Index providers join the cryptocurrency movement as demand for exposure to digital assets continues to grow, while EU regulatory news puts the cost of investment products in the spotlight.

S&P Dow Jones Indices has debuted the S&P Digital Market Indices, a new series of digital asset benchmarks measuring the performance of recognised open cryptocurrency exchanges. The new index family consist of the S&P Bitcoin index, Ethereum Index and the Cryptocurrency MegaCap Index which tracks the performance of both bitcoin and ethereum. An additional expansion including other coins and broader-based indices such as large cap and broad market benchmarks will be introduced later this year.

In similar news, Swiss/French index provider Compass Financial Technologies has launched new reference and volatility target indices on 18 digital assets. The company offers two families of indices: the Compass Crypto Solutions Reference Indices and the Compass Crypto Volatility Target Indices.

The European Securities and Markets Authority (Esma) and the European Insurance and Occupational Pensions Authority (Eiopa) have elevated the cost of investment products as ‘a challenge for the whole market’ and a driver of ‘some of our supervisory work now’. The announcement follows the publication of the annual statistical report on the cost and performance of EU retail investment products which found that retail investors pay 40% more than institutional investors.

In response, Thomas Wulf, secretary general at Eusipa, told SRP that [the association] appreciate the effort of showing what is happening in the market at a European level, but it is clearly not enough. “To have a full picture of the risk exposure of the retail investor population to structured products, you need to have the insurance product landscape within the retail structured products analysis,” he said.

In addition, the European trade body believes the Esma report uses a methodology which is closer to an academic exercise than a real-life yield analysis.

Tim Mortimer, managing director at FVC, noted that the structured products section of the report are interesting but do contain some inaccuracies and biased statements, such as the observation that “[…] unlike long-term investment products such as funds, many structured products may be designed for hedging purposes or to speculate on price movements over the period of months or years. Consequently, structured products should – as a general rule – not be regarded as long-term investments in the same way as funds”.

Any round-up of structured product news would be incomplete without a mention of ESG. This week, Shinhan Bank has entered the ESG space with structured funds linked to sustainable underlyings developed by S&P DJI and Stoxx. The South Korean distributor has debuted two equity-linked funds (ELFs) tracking equity-linked securities (ELS) tied to the performance of a series of ESG indices, which together derived KRW385m (US$339,903). One of the products, the Shinhan ESG Index-Linked Securities Investment Trust No. S-1 [ELS-derivative type] is linked to an autocallable step-down ELS tracking the performance of S&P 500 ESG Index (USD).

Also in South Korea, despite the increase in issuance and sales, Mirae Asset Securities has slipped down the country’s league table. The sales volume of equity-linked securities (ELS) and derivative-linked securities (DLS) has dropped 63.9% to KRW2.71 trillion in Q1 FY21 quarter-on-quarter (QoQ), leading to a record-wide gap with the redemption amount in two years. The Korean broker-dealer, which took the crown as the most active issuer of ELS in 2020, slipped to the third position in the issuers’ ranking with a volume of KRW2.26 trillion, which translates to a market share of 12% in Q1 FY21 at a short distance from Korea Investment & Securities and Samsung Securities.

It was also a busy week for staff moves at the some of the world’s largest investment banks.

Antonio Celeste has been promoted to head of ESG product, ETF & Index Solutions at Lyxor Asset Management. He joined SG’s asset management subsidiary as an ESG product specialist in its ETF and indexing division from French smart beta ETF issuer Ossiam in November 2020. In his new role, Celeste will oversee the team responsible for innovation and promotion of the firm’s ESG ETF range.

UBS has made two senior appointments within its new Sustainability and Impact organisation. Michael Baldinger has been appointed chief sustainability officer for UBS, while Phyllis Costanza has been appointed head of social impact and will continue to be responsible for the group’s Philanthropy Services, Optimus Foundation and Community Affairs activities.

Finally, BNP Paribas has appointed Sandro Pierri as CEO of its asset management arm, with effect from 1 July 2021. Based in Paris, Pierri will report to Renaud Dumora, the recently appointed deputy COO of BNP Paribas, in charge of the Investment & Protection Services Division of the group.

Picture credit: Wikimedia.