As we finish a year that has been, by most accounts, eventful, we turn our attention to some of the headlines that made the news in the past week.
Citigroup has announced a series of senior management changes in its sales and trading teams to push its equities franchise and structured solutions business forward with a focus on implementing a ‘client-centric model,’ according to an internal memo. As part of the reshuffle, Julia Raiskin will be in charge of Citi’s equity sales activities in the Asia Pacific region and will also be head of cash and derivatives equities trading in Apac.
The bank’s head of equity derivative sales for Europe, the Middle East & Africa, Dirk Keijer, will be in charge of the equities team covering Emea. The memo also announced that Steve Roti will oversee sales for the structured equity solutions unit. Under the new set-up, Quentin Andre and Eduardo Martinez Campos will co-head the bank’s global multi-asset group team with Andre alone taking responsibility for global derivatives and delta one sales.
Another big structured player, Vontobel, has announced changes to its senior management team following the departure of Axel Schwarzer who is stepping down from his operational role after 10 years. Marko Röder, the bank’s head global sales asset management, will take over the running of the asset management client unit. In addition, SRP Nordics Personality of the Year 2019, has joined Swedbank as a product offering manager, having left Nasdaq last month.
With 2020 drawing to an end, SRP took a look at some of the best-selling products in the Americas during a tumultuous year in terms of volatility and market uncertainty. The S&P 500 retains the lion’s share when it comes to underlying sales. However, when looking at individual product sales, SRP data shows that the best-selling structured product in the US market in 2020 was a structured note linked to Charter Communications (09709THH7) which was issued by BofA Finance and distributed by BofA Securities. In Brazil, the best-sellers in 2020 was issued by Morgan Stanley, in the shape of the COE S&P 500, while in Mexico, Monex’s Dual Currency Note - USD/MXN - 5.4% pa is the best-selling product with a short tenor of just over a week.
Over in Asia, the best-selling product in the region comes from South Korea: Mirae Asset Daewoo ELB 2480, which is linked to the performance of the S&P 500 and recorded a volume of KRW1.07 trillion (US$920m) – lower than the KRW1.62 trillion from its counterpart in 2019. The second best-selling product in the Apac region is 日経転換債/Nikkei M20230214 sold at JPY22.9 billion (US$210m), which was issued by Mitsubishi UFJ Securities International and distributed by Mitsubishi UFJ Morgan Stanley Securities. The reverse convertible note (RCN) with an autocallable option is linked to the performance of the Nikkei 225.
SRP hosted last week its 2020 China event, which was attended by over 500 people over two days.
Market leaders discussed the future of structured products in China including opportunities and risks, and how banks are preparing for the integration of asset management regulations. Panellists on day one (1 December) kicked off the discussion by assessing the structured deposits market segment and the shift of structured notes to net asset value (NAV)-based as required by the 2018 landmark rules (known as ‘new asset management regulations’) that carry a grace period until the end of 2021.
Lucia Fang, structured investment manager at Ping An Bank, noted that straightforward payoffs such as the digital are more welcome and that a product may become more attractive when its maximum return is lifted through its payoff.
“Many investors don’t pay close attention to the payoff. The higher the maximum return looks, the more attractive the product can be – regardless of the likelihood to achieve that return,” she said.
“Our principal-guaranteed structured products (aka ‘beneficiary certificates’) act as windows for us to access retail customers,” said Rui Chen, senior vice president of equity derivatives at Citic Securities. “We’ve been offering two types of the products since 2017. One is knockout with a medium and long tenor. The other is shark fin with a short tenor targeting excess return.”