The Swiss structured products specialist struggles to leave behind allegations of shortcomings in the prevention of money laundering, tax evasion and terrorist financing.
Leonteq Group has issued a profit warning revising its outlook for the full year of 2023 pointing at above average investments in key strategic initiatives impacting cost base which will bring down group net profit in the range of CHF10-20 million (US$11.4 – US$22.8m) compared to previous guidance which expected profit before taxes to be CHF40-70 million.
The revised profit target suggests the firm is making provisions despite reporting a solid performance of its client franchise with growth in issued products (+34%) and client transactions (+12%).
‘Turnover and net fee income relatively stable year-on-year due to lower average ticket sizes,’ it said. ‘Net trading result positive but significantly lower year-on-year mainly due to decrease in market volatility.’
Leonteq also defended its ‘strong position’ in the Swiss market and has expanded its market share in the SIX-listed structured products market to 11% compared to eight percent in the prior-year period.
Against a backdrop of inflationary pressure, increased geopolitical uncertainties and a significant reduction in market volatility which reached an all-year low in November 2023, Leonteq recorded a normalised net trading result with positive contributions from its hedging and treasury activities in the amount of approximately CHF30 million.
‘This compared to an exceptionally strong performance in the prior-year period where the net trading result significantly overcompensated for reduced client demand,’ stated Leonteq.
The firm led by CEO Lukas Ruflin (pictured) added that it has increased its annual investments in key growth initiatives by around 50% to approximately CHF30 million in 2023.
‘In particular, it continued to significantly invest in its retail flow business initiative as well as in its digital client solutions offered through LynQs,’ it said, adding that under the share buyback programme launched on 3 April 2023, 394,881 shares have been purchased YTD with a total buyback value of CHF16.5 million, or 92% of the programme size.
The programme is expected to be completed by end-2023. Leonteq will publish its full-year 2023 results on 8 February 2024.
The profit warning comes on the heels of an order issued by the German Federal Financial Supervisory Authority (BaFin) urging Leonteq Securities (Europe) ‘to remedy deficiencies in its precautions to prevent money laundering and terrorist financing’.
BMO expands leverage ETN range with 4X SPX play
Bank of Montreal (BMO) has launched 4X leveraged Exchange Traded Notes (ETNs) linked to the S&P 500 Total Return Index in the United States.
The ETNs are targeted at sophisticated investors seeking four times leveraged participation in the daily performance of the index, before taking into account fees and charges. The MAX S&P 500 4X Leveraged ETNs are available for trading on NYSE Arca.
Adam Stempel (right), managing director, BMO Capital Markets, said the new product ‘exemplifies BMO's dedication to provide investors with innovative solutions that align with their financial objectives’.
‘With the launch of these ETNs, we continue to foster a diversified and dynamic investment landscape,’ he said. ‘As investors seek strategies to navigate evolving market conditions, we provide access to innovative tools designed to meet their various needs.’
Stempel noted that the launch reflects BMO's commitment to delivering new financial instruments, which offer sophisticated investors ‘a means of potentially enhancing their returns and accordingly, of potentially increasing their losses while tracking the performance of the index’.
Launched in 2023, MAX is the leveraged and inverse leveraged exchange traded notes brand of BMO aimed at servicing sophisticated investors.
Luma partners with specialist annuity provider FIG
Multi-issuer structured products and annuities platform Luma Financial Technologies has launched a partnership with annuities and life insurance products specialist Financial Independence Group (FIG), to provide tools and make researching and purchasing annuities easier for advisors.
Luma’s open architecture technology platform launched in 2018 to serve the structured product market, and extended into the annuity industry in February 2021. Luma has since developed additional tools for the platform, including Luma’s “Lifecyle Manager” which simplifies the process of managing in-force annuity contracts, according to Tim Bonacci (right), chief executive at Luma.
Luma’s annuity technology centralises the tracking of products and offers educational content, as well as training modules, data, and client-level performance reports.
‘As our organization continues to evolve and expand within the market, it is essential to ensure that we are delivering the best client experience,’ said Jim Cooper, co-chief executive officer at FIG.
Generali deploys Premialab risk solutions
Data, analytics and risk solutions provider Premialab will supply its technology to deliver portfolio management and risk solutions to Generali Investments Partners.
Premialab's multi-asset, multi-region platform processes 5 million data points every day on 5,000+ investible systematic strategies, with client AUM representing an estimated USD$5 trillion. The Premialab platform and Premialab Pure Factors offer cross-asset quantitative strategy selection as well as due diligence on strategies available across global markets.
The platform also delivers faster, detailed risk management and reporting, including regulatory reporting.
‘In the current market environment marked by elevated inflation and interest rates, institutional investors are increasingly turning to quantitative investment strategies,’ said Premialab CEO, Adrien Géliot (right). ‘They are seeking greater transparency, enhanced performance, and robust risk management processes.’
Cédric Baron, head of multi asset strategies, Generali Investments Partners, said the company's choice of Premialab was based on their capacity to provide real-time, granular and actionable data.
ASIC warns of high-risk products, business practices
The Australian Securities and Investments Commission (ASIC) has intervened to disrupt ‘potentially harmful offers of financial products and services by online trading providers’.
In a report released last week, the regulator highlighted its observations from its surveillance of online trading providers in 2022-23 and clarified its regulatory expectations. The report identifies a range of regulatory interventions made, including court actions, stop orders and infringement notices, in relation to high-risk offers; inadequate supervision of representatives; misleading or deceptive statements; use of digital engagement practices, such as gamification and influencer marketing; and holding client assets and money.
‘ASIC has taken multiple actions to protect retail investors from high risk offers and business practices that may be unfair, inappropriate or result in poor outcomes,’ said ASIC commissioner Simone Constant (right). ‘Our more proactive approach to identifying and disrupting emerging risks and harms is in response to the rapid pace of change we have observed in recent years.’
The report follows ASIC’s warning to online trading providers last year against high-risk offerings to retail investors such as securities lending and provision of crypto-asset trading. This also included offers of ‘zero’ or ‘low-cost’ brokerage where the true cost is masked.
Online trading providers are encouraged to assess their own arrangements and consider how the observations and areas for improvement outlined in the report apply to their business.
Click in the link to read the Report 778 Review of online trading providers (REP 778).