Headlines in the structured product space moved in different directions last week, with product innovation coming out of Asia Pacific, and regulatory reviews in the EU.

Goldman Sachs has appointed Rob Mullane and Tristan Blood as the co-heads of platform and client strategy for its private wealth management (PWM) business in Europe, Middle East and Africa (Emea). They report to Chris French and Stefan Bollinger, co-heads of Goldman Sachs Private Wealth Management for Emea.

The new-created roles are aimed at expanding the private bank’s management responsibilities and contribution to ‘building and delivering high-quality investment solutions for clients,’ as the bank continues to scale its European business and extend its capabilities across the region.

The Priips key information document has brought increased transparency and strengthened the protection of retail investors - Petra Hielkema, Eiopa

Financial products architect Mohamed El Hioum has joined Save to further develop its accounts and portfolios, including an upcoming ESG investment strategy. Based in New York, El Hioum will work with the firm’s partners and providers to expand its account offering and enhance existing financial products. He will report to Michael Nelskyla, CEO at Save. El Hioum joins from UBS where he spent the last two years as solutions specialist at UBS Evidence LabSolutions.

UBS has issued two tranches of structured notes linked to USD 10-year constant maturity swap (CMS) in China to capitalise on US treasury volatility spikes. After several years of limited activity around the CMS market in China, the Swiss bank launched a new series of non-principal-protected CMS-linked structures – the two tranches which have a tenor of nine months and use a European digital put option were sold to an onshore corporate client. Denominated in US dollars and Chinese yuan, respectively, they were offered under the Qualified Domestic Institutional Investor (QDII) scheme, which allow eligible Chinese domestic institutions and fund managers to invest offshore within quotas.

Starting in China, HSBC has traded the first tranche of structured deposits tracking the performance of a target vol strategy. With a two-year tenor, the product linked to the Morningstar Exponential Technologies ESG Screened Target Volatility 7% Select Index includes an Asian up-and-out option offering full principal protection if held till maturity. The CNY-denominated deposit will deliver a coupon of 7.5% if the performance level is at or above 112% of its initial strike on any yearly valuation date.

The UK bank’s wealth business dropped in the first quarter of 2022, leading to a 25% decline of net profit compared with a year ago. Reported net profit at HSBC dropped 24.6% to US$3.4 billion in Q1 2022 year-on-year (YoY), which was attributed to lower revenue and ‘a net charge for expected credit losses and other credit impairment charges (ELC)’, according to the bank’s latest earnings report. Reported revenue went down four percent to US$12.5 billion. The UK bank was forced to defend its strategy following media reports that Ping An, its larger stakeholder with an 8.2% stake, has recommended HSBC to spin off its Asia business, and list in Hong Kong.

In Hong Kong SAR, where HSBC has its structured products hub, the UK bank issued and distributed 1,168 equity-linked investments (ELIs), mostly reverse convertible notes with a typical minimum order amount of HK$100,000 (US$12,700), SRP data shows. The issuance was almost halved compared with Q1 21.

Continuing on the product side, 83% of discount certificates generated a positive return in 2021, according to a report commissioned by the German Derivatives Association (DDV). The study, which was conducted on behalf of the DDV in collaboration with the Stuttgart Stock Exchange, examined 152,898 discount certificates on 70 stocks and indices from Germany, Europe and the US. Some 41% of the discount certificates outperformed their underlying assets in the relevant period while 13.86% achieved a positive yield, despite a negative performance of the underlying in the period under review. The average maximum return was 8.57% per year. The average yield of the discount certificates analysed was 7.34% p.a., that of the underlyings 15.93%.

The European Supervisory Authorities (EBA, Eiopa and Esma – ESAs) published on 29 April their technical advice to the European Commission on the review of the Packaged Retail and Insurance-based Investment Products (Priips) Regulation.

The ESAs are proposing significant changes to the Priips Regulation based on the details provided by the Commission in January 2021 on their intended approach to the review of the Priips Regulation, and has recommended the Commission to consider a broad review of the Priips framework as well as to undertake appropriate consumer testing before formulating proposals for changes. The recommended changes aim to improve the presentation of information provided to consumers and to make it easier for them to compare different products.

‘The Priips key information document has brought increased transparency and strengthened the protection of retail investors,’ said Petra Hielkema, chair of Eiopa and the current chair of the Joint Committee of the ESAs.

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