We start the week with a look at activity in key Apac markets, and a new year push on ESG from a number of big European banks.
South Korea’s Financial Supervisory Service (FSS) has urged domestic securities houses to strengthen risk management processes of structured products.
The balance of structured products reaching their knock-in level in the country increased by 280% to KRW1.1 trillion (US$850 billion) at the end of Q3 2022 compared with three months ago mainly due to the weak performance of the HSCEI, according to the report released by the FSS on 8 January.
Nearly all the balance comes from equity-linked securities (ELS) while derivative-linked securities (DLS) contributed KRW4.4 billion. The Korean regulator noted that local securities houses, which act as the issuers and help providers to hedge their ELS activity, must strengthen their risk monitoring, particularly on HSCEI-linked structured products, in view of the knock-in volume surge during Q3 22.
Hong Kong-listed callable bull/bear contracts (CBBCs) and derivative warrants (DWs) have mirrored each other in terms of turnover in 2022 which has recovered the level of 2020. In 2022, DW turnover fell 27% to HK$1.93 trillion (US$247 billion) while CBBC turnover dropped 11.5% to HK$1.92 trillion year-on-year (YoY). This led to an average daily turnover (ADT) of HK$7.85 billion and HK$7.82 billion, respectively, said Horace Chow and Eva Tsoi, director, cross asset listed distribution, global markets, Apac at Société Générale, in a media briefing held on 10 January. Tsoi also noted that US underlying indices had recorded traction in terms of net inflow following the launch of CBBCs on the Dow Jones Industrial Index by SG on 14 September 2022, and investors preferred holding their position of both DWs and CBBCs on the asset overnight due to the trading time difference.
Some recent noteworthy products include big tickets for MSCI-linked structures in France. Crédit Agricole Banque Privée distributed Impact Transition Septembre 2022 in France. The eight-year green bond can be accessed via a life insurance contract. It is linked to the MSCI France Select ESG 30 5% Decrement Net Index, which is based on the MSCI France IMI Index and aims to represent the net performance of a set of 30 stocks from the parent index that have high ESG scores. Another MSCI index, also in France, was used by Société Générale as the underlying for SG Opportunités Trimestrielles N° 5. The 10-year autocall is linked to the evolution of MSCI EMU Circular Economy Sustainable Impact Select 50 Points Decrement Index, which was launched in April 2021 and represents the performance of an equally weighted portfolio of 50 stocks from the European Economic and Monetary Union region which contribute positively to circular economy.
Solactive, Société Générale and Iceberg Data Lab have partnered to develop a range of biodiversity screened index strategies targeted at investors seeking to consider the impact of companies on biodiversity into their investments. The new indices - Solactive Transatlantic Biodiversity Screened 100 RW Index, Solactive Transatlantic Biodiversity Screened 150 CW Index and Solactive Transatlantic Biodiversity Screened Index - have been licensed to the French bank for the issuance of structured products. All indices represent securities from corporate issuers from the US and the eurozone that have been screened, based on their impact on biodiversity relatively to their industry peers and based on market filters, while not breaching certain activity- and norm-based exclusion criteria.
When it comes to people moves, Dutch bank Van Lanschot Kempen (VLK) is hoping for synergy benefits and more cross-sell opportunities by merging two teams within its treasury department. Marcel Pronk has started a new position as director treasury sales, structured products & FX in Amsterdam. The appointment follows VLK’s decision to merge two sales teams within its treasury department: the structured products sales team, for which Pronk was responsible, and the treasury sales team, led by Odette Arnouts, which did the FX transactions for VLK clients.
In Italy, Nicola Francia, head of Private Investor Products & Southern Europe coverage at UniCredit in Milan has joined the bank’s Group Investment Strategy (GIS) division in a senior position. In his new role, Francia will work within the team responsible for defining and communicating the bank’s investment strategy for all client segments, managing portfolios under mandate and supporting related client activity within the wealth management and private banking franchise. He will remain based in Milan and report directly to Alessandro Caviglia, chief investment officer, Italy, UniCredit Group.
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