A week of celebration in the structured product industry as UK articles blow their 20th candle.
It’s many happy returns for the UK autocall, which is celebrating its 20th birthday. The payoff structure is celebrating this with a new milestone after emerging as the preferred investment vehicle by retail investors within the structured products sector.
[Autocalls are] one of the UK's most successful retail investments of the 21st century - Ian Lowes, StructuredProductReview
“[Autocalls are] one of the UK's most successful retail investments of the 21st century,” said Ian Lowes (pictured), founder of StructuredProductReview – a specialist portal for professional advisers. “[They are] a reliable investment option regularly overlooked by financial advisers.”
According to him, the autocall payoff offers “predefined returns at predetermined dates, providing investors with market-linked investments that safeguard their original capital at maturity from all but the most extreme scenarios”.
Banco Bilbao Vizcaya Argentaria (BBVA) has promoted Eric Michl as head of global markets, Asia. Michl will remain in Hong Kong SAR and report to Antonio Ordás, head of global markets and Pablo Riquelme, head of corporate and investment bank (CIB), Asia.
In his new role, Michl will be responsible for fostering the Spanish bank’s cross-selling and promote its cross-border business, a BBVA spokesperson old SRP. The position was vacant “for a while” during which Riquelme supervised global markets activities in the region.
Fellow European bank Vontobel has appointed Markus Pfister, head of structured solutions and treasury, as its new chief operating officer succeeding Felix Lenhard, effective from 1 January 2024. Pfister joined Vontobel as head of financial products engineering and development in 2004 and took over his most recent role in 2020. He has served as a member of the executive committee of Bank Vontobel since 2020.
The Swiss Structured products Association (SSPA) has announced two new additions to its ranks: London-headquartered Marex, which provides services in agency execution, market making, clearing and, hedging and investment solutions, and Beacon, a fintech dedicated to financial services with offices in New York, London, and Tokyo. For its part, the German Derivatives Association (DDV) has onboarded pan-European trading venue for securitised derivatives Spectrum Markets as a supporting member to underpin the association's work for structured products.
Over in Asia, SGX Index Edge has seen increasing demand ESG and sectoral decrement indices in the European structured product space over the last few months, according to Mohit Bahet, head of SGX Index Edge (iEdge). However, the index arm of Singapore Exchange (SGX) has seen less demand for decrement indices in Asia where technology underlying stocks dominate compared with Europe.
“Decrement indices are more popular in Europe compared to Asia,” he said. “In Asia, equity-linked structured products are primarily issued on single stocks, basket of stocks and traditional benchmark indices. Custom indices form a small proportion of underlyings used for structured products.”
Panellists at the SRP France 2023 conference in June said that using digital innovation to meet the market’s specific needs can help gain more traction in investors' interest in structured products in the French pension market.
Innovation and technology can be both challenges and opportunities that drive further growth of structured products in the insurance and pension market. The panel focused on how issuers and structured product specialists cope with impacts in the retirement space since the introduction of the French retirement reform law and the challenging macroeconomic environment with rising inflation and interest rates.
One of the responses that Hilbert Investment Solutions took is to “work with the underlying,” said Steve Lamarque, CEO and founding partner of the London- and Paris-based structured products specialist.
Lamarque said his firm had replaced traditional structured products with “credit risk on the part of the issuer, liquidity issues, and stock” and dealt with protection based on the “individual scale” as a contract with an insurance company, including an exchange-traded fund (ETF) with outsourced protection.
“We chose the solution of working on the individual rather than getting back to problems that we had in the past with cash lock issues,” he said. “The hardest is technology – setting up the algorithms and the whole back-office... That's the most important part of the project.”
Image: By-studio/Adobe Stock.