The impact of geopolitical tensions on structured products were a recurring topic at SRP’s Paris event while we also reported on a flurry of collaborations this week.

Continuing our coverage of the SRP France 2024 Conference, panellist at the ‘ESG 2.0: opportunities for innovation amidst geopolitical turmoil’ discussion assessed that ESG-linked structured products have come under scrutiny in recent times due to their relatively poor performance, a consequence of the energy crisis resulting from the war in Ukraine, among others.

[Investing in ESG] is about participating in a movement for the long-term – it is not a question of performance over a year or two, but it is about a deeper commitment - Armelle Loeb-Darcagne, STOXX

STOXX’ Armelle Loeb-Darcagne expected things to improve in 2024, but at the same time she agreed that investing in ESG is about more than just performance.

“[Investing in ESG] is about participating in a movement for the long-term – it is not a question of performance over a year or two, but it is about a deeper commitment, STOXX’ Armelle Loeb-Darcagne told the audience.

The geopolitical situation was a recurring topic at the Paris event, as together with economic uncertainty, inflation that is still high, volatility on the financial markets, and climate change – it is a factor investors should take into consideration in their investments today, according to Caroline Delangle, head of investment solutions at Federal Finance Gestion.

The past 18 months have been positive for the French insurance market driven by increased demand for Euro funds and solid market performance, according to Selencia’s Bernard Hau and Yann Pelard of Groupe Premium while the progress of the European Council’s retail investment strategy (RIS) was one of the core topics discussed on stage at the ‘Impact of updated regulations on the structured products industry and product distribution’ panel.

SRP revealed the best-selling European product in H1 2024, which came in the shape of a standard long digital certificate from Intesa Sanpaolo.  The Luxembourg-listed structure, which is linked to the three-month Euribor, collected €529m during its subscription period.

More product developments could be found in our Q1 review of the European structured products market, which has shown strong growth, both year-on-year and quarter-on-quarter, with the most significant increases observed in Switzerland.

Talking about the latter, Twin win certificates surpassed an estimated four percent market share in the first half of 2024 in Switzerland, and if the trend continues the issuance of these products will double last year’s level.

The noticeable spike has been gaining momentum since 2021, with the past two years showing exponential growth around a payoff that had almost disappeared from the Swiss market.

New developments

Société Générale became the first issuer of structured products to use Connexor, the reference data platform of SIX Swiss Exchange, in the Spanish market. On 12 July, the BME (Bolsas y Mercados Españoles) implemented the Connexor platform by admitting warrants from the French bank in a fully automated process.

Issuers in the Spanish market will be able to increase the number and variety of structured products while reducing their time to market and increase the choice to target different risk profiles with individual investment strategies.

There is an increasing demand for AI and technology related themes in different Latin American markets, most notably Brazil and Mexico - Omar Tlili, BNP Paribas

This week also saw a focus on Brazil, where BNP Paribas unveiled its partnership with XP to offer structured notes on the BNP Paribas Cross Asset Trend and AI Index which is powered by QuantumStreet AI, a US fintech and partner of IBM.

“There is an increasing demand for AI and technology related themes in different Latin American markets, most notably Brazil and Mexico,” Omar Tlili, director, quantitative investment strategies at BNPP, told SRP.

BNP Paribas was not the only financial services provider that teamed up with XP as Peruvian Zest Capital is also seeking to expand its footprint across markets in in South America on the back of a strategic agreement with XP Wealth Services.

The collaboration with XP is aimed at expanding investors' access to international products and strengthening a new line of business targeted at multi-family offices (MFOs) and financial advisors.

"This partnership marks an important milestone, as it is the first time that the XP Wealth Services platform has closed a deal to drive growth in Latin America," said Arthur Silva, founder of Zest Capital.

It certainly was a week of collaborations with another one seen in Asia where RegTech and CapTech provider Lucht Probst Associates (LPA) entered into a strategic partnership with DB Power, with the aim to further expand its presence in the region. Under the terms of the agreement, LPA will be able to offer its existing customers in the European core markets DACH, Scandinavia, France, Italy and Iberia a more comprehensive offering.

Image: Andrii Zastrozhnov/Adobe Stock

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