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Structured product sales ebb and flow globally, Thailand is at the forefront of activity in Apac, and Luma expands further into Europe.
Some of the largest global banks have reported recent figures, with US faring better than their international counterparts – at least for now.
J.P. Morgan has posted a record-high sales volume of structured products at US$3.27 billion in the first quarter of FY21 ended in March in the US following a rebound in issuance. The bank’s issuance of structured products at the end of Q1 2021 grew 15.5% increase year-on-year, making it the fourth largest group issuer in the US with a market share of 12.5% after Morgan Stanley (US$3.77 billion), Barclays (US$3.48 billion) and Goldman Sachs (US$3.46 billion), SRP data shows.
For its part, Citi has reported record net income boosted by a strong performance in the institutional client group in a year that started better than expected. It saw net income of US$7.9 billion on revenues of US$19.3 billion for the first quarter of 2021. This compared to net income of US$2.5 billion, on revenues of US$20.7 billion for Q1 2020. During the quarter the group sold more structured products in its domestic market than ever before, according to SRP data.
Since the outbreak of Covid-19, we have clearly seen a rising demand for US equities due to their high volatility - Ittiphan Jearkjirm
Over at Morgan Stanley, record net revenues of US$15.7 billion in the first quarter of 2021 were seen, compared with US$9.8 billion during the same period in 2020. The US bank saw its structured product sales skyrocket by US$1 billion compared to the prior year period during the first quarter of 2021 to reach US$3.7 billion. The bank’s structured product issuance steadily declined during the first three quarters of 2020, crashing to a record low of 541 products valued at US$1.6 billion in Q3 20. This figure rebounded in the following quarter to total 643 products with a sales volume of around US$2.8 billon.
Credit Suisse, however, has seen its issuance and sales of structured products in Europe falling by 90%, respectively, over the last year. Sales volumes in the European market have plummeted with issuance standing at 42 products worth €27m (US$33m) in Q1 21 from 426 products valued at €392m recorded in Q1 20. The bank’s sales and volumes followed a downward trend throughout 2020, reaching a low at the end of the year after a fall of 70% in sales and 48% in issuance - from €368.7m (from 355 products) to €107.3m (from 183 products) between the second and third quarters of 2020, when sales went down.
Recent people move news saw Johnny Wu, former cross-asset solutions head at Barclays in New York, join the board of Optimal Asset Management, an SEC-registered investment advisor and manager of US$2.4 billion in custom portfolios assets. He will work closely with the firm’s CEO and founder, Vijay Vaidyanathan, and ETF industry veteran Ben Fulton who joined the board in February.
In addition, as part of its recent expansion news to the EU, US multi-issuer structured products platform Luma Financial Technologies has appointed Konstantinos Pampoukidis as sales manager. He will report directly to David Wood, managing director of Luma’s International Business, who is spearheading the platform’s expansion into Europe and joined in January 2021.
In an interview with SRP, Ittiphan Jearkjirm, executive vice president, investment product division at Siam Commercial Bank (SCB), highlighted the distributor’s two-fold increase in its structured product offerings in 2020 despite an overall drop nationwide. The bank doubled its offerings to 693 in 2020 with a 35.2% increase in sales at THB8.9 billion (US$284m) year-on-year (YoY), making it the third most active distributor in the country after Phatra Securities and CGS-CIMB Securities.
Among other changes supporting the bank’s sales, the lower ticket sizes to THB1m from THB5m for structured notes at SCB Group in 2020 reflected its focus shift from institutional investors to high-net-worth individuals (HNWIs), Jearkjirm noted.
“However, it’s quite surprising that most new clients end up choosing the original size or even bigger,” he said. “So, the smaller ticket sizes enable our relationship managers to approach new clients, but they tend to prefer bigger tickets once [they] understand the products.”
In addition to the ticket size, the Thai bank has significantly changed its underlying offerings as the March sell-off created opportunities for investors to buy low.
“Since the outbreak of Covid-19, we have clearly seen a rising demand for US equities due to their high volatility, especially the household tech names like Amazon and Facebook,” he said, adding that some red chip stocks in Hong Kong also gained traction led by Alibaba.