As the UK licks its Euro 2020 football (soccer) wounds, the structured product market goes from strength to strength on the back of investor interest shifting to these products.

Arx Financial Engineering CEO Danny Skutelis told SRP that the Archegos blowback has forced banks with Asian positions to offload that exposure. The Dubai company has moved to capitalise on that demand by leveraging its platform and optimisation tools to look for ways to restructure those positions. The firm closed a transaction with Credit Suisse/UBS on an Asian basket with a 52% coupon after originating the trade with a 20% coupon.

“The timing was good, and the client was happy, but more importantly we were able to leverage our platform to find the best stocks for the basket,” says Skutelis, adding that Arx do things differently compared to other pricing platforms where an algorithm prices every single stock to find the best combination for a worst of basket. 

After a challenging 2020 we have had a really good year so far with high business activity - Mathias Lundberg, Nordea Bank

Bloomberg, which won the Best Pricing & Risk Analytics Provider award at the SRP Apac Awards 2021, signed several regional banks across China, Taiwan, Thailand and Malaysia on its Bloomberg Derivatives Library (DLIB) in 2020, as these markets began to acquire an appetite for structured products.  

DLIB has been boosted with new functionalities to accommodate demand as the structured product issuance on the platform has increased during the past 18 months, according to Abdessamad Khaled, head of structured products & derivatives pricing at the firm.  

Some green shoots out of Sweden, one of the only remaining active markets in the Nordics. Nordea, the largest financial group and a leading issuer and distributor of structured products in the region, has already surpassed last year’s issuance and sales in the region, and has the largest market share YTD in Sweden.

“After a challenging 2020 we have had a really good year so far with high business activity,” Mathias Lundberg, director of structured products at Nordea Bank, told SRP. “Transaction wise it has been extremely high and one off the top years ever in the Nordics. We can definitely see that the negative trend from last years has turned around.”

More cautious headlines have emerged from the regulatory side. The Australian Securities and Investment Commission has sounded the alarm on crypto-linked products following new regulatory crackdowns from the UK, Canada and Japan which have banned digital assets exchange Binance. It is seeking feedback on its proposed good practices for exchange-traded products (ETPs) and other investments tracking crypto assets, including structured products, in a response to rising interest from market participants.

The Dutch Authority for the Financial Markets is looking to provide better protection for retail investors against the risks of turbos, and has announced new restrictions on the offering of turbos to Dutch retail investors. From 1 October 2021, there will be a leverage limitation, a mandatory risk warning and a prohibition on bonuses for trading turbos. The restrictions will apply to the offering of all turbos in the Netherlands, regardless of the member state in which the issuer is located. In neighbouring Belgium, the local regulator expects the sector to improve the quality of the key information documents (KIDs) provided to retail investors. The Financial Services and Markets Authority (FSMA) has analysed a number of KIDs intended for Belgian retail investors who are buying structured products or insurance-based investment products. As a result of its findings, the FSMA expects the sector to improve, among other things, the clarity and readability of the information to be supplied by product providers.

Over on the data side, Goldman Sachs is the most prolific US issuer group of the first half of 2021 in terms of sales volumes, displacing former winner Barclays from the same period a year prior, SRP data shows. The US investment bank issued a total of 1,750 structured products during H1 21 valued at US$6.9 billion, compared with 1,552 products in H1 20 worth US$4.4 billion.

Over in Europe, providers that focus on the Dach region dominated primary market issuance in the first half of 2021, with issuers from Germany and Switzerland in command during the semester. Specifically, although it is headquartered in Milan, when it comes to structured products, Unicredit, the most prolific issuer in the first half of 2021 in Europe, has a clear focus on the German market. Ninety-five percent of its H1 2021 issuance was targeted at investors in Germany.

Finally, no news round-up would be complete without a mention of people moves. The Association for Financial Markets in Europe (AFME) has announced that Thalia Chryssikou, head of global sales strats & structuring at Goldman Sachs, has been appointed as chair of the board. Chryssikou takes over from Michael Cole-Fontayn who has been a member of the AFME board since 2011, and served as its chair between September 2015 and June 2021.

HSBC has appointed Jackie Mau as head of global private banking, mainland China, HSBC, effective from 1 August 2021.

Mau (right) will focus on building products, platforms and service capabilities, growing the bank’s market share and expanding its presence in mainland China ‘to serve the increasingly sophisticated HNW/UHNW clients in the world’s second biggest wealth market’.

Image credit: Vectorstock.