News of France’s Natixis return to structured products, albeit on its terms, was a key headline in the past week.

Natixis CIB is selling autocallables again as it continues to rebuild its equity derivatives business with a catalogue of less risky products, tightened risk controls on its trading book and a selected number of strategic clients.

The French bank is seeking to boost its equity derivatives activities with low risk autocall structures linked to baskets of shares with calling dates changing frequently known as multi step-downs and fixed dividend autocallables linked to decrement (synthetic dividend) underlyings, SRP has learned. This is not the first time Natixis makes changes to its equity derivatives business because of trading losses. The Paris-based lender reorganised its structured products business in 2019 following €160 million in hedging losses in relation to autocallables sold in Asia, mostly in South Korea, in the fourth quarter of 2018.

The hiring spree continues relatively unabated in Asia Pacific. Bank of Singapore has announced the appointment of Vivienne Chia as its global head of investment advisory solutions. She will report to Lim Leong Guan, global head of products, and will be responsible for the development of the bank’s investment advisory solutions across all asset classes ‘to meet the needs of ultra-high and high net worth individuals in Bank of Singapore’s core markets in South and Southeast Asia, Greater China and Middle East’.

UBS Global Wealth Management has boosted its senior management ranks with the appointment of Nicola Pantone and Rodolphe Larqué as the new co-heads of UBS Global Wealth Management Capital Markets in Asia Pacific. Pantone and Larqué will be responsible for implementing the bank’s strategy in the Apac region following the launch in 2020 of a unified global markets division combining the bank’s global wealth management (GWM) and investment bank (IB) capabilities, and the integration of the capital markets teams in GWM Switzerland and International (S&I) and IB Global Markets.

Over in the US, Luma Financial Technologies has rolled out Luma Compare, a new tool which provides instant price discovery and test of a wide range of annuity products for client usage. The tool was introduced as a solution to the challenges surrounding annuity transactions and streamlines product price discovery by enabling advisers to instantly select, compare and test different annuity products. These include variable annuities, fixed index annuities and registered index linked annuities. The US multi-issuer structured products platform continues to expand its annuity capabilities as demand increases.

Bank of Montreal (BMO) has slid from the top spot of the rankings as the most dominant issuer group in the Canadian structured products market during the third quarter (May to July) of 2021. CIBC is now in the lead after a year of the firm wavering between second and third ranks on the SRP league tables. BMO issued 384 structured products while CIBC issued 386 in Q2 21, compared to the former’s Q2 20 total of 233 products. Nevertheless, the bank has managed to boost its structured product issuance by 65% compared to the previous quarter.

SRP data records that the volume of US structured product sales tied to Invesco QQQ Trust Series 1 ETF has increased by 40% in 2021-to date with 140 products being issued in total, valuing US$700m, surpassing the 2020 record of around US$500m, across 135 products.

The sales volumes of structured products tied to Invesco QQQ have steadily increased throughout the last five years - in 2017, issuance stood at 26 products worth just over US$44m.

Within the funds world there are many interesting strategies that are used by managers to provide diversification or outperformance over the mainstream funds in the traditional asset classes, writes FVC managing director Tim Mortimer. One such concept of is that of market neutral funds. These aim to deliver returns without taking a significant long position in equities, bonds or any other asset class. This strategy has a lot of appeal since it does not generate excessive volatility and is largely uncorrelated with more conventional market funds. A related strategy to market neutral is known as absolute return, which seeks to earn a constant target return that is significantly in excess of the risk-free rate but independent of market performance. These two definitions are very closely connected, since if an absolute return fund is aiming for a return that does not depend on the market then it cannot be taking a significant fixed position in it. We can also deduce that both these strategies are likely to place a strong emphasis on risk control.

(Image credit: Vecteezy)