Societe Generale has entered the Dutch market for leverage products with the launch of Daily Bull & Bear certificates on Tuesday (July 12). The certificates are listed at Euronext Amsterdam and issued via the bank's SG Issuer subsidiary; liquidity is provided via market makers Societe Generale and SG Option Europe.
The launch of the Daily Bull & Bear certificates is only the beginning for the French bank, according to Ernst Gevaerts (pictured), head of cross asset retail distribution sales the Netherlands, at Societe Generale. "We hope to introduce our first turbos in the Netherlands before the end of this year and we are also looking at other products already marketed by SocGen in the surrounding countries," he said.
Daily Bull & Bear certificates offer a fixed leverage of between three to fifteen times the daily performance of the underlying and have an airbag mechanism instead of a stop-loss level. "We see [Daily Bull & Bear] as an addition to the existing range of leverage products in the Netherlands. The product is especially suited for the very short term, ideally for day trading," said Gevaerts. "Daily Bull & Bears are suitable to react to market events, macro-economic news and corporate results," he said.
"Of course it is possible to hold on to the product for more than one day but in very volatile markets this does not work in your favour."
There are currently 42 Bull & Bear certificates live including offerings linked to the AEX (12), Bel 20 (four), Cac 40 (12), Dax (eight) and Eurostoxx 50 (six). "For the moment we have only used indices as underlying," said Gevaerts. "The plan for the short term is to come up with the main single stocks. Commodities and FX will follow after that."
The certificates are targeted at the Dutch retail investor, according to Gevaerts. "I would say that 98% of the target group is the active and experienced investor in the Netherlands," he said. "Although I could imagine that [Daily Bull & Bear] could be of interest to a small asset manager too because you can react specifically to market events and this product does not have the risk of immediate stop-out."
The market for leverage products is highly competitive in the Netherlands with Binck, BNP, Citi, Commerzbank, Goldman and ING issuing turbos and related products on a regular basis. Gevaerts admits it will be difficult to distinguish from the competition with spreads and transaction cost already very tight "but of course we will make sure both are very competitive".
"The difference comes from the vast knowledge SocGen has as one of the main derivatives houses in the world," said Gevaerts.
Gevaerts joined Societe Generale mid-march. He started his career at ABN Amro before moving to ING where he was account manager structured investments. In 2014 he moved to Royal Bank of Scotland (RBS) as an interim professional to help migrate the turbo business from the British bank to BNP Paribas.
Click the link to view the Daily Bull & Bear brochure (Dutch).
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