Regulatory developments were in focus in Europe last week, while South Korea’s autocallable product sales rebounded.
The European Council under the Belgian presidency has decided on a general approach to the Retail Investment Strategy and is ready to move forward with what has been agreed on the technical side of the updated guidelines.
“The next step is for the proposal to be negotiated with Parliament, which will need to formally decide in September whether they continue to file, which we expect they will,” Thomas Wulf, secretary general at the European Structured Investment products Association (Eusipa), told SRP.
On the value for money provisions, the industry is likely to end up with a quantitative benchmark to be used by regulators as a supervisory or at least market screening tool, given that both Parliament and Council would like to see such an instrument in place, according to Wulf.
We have taken several initiatives over the past 10 years to ensure that consumers are better informed and have the capability to compare products and identify the impact of costs on the final return - Jean-Paul Servais, FSMA
Value for money was also a central theme in Belgium, where the Financial Services and Markets Authority (FSMA) addressed costs charged by investment funds, structured notes and insurance products in its annual report for 2023.
“We have taken several initiatives over the past 10 years to ensure that consumers are better informed and have the capability to compare products and identify the impact of costs on the final return,” said FSMA chair Jean-Paul Servais.
According to the financial watchdog, structured products commercialised last year were generally less risky than in previous years. Their tenors were shorter, while the vast majority was denominated in euros. Almost all products that struck during the year were fully capital protected. The most used underlying asset to determine the payoff formula were interest rates and less products were linked to a house or proprietary index.
Zooming into the issuer’s development: Société Générale issued 16,749 new notes (among which 70 secured notes) and 3,226 warrants during 2023 through its SG Issuer (SGIS) issuance programme.
Some 22,973 unsecured notes were issued for a total amount of €51.1 billion and 426 secured notes were issued for a total amount of €5.8 billion – this compares to 21,324 unsecured notes (€34.6 billion) and 514 secured notes (€4.2 billion) in 2022.
We’ve delivered automated CLNs and offered pricing and execution via our platform for the ticket size starting at US$100,000, which is lower than what we can see in the market - Sébastien Moretton, Vontobel
Looking at the Asian market, Vontobel was awarded “Best House, Hong Kong” during the SRP Asia Pacific 2024 awards season for the Swiss bank’s regional contribution with its automated service platform and credit-linked notes (CLN) expanded offering.
“We’ve delivered automated CLNs and offered pricing and execution via our platform for the ticket size starting at US$100,000, which is lower than what we can see in the market,” Sébastien Moretton, head of structured solutions and investments Asia at Vontobel, told SRP in an interview.
South Korea’s autocallable sales continued to show signs of recovery after they recorded a two-month increase in a row. SRP data shows that the country’s overall structured product monthly sales volume rebounded to KRW4.78 trillion (US$3.4 billion) in May, up 12% month-on-month (MoM).
The biggest growth stemmed from capital-at-risk equity-linked securities (ELS) products, with sales skyrocketing by over 62% MoM to KRW1.6 trillion coming from 564 products. The trend reversed the severe plunge triggered at the beginning of the year by the Hang Seng China Enterprises Index (HSCEI) debacle.
In the US, Citi promoted Kris Bitterly to the role of head of Citi global wealth at work, a business that serves clients through their employers and one of Citi Wealth's core business lines.
Bitterly was previously head of investment solutions, where she oversaw Citi solutions like alternatives and managed improved customer experience projects such as the bank's Project Simplify. She has worked at Citi for over 17 years, having previously been a managing director. Before joining Citi, Bitterly worked at Credit Suisse and J.P. Morgan
In the May edition of the US Market Review, sales of structured products hovered at the sixth highest on record, according to SRP data. Some 3,974 structured products worth approximately US$13.3 billion had strike dates in May – down seven percent by sales volumes compared to April, but an increase of 39% year-on-year.
J.P. Morgan was the number one issuer group in May. The bank collected US$1.9 billion from 745 products – the equivalent of a 15% share of the US market (May 2023: US$1.6 billion from 644 products).
Image: Weyo/Adobe Stock.
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