Standard Chartered has launched the first ESG structured note issued in Taiwan.
The UK bank’s inaugural Formosa note issuance follows a number of sustainable finance transactions from Standard Chartered over the last few months including a sustainable fiduciary deposit offering in the UK, an ESG Islamic repo transaction with a Malaysian bank, and its first Sustainable Export Letter of Credit programme.
The US$40m Formosa note, issued by Standard Chartered Bank from its note, certificate and warrant programme, has a 10-year tenor and is callable after three years by the issuer.
The new structured notes will help finance the bank’s Sustainable Finance assets - Amit Puri, Standard Chartered
‘Only a very small number of sustainability bonds have been issued to support emerging markets in their transition to a low carbon future,’ said Amit Puri (pictured), global head of sustainable finance at Standard Chartered. ‘Yet it is these very countries that will have a major impact on the world’s ability to meet climate targets.’
Standard Chartered has printed more than 90 Formosa trades and brought more than 40 foreign issuers to the country, according to Ian Anderson, CEO at Standard Chartered Taiwan.
‘The new structured notes will help finance the bank’s Sustainable Finance assets including offshore wind assets and green energy projects located in Taiwan and globally,’ he said.
This is the sixth issuance by the UK bank year to date in the Formosa market. E.SUN Bank was co-manager in this transaction.
Julius Baer enters China offshore market via partnership
Julius Baer has become a strategic investor and business partner of China’s Grow Investment Group as a first step to enter China’s onshore market.
Under the terms of the agreement, the new partners will jointly establish a distribution network for Grow’s domestic clients to access selected Julius Baer offerings via Qualified Domestic Limited Partnership (QDLP) products while the Swiss bank’s clients will have access to local investment expertise and assets via Qualified Foreign Institutional Investor (QFII) products.
Grow is a Shanghai-based domestic asset management company established in June 2021 with the goal of becoming ‘a world-class, next generation asset management firm with a focus on China’. The amount of the transaction amounted to a low double digit million US dollar equity investment which has not been disclosed.
‘The cooperation between Grow and Julius Baer will undoubtedly create value for these clients and support our growth plans for this important market,’ said David Shick (right), head of Greater China at Julius Baer.
The Swiss private bank reported CHF17.1 billion worth of assets under management linked to structured products in H1 2022. Structured products accounted for four percent of the AuM, or CHF17.1 billion, after equities, investment funds, client deposits and bonds/convertibles. The amount translated to a decline from CHF19.3 billion a year ago as well as six months ago.
Finra slaps BofA for reporting failures on large OTC options positions
The US Financial Industry Regulatory Authority (Finra) has fined BofA Securities Inc. US$5 million for failing to report over-the-counter (OTC) options positions to the large options positions reporting system (LOPR) in more than 7.4 million instances, including 26 positions that were over the applicable OTC position limit, and related supervisory failures.
Finra Rule 2360 requires member firms to report large options positions to the LOPR, which the regulator uses to monitor potentially manipulative behaviour, including attempts to corner the market in the underlying equity, leverage an option position to affect the price, or move the underlying equity to change the value of a large option position.
The accuracy of LOPR reporting is essential to Finra’s surveillance, and is particularly important with respect to the OTC options market because there is no independent source of data for regulators to review OTC options activity, stated the regulator.
According to the regulator, between January 2009 and October 2020, BofA failed to report OTC options positions to the LOPR in more than 7.4 million instances, in violation of Rule 2360 as well as Rule 2010 (Standards of Commercial Honor and Principles of Trade). Twenty-six of the unreported positions were also over the applicable OTC position limit of either 25,000 or 50,000 contracts.
In addition, Finra found that from January 2014 through October 2020, the firm’s supervisory system was not reasonably designed to comply with its LOPR reporting obligations, a violation of Finra Rules 3110 (Supervision) and 2010.
‘Finra relies on accurate reporting of transactions in order to maintain the integrity of the markets,’ said Jessica Hopper (right), executive vice president and head of Finra’s department of enforcement. ‘BofAS’s failure to report millions of OTC options positions prevented Finra from carrying out that core function for transactions that carry substantial risks.’
In settling this matter, BofAS consented to the entry of Finra’s findings, without admitting or denying the charges.
GenTwo opens to retail investors
Swiss fintech GenTwo has extended its offering for financial intermediaries to private investors.
The Swiss special purpose vehicle (SPV) provider has announced an expansion of its offering targeted at financial intermediaries which will be able to offer Swiss retail investors all types of assets.
According to the firm, the shift towards private investors ‘will transform the market for alternative and digital investment products’ as services that were previously reserved for institutional investors will now also be made available to retail investors through their existing banking relationship.
The expansion is aimed at capitalising on growing demand for alternative and digital assets with a dedicated solution for private investors based in Switzerland.
‘This type of offering has never been seen on the market,’ said Patrick Loepfe (right), chairman and founder of GenTwo. ‘It will enable private investors to participate in the rapidly growing segment of alternative financial products.’
The company’s clients – financial intermediaries, banks and asset managers – will be given the necessary resources to offer appropriate products for the mass market ‘encompassing everything from prospectuses and key information documents (KIDs) to product issuance’.
The ‘high regulatory complexity associated with retail products’ will be fully covered by the new solution ‘virtually at the push of a button’, according to Marco Flury, head business development products at GenTwo.
‘[This] will allow our clients to stand out from their competitors in this fiercely contested market and to further expand their customer base,’ he said.
Luma partners with MSCI
Luma Financial Technologies has added MSCI indexes to its Creation Hub, a module embedded in the platform, to enable access to global MSCI equity and ESG indices to use as underliers via customised structured products.
In addition to indices, advisors using the Luma platform will also be able to access MSCI research and content geared towards structured product investors. These materials will feature revolving analysis global market trends, as well as multi-format media resources such as publications, podcasts, graphs, and scorecards, which will be housed together in Luma’s Learning Center.
“With this new development, we’re providing our users with further differentiating capacity to build customized structured notes linked directly to established, well-known global indexes,” said Tim Bonacci (right), Luma’s CEO and president. “And through the thorough educational materials MSCI is adding to our Learning Center, we’re also aiding advisors in making well-informed decisions when building products on behalf of their clients. A that we’re extremely excited about.”
According to Luma, the partnership delivers a ‘two-for-one value add’ as MSCI indices will help advisors to potentially improve the risk structure of end-investor portfolios and provide access to sustainable products through MSCI’s ESG expertise, as well as ‘world-class research’.
‘Transparency and accessibility are the main ingredients needed for advisors to better serve their clients when transacting in structured products,’ said David Wood, managing director of international business at Luma.