SRPInsight - POSITIVE IMPACT - Structured Retail Products

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SRPInsight - POSITIVE IMPACT - Structured Retail Products
SRPInsight                    Issue 10 | November/December 2021                @SRP_Insider

                     POSITIVE
                      IMPACT

LATEST // MAREX & FIRST BITO-        SG // HNW DEMAND SOCIAL        ANALYSIS // THE EVERGRANDE
   LINKED AUTOCALL p22                       IMPACT p34                      STORY p38
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                                                                                                     CONTENTS

                                               Contents
Editorial:
Amelie Labbé, Pablo Conde,
Lavanya Nair, Summer Wang,
Marc Wolterink

Production:
Paul Pancham

Marketing:                                     News Europe                                                  4
Monique Kimona Bonnick

Sales:
Reihaneh Fakhari
                                               News Americas                                                10

If you are interested in having a              News Apac                                                    16
similar bespoke report produced
for your organisation, please
contact:                                       Latest: Marex                                                22
Reihaneh Fakhari
T: +44 (0)20 7779 8220                         Feature: Leonteq                                             24
M: +44 (0)79 8075 6761
E: 	Reihaneh@structuredretail
     products.com
                                               Feature: Morgan Stanley                                      26

REPRINT POLICY:                                Q&A: Spectrum Markets                                        28
SRP’s Reprint Policy: Articles published by
SRP can be sent to sources for reference
and for internal use only (including
intranet posting and internal distribution).
                                               Q&A: CACIB                                                   30
If an article is to be shared with a third
party or re-published on a public website
(i.e. a location on the World Wide Web
that is accessible by anyone with a web
                                               Q&A: Barclays                                                32
browser and access to the internet),
SRP offers reprints, PDFs of articles or
advertisements, and the licensing to           Q&A: SG Private Banking                                      34
republish any content published on the
SRP website. Prices vary depending
on size, quantity and any additional
requirements. To request authorisation         Expert View: US Market Reviews                               36
to republish any Q&A, profile or feature
published by SRP, please contact:
info@structuredretailproducts.com.
                                               Expert View: The Evergrande Story                            38

                                               Product wrap                                                 40

                                               People moves                                                 43

Front cover image: Casey Horner / Unsplash

                                                                         www.structuredretailproducts.com    3
SRPInsight - POSITIVE IMPACT - Structured Retail Products
NEWS | EUROPE

ESAs ask for ‘experiences,’ further Priips
changes needed
The European Supervisory Authorities (ESAs) have opened a call for evidence
regarding the Priips Regulation.

T
           he ESAs are requesting               regarding a certain issue or topic.            and digital transitions of the continent’s
           information from the industry                                                       economy. With its strategy for retail
           on a range of topics including       ‘This might include whether the views          investors, the European Commission
           the practical application of         are based on actual experiences, such          wants to offer consumers increased
           the existing key information         as selling, advising on, or buying Priips, a   investment opportunities and stronger
document (KID) such as its use by financial     survey of market participants, academic        investor protection on the capital markets.
advisors or the use of digital media,           research undertaken etc,’ states the
the scope of the packaged retail and            report. ‘Manufacturers of products, which      The input provided will feed into the ESAs’
insurance-based investment products             currently benefit from an exemption to         technical advice to the Commission on the
(Priips) Regulation and the degree of           produce a KID, such as fund managers,          KID for Priips review.
complexity and readability of the KID.          are not precluded from sharing evidence
                                                or experience under this call, but should      In response to a recent consultation by the
The call for evidence follows the request       clarify the context in which they would        UK FCA on post-Brexit Priips divergence,
for advice from the European Commission         provide comments.’                             the country’s association of advisers
of 27 July 2021 in preparation of legislative                                                  and investment managers is calling for a
proposals implementing aspects of               SCOPE                                          fundamental review of the Priips regime
the retail investment strategy, and             Some of the areas of focus in the review       rather than a ‘sticking plaster’ approach.
more specifically regarding a review of         include the complexity and readability
Regulation (EU) 1286/2014 on packaged           of the KID, performance scenarios and          Earlier, in September, the European
retail and insurance-based investment           past performance, Priips offering a            Structured Investment Products
products (Priips).                              range of options for investment (multi-        Association (Eusipa) with other major
                                                option products, or MOPs) as well as           financial sector associations requested
In the original mandate, the Commission         the alignment between the information          a sufficient timeline to implement the
had requested the ESAs a general survey         on costs in the Priips KID and other           Regulatory Technical Standards (RTS) on
on the use of the KID; a general survey on      disclosures requirements in Mifid and IDD.     the EU Priips Regulation endorsed by the
the operation of the comprehension alert                                                       EC.
in the KID; and a survey of the practical       The consultation is closely connected to
application of the rules laid down in the       the Commission’s Capital Markets Union         The deadline for the ESAs to provide
Priips Regulation.                              (CMU) Action Plan and its future strategy      their advice is 30 April 2022. The call for
                                                for retail investments in Europe.              evidence is open until 16 December 2021.
With the new consultation, the ESAs are
collecting further industry feedback ‘on a      The CMU Action Plan aims to boost              The ESAs also plan to hold a stakeholder
range of other issues’ not identified in the    market-based financing in the European         event in Q1 2022 before finalising the
mandate provided by the Commission.             Union to help chart a return to long-          advice to present the findings of the
                                                term growth and to finance the green           consultation.
The Commission is asking for an
assessment of the effectiveness of the
administrative sanctions, measures,
and other enforcement actions for
infringements of the Priips Regulation; an
evaluation of the extent to which the Priips
Regulation is adapted to digital media,
                                                Some of the areas of focus in the
and an examination of several questions
concerning the scope of the Priips              review include the complexity
Regulation.
                                                and readability of the KID
Some of the questions of the consultation
ask respondents to provide ‘experiences’

4        www.structuredretailproducts.com
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                                                                                                                  NEWS | EUROPE

VLK, ING debut Refinitiv ESG index
The two Dutch banks have partnered for their first public offer since 2013.
                                              40 Index has been developed by ING           “There is an increasing demand for
                                              and tracks the performance of 40             this type of indices and therefore we
                                              companies from the Refinitiv Global          developed the Refinitiv ESG Global
                                              Developed Market Index that actively         Dividend 40 Index to increase the
                                              invest in and promote environmental,         offer of ESG benchmarks for structured
                                              social and governance (ESG) values           products. The index combines the
                                              and principles in the running of their       use of ESG screens with a selection
                                              businesses. The index is a weighted          of global shares with an attractive
                                              index with a constituent’s cap of five       dividend yield and diversification
                                              percent.                                     between sectors and regions,” said
                                                                                           Van Baren.
                                              “The starting point in selecting the
                                              underlying index for this product            Sustainability is one of the strategic
                                              launch was the desire from our private       pillars of VLK and the bank takes ESG
                                              bank to offer a product with 100%            factors into consideration in all the
                                              minimum redemption and global equity         investment propositions it offers to
                                              exposure.                                    clients. However, within structured
                                                                                           products, it is sometimes quite
                                              “Furthermore, our internal investment        challenging to find a suitable ESG
                                              view is that value shares will               underlying, said Pronk.
                                              outperform growth shares in the
                                              coming period because of most Covid          “The Refinitiv index proposed to us
                                              19 restrictions have been lifted and the     by ING did fit into our internal ESG
                                              expected economic recovery,” said            guidelines and because it combines
Van Lanschot Kempen (VLK) is                  Pronk, adding that an index that selects     ESG factors with exposure to global
distributing the Index Guarantee Note         high dividend paying shares will             high dividend paying shares it was a
ESG Global Dividend 21-28 in the              normally have a significant exposure to      perfect fit for this product launch.”
Netherlands.                                  these value shares.
                                                                                           This is the first time in the eight years
The seven-year, capital-protected             The index is the second ING proprietary      that VLK and ING have collaborated
note is issued on the paper of ING.           index that meets several sustainable         for a public offer in the Netherlands.
It is denominated in US dollars and           criteria. Over the years, the bank has       The last time the two banks worked
participates 100% in the rise of the          seen a strong inflow in structured           together was in 2013 when ING Index
Refinitiv ESG Global Select Dividend 40       products linked to its Solactive             Guarantee Note Eurozone May 13-20
Index, which makes its debut on the SRP       Sustainable Europe Low Risk Equity           was launched, although there have
database.                                     Index, according to Sander van Baren,        been a number of ING products that
                                              director, investment products retail         were offered to VLK clients on a private
The main reason for the launch of the         solutions, ING Bank.                         placement basis since.
product is to offer a rollover opportunity
for the VL USD Capped Index Garantie
Note Wereld 19-26, which is currently
trading well above the minimum
redemption (118.45% on 18 October
2021), according to Marcel Pronk
(pictured), director securities marketing
structured products, at Kempen & Co.
                                              Within structured products, it is
“Investors in this product who would          sometimes quite challenging to
like to secure their profit can sell it and
rollover in the new note,” said Pronk.        find a suitable ESG underlying
The Refinitiv ESG Global Select Dividend

                                                                                         www.structuredretailproducts.com           5
SRPInsight - POSITIVE IMPACT - Structured Retail Products
NEWS | EUROPE

Causeway, Barclays track Solactive climate
change play in the UK
The UK brokerage has deployed a Barclays proprietary index for its first deposit plan.
                                              Change deposit is timely ahead of             either as a single index, or as part of a
                                              November’s COP26 meeting in Glasgow,          basket in combination with S&P 500 or
                                              where world leaders will discuss their        Eurostoxx 50. They are wrapped as notes
                                              climate commitments; and also Treasury’s      and issued via Goldman Sachs (seven
                                              announcement on the new sustainability        products), Morgan Stanley (six), Société
                                              disclosure requirements for some large        Générale (five) and BNP Paribas (two).
                                              UK businesses, which will mean they will
                                              be obliged to disclose their firms impact     “In terms of strategy, we feel the
                                              on the environment.                           Climate Change Deposit Plan perfectly
                                                                                            complements our existing offerings,” said
                                              “With this in mind, we feel that ESG          Moody. “We will continue to develop
                                              structures will become even more popular      innovative structured investment
                                              during 2022, as investors seek climate        solutions to our clients which offer value
                                              change investments which offer both           to investors, be that in way of returns or
Causeway Securities has launched the          positive returns and a positive impact on     environmental impact.”
Climate Change Deposit Plan November          society and the environment,” said Moody.
2021 in the UK.                                                                             Although the UK market is dominated
                                              The underlying index is exclusively           by the FTSE 100 index, there has been
The six-year capital-protected product        licensed to Barclays and has been live        an increase in the use of synthetic fixed
offers 200% participation in the Solactive    since 16 December 2020. It is derived from    dividend indices as issuers look to reduce
Climate Change Europe BTI PR Index,           the Solactive right. Climate AVG Target       the costs and risks associated with
capped at 36%. It is the company’s first      Europe Index, and tracks companies which      dividends.
deposit plan, and its first collaboration     are aligned with a 2°C global warming
with Barclays Bank, which acts as the         scenario through to 2050 and maximises        The FTSE 100 Fixed Dividend Yield
deposit taker.                                investor exposure to companies with           Equal Weight Custom Index for example
                                              emission reduction targets.                   has been used as the underlying for 42
“We have been planning to launch a                                                          products in 2021 to date (FY2020: 37
UK deposit product for some time and          The index is also designed to enhance         products), while the FTSE Custom 100
feedback from our extensive market            return profiles by applying additional        Synthetic 3.5% Fixed Dividend Index was
research has indicated that UK investors      smart beta filters, only including stocks     seen in 35 products (FY2020: seven
are keener now more than ever to make         with both lower volatility and a consistent   products).
more environmentally led decisions in         track record of growing dividends.
terms of their portfolio composition,”                                                      “We would expect this trend to continue
Chris Moody (pictured), head of UK sales,     Causeway has distributed 20 structured        and feel there is an ever-increasing
Causeway Securities, told SRP.                plans in the UK, according to SRP data.       appetite from UK investors to look beyond
                                              The products are linked to the FTSE 100,      the FTSE 100,” said Moody.
“Research suggests that investors are no
longer solely interested in the financial
performance of a company, but also the
impact of their investment.”

According to Moody, the deposit format
of this product allows for greater investor
                                              We feel that ESG structures will
comfort, given that each client’s deposit
is protected up to a total of £85,000 by      become even more popular
the Financial Services Compensation
Scheme (FSCS).                                during 2022
The launch of Causeway’s first Climate

6        www.structuredretailproducts.com
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                                                                                                                      NEWS | EUROPE

Capital-protected funds: the odd one out as
sector prospers
Net assets of publicly offered funds in Belgium reached a record amount
of almost €260 billion in the second quarter of 2021, despite the negative
performance of funds with capital protection.
                                              assets for some time now, according to          subscriptions and 40% to price increases
                                              Marc Van de Gucht (pictured), director          of the underlying assets.
                                              general, Beama.
                                                                                              At the end of June, the total net assets
                                              “The main reason is that the net                of publicly distributed funds in Belgium
                                              repayments of capital-protected funds           amounted to a record €259.6 billion
                                              that reach their maturity are no longer         (end-March 2021: €246.6m). Net assets of
                                              sufficiently compensated by newly               equity funds increased by 8.4% to €87.5
                                              launched capital-protected funds,” said         billion during the quarter while within the
                                              Van de Gucht.                                   category of mixed funds, pension savings
                                                                                              funds increased by €900m to €24.2
                                              “Due to the low interest rates, it is           billion in the period April – June 2021.
                                              no longer attractive to develop such
                                              products because the fixed-income part          “Funds are a suitable long-term product
                                              of the portfolio that provides the capital      to deal with inflation,” said Van de Gucht.
                                              protection takes too large a bite out of
                                              the entire portfolio – in other words,          “See for example the long-term returns
                                              the scope for derivative products has           of pension savings funds that can
                                              become too small.”                              reassure pension savers that they can
                                                                                              maintain their future purchasing power.”
                                              KBC’s Perspective Global 95 USD 2, with
                                              sales of €42m during the subscription           Since the end of 2019 (pre-Covid-19)
Capital-protected structured funds in         period, is the best-selling structured fund     and mid-2021, the Belgian fund market
Belgium had net assets of €2.9 billion at     in Belgium in 2021, while of the maturing       increased by €40 billion, according to
the end of June 2021, down by 8.7% from       funds, E-commerce 90 USD 3, which               Van de Gucht.
the previous quarter, according to figures    sold €13.54m at inception, registered the
released by the Belgian Asset Managers        best performance with a capital return of       “Covid-19 had a strong impact during
Association (Beama) on 15 October.            160% after 5.75-years (8.55% pa).               March/April 2020, but by the end of
                                                                                              2020 all price losses caused by the
Since 2011, when assets stood at €19.2        The Belgian fund sector as a whole              pandemic had been recovered. In
billion, capital-protected funds have         experienced a 5.3% increase quarter-on-         other words, the Belgian fund sector
shown a downwards spiral, a trend             quarter during Q2 2021. Approximately           has assimilated the Covid-19 pandemic
reflected in issuance and sales figures       60% of the rise can be attributed to net        relatively quickly,” Van de Gucht said.
for structured funds recorded in the SRP
Belgium database.

Back then, 138 structured funds, from
seven different providers (Axa, Bpost,
Centea, Dexia, Fortis, ING and KBC),
collected a combined volume of €2.6
billion. By contrast, in 2021 to date there
have been just eight new funds worth
                                              Funds are a suitable long-term
€215m, with KBC the sole provider.
                                              product to deal with inflation
Capital-protected funds have been
phasing out their commercialised

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SRPInsight - POSITIVE IMPACT - Structured Retail Products
NEWS | EUROPE

Vontobel delivers ESG-themes on correlated
stocks in Italy
The structured products specialist is targeting Italian investors with a new range
of certificates linked to ESG-themed sector baskets.
                                               Although the underlying baskets are           organisations such as the United
                                               linked to eight different sectors, the        Nations Global Compact for corporate
                                               structure of the certificates is the same.    sustainability.
                                               They are issued on the same date
                                               with the same maturity and the same           “We are committed to economic,
                                               characteristics. The certificates have        environmental and social sustainability.
                                               a step-down autocall trigger, deep
                                               barriers of up to 50%, and memory             “If the product issuer is sustainable and
                                               coupons of between 9.84% and 17.76%           the underlying is considered sustainable
                                               pa. The latter is offered via Memory          by our ESG Competence Center,
                                               Cash Collect (Express) Certificate on         then the final product is considered a
                                               a basket comprising four shares from          sustainable product according to our ‘Act
                                               the renewable energy sector (Ballard          ESG’ methodology,” said Fiaschini.
                                               Power Systems, Nordex, Siemens
                                               Energy, and Vestas).                          The story of ‘Act ESG’ goes back to
                                                                                             2019 when Vontobel conducted a
Vontobel has launched eight new                                                              survey across 4,600 investors from 14
Memory Cash Collect (Express)                                                                different markets. Sixty-four percent
Certificates with the ‘Act ESG’ logo                                                         of respondents said they did not
in Italy. The certificates are linked to                                                     receive enough information about ESG
thematic baskets comprised of stocks                                                         approaches. Amongst them only 17% had
that are correlated – ranging from the         All products are                              been offered concrete opportunities to
gaming sector to the construction sector.                                                    save and invest in a sustainable manner.
                                               linked to worst-
“We wanted to offer investors the                                                            “It became pretty clear that there was
option to invest in an ESG-related             of sector baskets                             a lack of support and this was holding
theme via structured products,” said                                                         investors back, but at the same time
Jacopo Fiaschini (pictured), head of           of three or four                              we saw an interest and a trend towards
flow products distribution Italy, Vontobel                                                   sustainable investments,” said Fiaschini.
Digital Investing.                             stocks that are
                                                                                             Vontobel then started taking the initiative
Vontobel created sector baskets for the        correlated                                    to speak about the challenges ahead but
certificates that are entirely composed                                                      also to show the historic transformation
of stocks of companies considered to                                                         process that is creating unique
be sustainable by its ESG Competence                                                         opportunities for investors too.
Center in Switzerland.
                                               “All products are linked to worst-of sector   “Given this ESG knowledge gap, we
“The goal of the ESG Competence                baskets of three or four stocks that          wanted, and we still want to explain what
Center’s sustainability analysis is to         are correlated. This is what we want to       investors need to know to play an active
identify companies that beat their             deliver to our Italian investors because      role in sustainable transformation for our
competitors in an active sustainability        low correlation is a risk component,” said    economy,” said Fiaschini.
approach and offer the best sustainability     Fiaschini.
performance in their industry.                                                               “The ‘Act ESG’ logo signals where the
                                               The aim of the certificates is to promote     sustainable investing discussion is.
“This is the so-called ‘best in class’         Vontobel as an issuer of sustainable          You can see it on our website, in our
approach,” said Fiaschini - all certificates   solutions. The company has been               publications…it is a symbol that is meant
are marked with Vontobel’s ‘Act ESG’           involved in sustainability since the          to guide investors on our platforms to
logo “to make them easily recognisable”.       1990s and is a member of numerous             identify relevant content.”

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                                                                                                                       NEWS | EUROPE

BBVA QIS deploys cyber play                                                                       Morningstar
                                                                                                  introduces EU
BBVA has added the Solactive BBVA
Cybersecurity Index to its range of
                                               “Hyperconnectivity is an already visible
                                               future, but not without threats,” he said.
                                                                                                  climate indexes
quantitative investment strategies (QIS).      “Companies, governments and individuals
                                               are constantly exposed to cyber-attacks,
The new technology index is comprised          and the cost is growing steadily. The
of equity stocks of companies helping          Solactive BBVA Cybersecurity index
to create a trusted and safe cyberspace        strategy is based on the strong growth
companies in the frontline of digital          in the demand for cybersecurity services
security; data protection and cyber-risk       expected in the near future, due to the
insurance, as well as those creating           increasing frequency and sophistication of
secure online transaction platforms and        cyberattacks, regulatory pressure across the
heeding the call for cyber defense, thanks     board and the IOT expansion, which calls
to the low-latency network infrastructure      for another added level of cybersecurity.”
and components.
                                               The top components of the index include
The Solactive BBVA Cybersecurity               Oracle (5.54%), Microsoft (5.11%), Adyen
index is part of BBVA QIS’ strategy            (4.39%), Paypal (4.22%), Lockheed Martin           Morningstar Indexes has rolled out
to offer its clients exposure to one           (4.18%), Chubb (3.63%), Fiserv (3.57%),            the Morningstar EU Climate Indexes
of the most relevant megatrends -              Analog Devices (3.53%), Fidelity National          to help investors progress toward
technological disruption - and is a            Information Services (3.44%), and Palo             meeting EU Climate Transition
fully complementary strategy to the            Alto Networks (3.43%).                             Benchmarks (CTB) and Paris-Aligned
recently launched Solactive BBVA Next                                                             Benchmarks (PAB) requirements.
Generation Networks index, according           The new underlying is available now for
to Javier Enrile Mora-Figueroa, head of        direct investment and distribution through         This new climate index series from
QIS sales at BBVA.                             structured products.                               Morningstar allows investors to
                                                                                                  target companies within a broad
                                                                                                  market index that are on track for
                                                                                                  decarbonisation in line with Paris
                                                                                                  accord targets, while minimising

Unicredit joins Spire multi-
                                                                                                  tracking error against the parent
                                                                                                  index. The series combines
                                                                                                  Morningstar core benchmarks with

dealer platform                                                                                   carbon emissions data and Carbon
                                                                                                  Risk Ratings from Sustainalytics, a
                                                                                                  Morningstar company and leading
The Spire programme allows repackaged          Unicredit is seeking to adapt and                  global provider of ESG research,
notes arranged by the platform’s dealer-       upgrade its product platform ‘in line with         ratings and data.
members to be issued in standardised           the evolving needs and preferences
formats. Investors can gain exposure to a      of institutional investors, particularly           This new climate index suite from
variety of underlying collateral assets and    those in the European pension and                  Morningstar adds to its growing
customisable payoffs.                          insurance sector’, according to Guido              investment in market indexes and
                                               Filippa, global head of institutional              data to support global investors.
The platform has transacted in excess          distribution and private investor products
                                                                                                  In September, Morningstar
of €38 billion-equivalent of repackaged        at Unicredit.
                                                                                                  announced the acquisition
securities issued to major UK, European
                                                                                                  of Moorgate Benchmarks, a
and Asian institutional investors to date.     The Spire platform was established by
                                                                                                  Europe-based global provider
                                               BNP Paribas, Citigroup, Credit Suisse
‘Complementary to our existing suite of        and J.P. Morgan in May 2017. Barclays,             of index design, calculation, and
repackaging solutions, we see the Spire        Goldman Sachs, Crédit Agricole CIB and             administration, appointing Moorgate
platform providing additional choice and       Morgan Stanley joined in 2018. Natixis,            Benchmarks CEO Tobias Sproehnle
benefits that address some of the needs        BofA Securities Europe SA, Deutsche                as head of Morningstar Indexes in
of our institutional client franchise,’ said   Bank, HSBC, Société Générale and                   Europe reporting to Ron Bundy,
Amit Sharma, Unicredit’s global head of        NatWest Markets joined in 2019. Nomura             president of Morningstar Indexes.
markets structuring & solutions.               joined in 2021.

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SRPInsight - POSITIVE IMPACT - Structured Retail Products
NEWS: AMERICAS

US insurers ride the indexed annuity wave as
FIA demand intensifies
The Secure Retirement Institute (SRI) has recorded a 14% increase in the sales of
fixed indexed annuities during the first nine months of 2021 with figures totalling
US$47.1 billion, compared with the same period of 2020.
                                                date funds for the defined contribution by      illustration, but we are willing to potentially
                                                embedding a fixed index annuity structure,      partner with index sponsors that develop
                                                according to Tom Haines (pictured), head of     more sophisticated and innovative indices
                                                index solutions at Annexus.                     if they are sincerely seeking to implement
                                                                                                the latest academic advancements using
                                                “We also launched a Rila product last           robust methods in order to improve the
                                                year called the Nationwide Defined              likelihood that the index can perform on a
                                                Protection annuity, which is one of the         go-forward basis,” he said.
                                                first to use a floored structure in the Rila
                                                market to provide smart beta exposure.          In terms of thematic plays, it is questionable
                                                What we think is that the offering provides     if this area is going to be as concentrated
                                                opportunities to define the level of risk,      and sector based as apart from ESG, it
                                                which is the floor, while providing upside to   is rare that other thematics that would
                                                a well diverse group of smart beta indices,”    resonate with the US retirement market,

T
                                                said Haines.                                    according to Haines.

         he renewed interest in FIAs            The shift towards index-based solutions         “It will be interesting to see this play
         comes as the interest rate             is driven by the fact that these products       out. I do think people will continue to
         environment slowly recovers            provide better hedging efficiency for its       use strategies that look at new methods
         and lower volatility is re-            insurance company partners that results in      and computing power to drive better
         directing investor attention           better outcomes for clients.                    outcomes,” he said, stressing the
towards such products.                                                                          importance of bringing lifetime income
                                                                                                solutions within the defined contribution
As the attention towards indexed annuities                                                      market in the 401k market and that such
heats up, several market players are toying                                                     concepts that utilize lifetime income
with custom and proprietary strategies to                                                       solutions raises the need for having an
churn out newer alternatives to the market.     Some index                                      indexed annuity within a portfolio.

Independent FIA designer Annexus
recently introduced an FIA in partnership       sponsors try to                                 “Considering where markets are right
                                                                                                now, the S&P 500 is back at all-time highs,
with North American Life which tracks a                                                         interest rates are below 2% while the
Goldman Sachs managed prop index.               over engineer                                   expected returns for major US-based asset
                                                                                                classes is dim. So, I think it really reiterated
To respond to the increasing demand, the
firm has placed a higher focus on index         the design                                      that clients need to have alternatives for
                                                                                                their portfolio in 2022.”
driven insurance products which can range
from indexed annuities as well as the                                                           According to SRI, FIA sales grew by 30%
registered market with the broker-dealers                                                       in the second quarter of 2021 to US$17.1
in conjunction with its partners.               However, as the scope of how                    billion, marking the highest quarterly sales
                                                sophisticated these products can become         in two years.
The indexed universal life market is also       is further explored, the underying index
a priority for Annexus as well taking well      itself may fall victim to unnecessary and       SRI also noted that registered index-linked
developed index strategies with upside          decorative measures, according to Haines.       annuity (Rila) sales were US$9.2 billion,
participation in a life marketplace. The firm                                                   up 47% from third quarter of 2020. For
introduced a retirement solutions division      “Some index sponsors try to over engineer       the first three quarters of 2021, Rila sales
to employ a lifetime income builder, which      the design to make the index look               were US$28.4 billion, representing an 81%
aims to drive better outcomes in target         sophisticated in order to achieve a better      increase from the prior year.

10        www.structuredretailproducts.com
SRPInsight
                                                                                                                  NEWS: AMERICAS

SEC slaps enforcement action on oil ETP for
neglicence despite no investor loss
The US regulator has charged the United States Oil (USO) Fund, an exchange-
traded product (ETP), as well as its general partner United States Commodity
Funds (USCF) for misleading statements about limitations imposed by its sole
futures commission merchant and broker.
                                             created shares in oil future contracts.       counsel at law firm Mayer Brown, this
                                             This brought about the risk that USO          enforcement by the SEC is different from
                                             would not be able to meet its stated          other cases involving ETPs because
                                             investment goal and the order states          no losses by retail investors have been
                                             that the fund did not fully disclose the      mentioned.
                                             character and nature of the limitation
                                             until one month after the limit was first     “The fund was out of shares which led to
                                             imposed.                                      USO filing a new registration statement.
                                                                                           So, there were no offers of sales during
                                             On 20 April 2020, USO filed a Form            the whole time this was going on and
                                             8-K announcing that it anticipated            investors were just holding for the time
                                             exhausting its existing inventory of          being,” he said.
                                             available shares, and separately filed a
                                             registration statement on Form S-3 with       In terms of securities laws, liability comes
                                             the SEC. This registration statement          in connection with the offer and sale of
                                             would then go on to be amended                a security, but there were no securities
                                             several times and finally declared            to sell until the corrected registration
                                             effective in June of 2020.                    statement went effective, said Bergman.

                                             The SEC’s order also found that               “That’s why I believe the SEC had
                                             both USO and USCF have violated a             to pinpoint section 17, which was a
                                             negligence-based anti-fraud provision         negligence matter. They could have
                                             (Section 17) of the federal securities        gone after them under other avenues
                                             code. Neither party admitted to nor           if there had been damages. This is a
Both the USO and USCF have agreed to         denied the allegations made by the            cautionary tale to others as when you
pay US$2.5m in penalties to settle cases     watchdog and agreed to cease-and-             see the SEC going after somebody
by the SEC and Commodity Futures             desist orders and to pay the penalty,         where there were no offers and sales
Trading Commission (CFTC). According         which will be offset by up to US$1.25m        or no allegations of damage or investor
to the SEC’s order, USO’s investment         paid in CFTC’s parallel proceeding.           harm at all, that signals to them that they
objective was to track any changes in        According to Brad Berman (pictured),          must take extra precautions.”
the spot price of oil, as measured by the
changes in prices of certain oil futures
contracts.

However, oil market spiralled into turmoil
during the market crash of April 2020
and the near-month futures contract
closed at a negative price. The fund’s
                                             The fund was out of shares
sole futures broker then told USO it
would not execute any new oil futures        which led to USO filing a new
positions for it.

As a result of this limitation, USO was
                                             registration statement
restricted from investing the proceeds
generated by the future sales of newly

                                                                                         www.structuredretailproducts.com           11
NEWS: AMERICAS

US insurance regulator concerned with
Rila growth
The Federal Insurance Office (FIO), a division of the US Treasury Department, is now
eyeing the swift traction of Rilas in the market after record sales over the past year
have prompted much discussion over their trajectory.
                                               and trading expertise in options                  by 28% in the second quarter to total
                                               strategies,” said Toland.                         US$15.4 billion. Year-to- date, FIA sales
                                                                                                 stand at US$28.9 billion, reflecting a slight
                                               If the options strategy itself were to            increase of two percent from the same
                                               fail, the insurer is on the hook for the          period of 2020.
                                               promise to the policyholder, regardless
                                               which structure it falls within, which            Fixed annuity sales jumped by 27% to
                                               distinguishes these products from                 US$35.1 billion in the quarter. Year-to-date,
                                               structured notes.                                 total fixed annuity sales are at US$66.2
                                                                                                 billion, 15% above the first half of 2020.
                                               “Rilas are going strong and the biggest
                                               risks for these products come from                The growth in the Rila market over the
                                               either a dramatic change in economic              past several years has been driven
                                               conditions that would make popular                by a combination of two factors:
                                               Rila structures less attractive or an             current economic conditions - strong
                                               unexpected regulatory change.”                    equity market and low interest rates,
                                                                                                 and expanding market participants,
                                               In terms of potential interventions that          according to Todd Giesing, SRI assistant
                                               could be made by the FIO, matters are still       vice president and head of annuity
                                               unclear as the FIO has not taken any action       research.
In an annual report issued by the FIO in       previously on concerns it has voiced.
October 2021, the agency has expressed                                                           “Our research shows consumers’ desire
closely monitoring registered index-           According to the Secure Retirement                for protected investment growth remains
linked annuities (Rilas) detailing that        Institute (SRI), Rila sales in the US increased   strong and Rilas are providing the most
while they represent a small portion of        to a record level of US$10.1 billion in the       attractive option in a historically low
variable annuity sales, life insurers have     second quarter of 2021, a 122% jump from          interest rate environment,” he said.
‘significantly increased Rila sales over the   the same period a year prior.                     “Over the past five years, Rila sales have
past six quarters, particularly as compared                                                      quadrupled from $6.3 billion in 2016 to
to other variable annuity products’.           During the first half of 2021, Rila sales         $24.1 billion. Several carriers, recognizing
                                               stood at US$19.3 billion, 105% higher             this market opportunity, have entered the
‘Investors driving Rila sales growth appear    than the prior year.                              market. In 2016, there were just a handful
to be interested in capturing recent                                                             of companies in the Rila market. Today,
gains in equity markets and acquiring          Fixed indexed annuity sales also grew             there are 15 carriers offering Rilas.”
protection-focused products generally.
Rila sales appear likely to continue
to grow in light of ongoing life sector
restructuring. FIO will continue to monitor
Rila-related issues,’ said the report.

According to Tamiko Toland (pictured),
annuities director at Cannex, it is unclear
                                               Investors driving Rila sales growth
how intimately the FIO understands how
insurers manage the risk on fixed indexed
                                               appear to be interested in capturing
annuities (FIAs) or Rilas.
                                               recent gains in equity markets
“One thing they share in common is the
sophisticated use of financial engineering

12       www.structuredretailproducts.com
SRPInsight
                                                                                                                   NEWS: AMERICAS

BNP Paribas to fund Latam                                                                      Cboe and
non-profit via structured note                                                                 MSCI expand
                                                                                               partnership
sale proceeds                                                                                  Cboe Global Markets and MSCI
                                                                                               have signed a licensing agreement
                                                                                               that extends and broadens their
                                              organisation developing programmes               strategic relationship.
                                              to alleviate poverty.
                                                                                               The agreement builds on the
                                              The donations raised from the                    collaboration between the two
                                              campaign will specifically benefit one           companies and extends Cboe’s
                                              of the organisation’s projects at La             rights to offer options trading on
                                              Comunidad de Niños Sagrada Familia,              MSCI global indices through 2031.
                                              a large school, orphanage, and medical           The agreement also expands Cboe’s
                                              clinic in Peru, housing over 1,000               and MSCI’s relationship, creating
                                              children.                                        opportunities for the companies
                                                                                               to work together to pursue other
                                              BNP Paribas will donate to The                   strategic initiatives across capital
                                              Forgotten International a portion of the         markets, and combine their
                                              bank’s proceeds from structured notes            complementary strengths and visions
BNP Paribas USA has launched a                sales.                                           to help drive future innovation for
philanthropic campaign to fund an                                                              market participants globally.
independent non-profit organisation           The donation will fund the cost of a
with donations from structured notes          child’s daily meals for children housed          The two companies have
purchases.                                    at the orphanage for every $10,000 of            collaborated to offer options trading
                                              structured products notes purchased              on MSCI global indices for many
The French bank’s new structured              by the bank’s clients, said Nathalie             years. Under the agreement, initially
notes campaign will help The Forgotten        Texier-Guillot (pictured), BNP Paribas           signed in 2014, Cboe will continue
International, an independent non-profit      head of equity sales US.                         to have the rights in the US to
                                                                                               develop and list index options on
                                                                                               the following six MSCI indices: the
                                                                                               MSCI EAFE Index (MXEA), MSCI

Halo raises over US$100m in                                                                    Emerging Markets Index (MXEF),
                                                                                               MSCI All Country World Index, MSCI

series C funding
                                                                                               USA Index, MSCI World Index and
                                                                                               the MSCI ACWI ex-USA Index.
                                                                                               In addition, the agreement enables
Multi-issuer platforms continue to gain       investing’, according to Biju Kulathakal,        Cboe to offer index options,
traction across markets as well as support    co-founder & CEO of Halo.                        subject to regulatory approval, on
from independent investors as suggested                                                        four additional MSCI ESG indices:
by the latest funding rounds.                 Halo has expanded its offering over the          the MSCI Emerging Markets ESG
                                              past year with the addition of buffered          Leaders Index, MSCI EAFE ESG
The US structured notes platform has          ETFs and indexed annuities to its platform       Leaders Index, MSCI USA ESG
announced a collective investment             – the US platform has also onboarded             Leaders Index and the MSCI World
backed by Owl Capital which includes          more than 40 global banks and carriers.          ESG Leaders Index.
the Mubadala-backed US$1 billion fund
managed by Abu Dhabi Catalyst Partners,       Abu Dhabi Catalyst Partners was                  Cboe is the only US exchange that
along with existing investors Allianz Life    established in 2019 as a joint venture           offers options trading on MSCI
Ventures and William Blair.              between Mubadala Investment Company              indices. Cboe offers a series of
                                              and Falcon Edge Capital, to establish a          BuyWrite and PutWrite strategy
The capital will be deployed ‘to invest       strategic presence at Abu Dhabi                  benchmark indices based on
in new markets, widen its distribution                                                         the MSCI EAFE Index and MSCI
channels, and expand into new asset           Global Market (ADGM). Halo aims to open          Emerging Markets Index.
classes while further disrupting protective   an office at ADGM.

                                                                                           www.structuredretailproducts.com            13
NEWS: AMERICAS

NBC bolsters dividend investing as capital at
risk displaces protection
The Canadian bank is expanding the pool of underlyings offered as its issuance of
structured products returns to pre-pandemic levels.
                                            trending upwards, so we have witnessed      “There’s a strong market sentiment
                                            more autocallable notes being called        that dividends from banks are going to
                                            than in previous years.”                    increase and investing in an AR index
                                                                                        provides investors with exposure to
                                            More people have begun to see that          the dividend,” said Marquis. “I think it’s
                                            structured products offer a very powerful   been quite popular, but the transition to
                                            way of generating alternative income        AR has been executed very carefully.
                                            with some downside protection.              At NBC, we started with only one niche
                                                                                        sectorial index. The idea was to attract
                                            “The structured products team at NBC        the attention to the novelty and give us
                                            has been quite active and achieved a        time to properly train our clients.”
                                            record number of notes and notional
                                            value,” said Marquis. “A main priority      During the third quarter, NBC issued a
                                            of our clients is income generation         large volume of structured products to
                                            without taking too much risk, which is      Solactive underlyings worth a collective
                                            where structured notes find their niche     US$243m accounting for almost 160
                                            in answering those needs. We offer          products. Most of the products are linked
                                            multiple underlyings to cater to the        to the banking sector with the Solactive
                                            diverse needs of our clients.”              Canada Bank 30 AR index and Solactive
                                                                                        United States Big Banks AR index
SRP caught up with Vincent Marquis          The significant uptick in structured        dominating sales.
(pictured), managing director at National   products tied to Solactive has not gone
Bank of Canada (NBC) to discuss the         unnoticed. The German index provider        To support the shift, the bank has
bank’s structured product activity this     offers broad market indices, but their      produced many training documents, put
year amid a rapidly changing landscape,     sectoral indices have been more             on webinars, and organised one-on-one
which is garnering international            popular.                                    discussions with its clients when they
attention in the form of German index                                                   began showing interest upon the launch
provider Solactive.                         Dividends have been more stable in          of these products.
                                            Canada historically, and sectors such
Marquis speaks about the popularity of      as banking have been one of the most        “We then gradually rolled out other AR
the dividend banking sector, the bank’s     popular adjusted return indices used in     indices linked to sectors that are even
differentiating strategy in the Canadian    the Canadian market.                        more popular,” said Marquis.
structured products market, as well
as the growing trend of non-principal
protected note issuance which is now
displacing guaranteed investment
certificate (GIC) activity.

As reported in early September,
structured products issuance at NBC has
been strong this year.
                                            A main priority of our clients
“While the very early stage of the          is income generation without
pandemic was challenging in 2020, it
has since been a very good period for
structured notes, especially income
                                            taking too much risk
notes and auto callable coupon notes,”
said Marquis. “We have seen the market

14       www.structuredretailproducts.com
SRPInsight
                                                                                                                    NEWS: AMERICAS

Virtu’s RFQ-hub launches                                                                        SIMON adds
electronic workflow for                                                                         partner in push
                                                                                                for marketplace
swaptions on CDS                                                                                expansion

                                             voice and manual dominated swaptions
                                             on CDS workflow, a project which
                                             required the onboarding of sell side
                                             counterparties and technology integration
                                             with Union’s system architecture.

                                             Using the RFQ-hub platform, swaptions
                                             traders can now leverage electronic
                                             request for quote workflows to put
                                             multiple liquidity providers in competition
                                             for efficient and transparent price
                                             discovery, automated audit trail and
                                             integration with risk management and
                                             other post-trade systems or processing.            The US multi-dealer platform has
Virtu Financial has launches an electronic
                                                                                                partnered with enterprise software
workflow tool for swaptions on CDS in        German-based Union Investment, a
                                                                                                solutions provider +Subscribe to
its RFQ-hub, the firm’s bilateral multi-     European asset manager with €425
                                                                                                launch an alternative investment
asset and multi-dealer request for quote     billion AUM, negotiated the first-fully
                                                                                                fund marketplace, which would
platform.                                    electronic swaptions on CDS RFQ
                                             via Virtu’s RFQ-hub in H1 2021, which              deliver a full suite of investment
Union’s and Virtu’s RFQ-hub team             subsequently resulted in an OTC trade              offerings from established asset
collaborated to automate the traditional     executed in that instrument.                       managers.
                                                                                                The marketplace will be powered by
                                                                                                +Subscribe’s electronic subscription
                                                                                                document technology and strives to

Goldman offers SPAC-linked                                                                      allow financial advisors to centralise
                                                                                                their activity across direct fund and

structured notes
                                                                                                feeder fund investments.
                                                                                                The fund marketplace aims
                                                                                                to equip clients with product
                                                                                                analytics, education, and lifecycle
Goldman Sachs Group has sold ‘a few          It is understood Goldman does not                  management for both registered
structured notes’ to clients seeking         charge a management fee for the                    and private funds. It will also be
to gain geared exposure to special           notes but offers investors financing to            available to more than 100,000
purpose acquisition companies (SPACs),       participate in the product and keeps               financial professionals from 50
to capitalise on increasing activity on      some of the returns on the SPAC stocks,            wealth management firms that
the market trend, SRP has learnt.            depending on how well they perform.                already have access to the Simon
                                             The new SPAC notes are being offered               platform.
The two-year SPAC-linked structured          by a desk in the sales and trading arm of
notes offer a payout referenced to           Goldman Sachs’ global markets division,            +Subscribe’s technology is
a basket of discounted SPACs and             rather than investment banking unit.               employed on a global scale by more
have been issued under the Rule 144A                                                            than 5,000 institutional investors,
which provide many structured note           The SPAC market continues to grow at               1,200 private funds, and 300 service
offerings with exemption from the            a speed – its size reached US$137.4                providers such as fund formation law
Financial Industry Regulatory Authority’s    billion at the end of October.                     firms, fund administrators, and asset
(Finra) Rule 5123, relating to private                                                          custodians.
placements and the requirement for           Goldman Sachs declined to comment
registered documentation.                    on the details of the product.

                                                                                           www.structuredretailproducts.com           15
NEWS | APAC

China Minsheng Bank cashes in on first QIS
ESG play via structured deposits
Market players in South Korea reflect on the stagnating issuance of equity-
linked securities (ELS) linked to ESG indices since their debut in April.

T
        he new custom index, the              ‘Minsheng Bank ESG Index Series’ to be       hedge providers for onshore and offshore
        Minsheng ESG Overseas                 marketed via structured deposits, which      assets, respectively. All three ESG indices
        Allocation Index (民生银行海外              shall be principal-protected at Chinese      are already live.
        ESG资产轮动指数), known as                  banks as required by regulations, to
        ‘MSMEGA’, is administered and         capture new opportunities.                   The MSMEGA and MSTRAESG are the first
hedged by Société Générale.                                                                ESG-themed global multi-asset strategy
                                              “ESG theme is relatively new investment      indices independently developed by a
Following the first strike on 10 September,   concepts for Chinese customers. As a         Chinese commercial bank, as other ESG
China Minsheng Bank (CMBC) has issued         result, we need to make more promotion       indices offered by Chinese banks refer to
12 tranches of the structured deposits with   efforts,” said the CMBC official.            only one market or a single asset class.
a bull call spread, five of which generated
a US$28.3m notional while the remaining       Next in bank’s pipeline was the              UNDERLYING INDEX
are CNY-denominated.                          Minsheng ESG Global Allocation Index (       The MSMEGA covers a total of six stock
                                              民生银行全球ESG资产轮动指数), known                      indices that meet ESG characteristics as
“ESG investment is gradually being            as MSTARESG. The index constituents          well as government bonds in Japan, US
favoured by mainstream overseas asset         include another new proprietary              and Europe including 10-year US treasury,
management institutions in the overseas       ESG index offering Chinese banking           long-term German treasury, 10-year Japan
market,” a CMBC spokesperson told SRP.        exposure, the 民生银行行业龙头ESG                    treasury, S&P 500 ESG Index, Eurostoxx
“In China, the ‘carbon neutrality’ policy     指数, in addition to the S&P 500 ESG           50 ESG Index and Nikkei 225 Index.
has received widespread attention since       Index and Eurostoxx 50 ESG Index seen
its introduction in 2020, but capital-        in MSMEGA.                                   The rules-based momentum trading
guaranteed investment products featuring                                                   strategy aims to generate excess returns
ESG theme are uncommon in the market.”        The structured deposits on the               by increasing the weight of the relatively
                                              MSTRAESG is also based on a bull call        better-performing constituent while
The commercial bank has developed the         spread with Citic Securities acting as       decreasing the other in the same country.

  Bank of China International goes live with Horizon with Structured
  Products RFQ module
  Electronic trading solutions and algorithmic technology, Horizon Software, has announced that the Bank of China International
  (BOCI) has chosen to go-live with its Structured Products RFQ Solution to maximise efficiency and deliver automated solutions
  to their clients.
  The aim of this project is to provide BOCI with a system to receive, handle and monitor structured product RFQ requests that
  come in from clients via both email and messaging systems. As a result, the bank will be able to monitor the different RFQs, to
  price those RFQ requests using BOCI’s Numerix pricer, generate responses, and remove manual actions from sales traders.
  By deploying the RFQ module, BOCI will be able to handle a larger volume of RFQs on vanilla ELN, accumulators, and range
  accrual notes and help to reduce the time required to respond to the individual needs of clients, according to Emmanuel Faure,
  head of sales Apac at Horizon Software.
  Headquartered in Hong Kong with more than 50 subsidiaries around the world, BOCI provides clients with a full range of
  investment banking products and services in both mainland China and overseas capital markets, including share issuance,
  merger and acquisition, bond issuance, fixed income, private banking, private equity, global commodities, asset management,
  equity derivatives, and leveraged and structured financing.

16       www.structuredretailproducts.com
SRPInsight
                                                                                                                    NEWS | APAC

Hang Seng Bank debuts customised ELI with
US equity underlyings
In a first for the Hong Kong market, Hang Seng Bank has introduced equity-
linked investments (ELI) linked to US stocks for retail investors with a minimum
ticket of HK$100,000 (US$12,861).
                                             to expand our range of wealth                 awards at the SRP Apac Awards 2021
                                             management product offerings and              on the back of last year’s activities.
                                             further strengthen our market analysis
                                             capabilities.                                 The 10 highest-selling ELIs last week
                                                                                           were linked to the performance of
                                             ‘The launch of new subscription service       single stocks including Meituan,
                                             will expand the range of choices              Geely, Alibaba and Xiaomi, as well
                                             available to retail customers with more       stock baskets covering AIA, China
                                             sophisticated investment needs who            Merchants Bank, BYD, Bank of China
                                             are seeking to widen their investment         (Hong Kong), Hong Kong Exchange
                                             scope and further diversifying their          and Clearings, Sino Biopharmaceutical,
                                             investment portfolios.’                       China Life, Xiaomi or Alibaba,
                                                                                           according to the bank.
                                             Earlier this month, the Hong Kong-
                                             headquartered bank rolled out its US          There are 925, 1,142 and 1,208 ELIs
                                             securities trading mobile service to          issued by Hang Seng Bank in the
                                             ‘make it easier for customers to take         first, second and third quarter of
                                             advantage of investment opportunities         2021, respectively, SRP data shows.
                                             in the US stock market’.                      Majority of these reverse convertible
                                                                                           or bonus enhancement notes are not
                                             As a leading ELI issuer in Hong               capital-guaranteed, although the
                                             Kong SAR, Hang Seng Bank has                  issuer offers ELI with 70% to 99.9%
                                             marketed over 4,000 offerings in the          capital protection.
                                             first half of 2021 with a 30% increase in
                                             sales in 2020 compared with 2019, as          In 2020, ELI accounted for 57.8% of
                                             SRP reported.                                 the structured product market in Hong
The new customisation tool, which                                                          Kong SAR, or HK$1.6 trillion, which
went live on 18 October, allows ELI          The underlying expansion is the               includes equity-linked accumulators
investors to select their preferred          issuer’s response to the surge in             and decumulators, according to the
US stock underlyings, as well as the         demand for US equity underlyings              latest survey from the Securities and
investment period from one to 11             despite the dominance of Hong Kong            Futures Commission (SFC) and the
months, strike price and airbag level.       stocks - Hang Seng Bank won three             Hong Kong Monetary Authority (HKMA).
The subscription is available in seven
currencies.

In the meantime, the Hong Kong-based
bank will also issue ELIs tied to US
stocks daily.

‘In fast-moving market conditions,
                                             We are continuing to
investors are looking for more flexibility
in building their investment strategies,’
said Rosita Lee (pictured), head of
                                             expand our range of wealth
investment products and advisory
business at Hang Seng Bank. ‘To              management product offerings
meet the increasingly diverse needs
of customers, we are continuing

                                                                                         www.structuredretailproducts.com       17
NEWS | APAC

HK equity bolsters Malaysia structured
warrant market
The country’s structured warrants market saw a wider use of Hong Kong
equity stocks during the last quarter.
                                             ‘The dematerialisation of structured          The FTSE Bursa Malaysia KLCI Index,
                                             warrants through a robust and automated       Hong Kong-listed BYD, S&P 500 and
                                             distributed ledger technology will            iShares FTSE A50 China Index ETF (HKD)
                                             contribute to a more transparent, secure,     were tracked by four new warrants each,
                                             economical, and most importantly,             SRP data shows.
                                             effective marketplace for all,’ said Datuk
                                             Muhamad Umar Swift (pictured), CEO of         In contrast, Malaysian stocks Genting
                                             Bursa Malaysia.                               Berhad and Top Gloves were part of the
                                                                                           top five underlying assets in Q3 20 in
                                             STRUCTURED WARRANTS                           Macquarie’s issuance, although the Hang
                                             The third quarter saw a significantly wider   Seng Index remained the most popular
                                             use of Hong Kong equities in structured       choice featuring across 18 products.
                                             warrants in Malaysia, which feature a tenor
                                             of less than one year.                        Along with Maybank, AmBank continued
                                                                                           to focus on Malaysian equities - 59 new
                                             Macquarie Capital Securities (Malaysia)       listings linked to a total of 56 stock names
                                             remains well ahead as the top issuer in       including Genting Berhad, Hartalega and
The number of new structured warrants        the market with 141 new SWs in Q3 21, or a    Dagang NeXchange.
(SWs) listed on Bursa Malaysia has           35.5% market share, followed by Malaysia’s
increased by 16.8% to 396 in Q3 21           AmBank (59), Kenanga Investment Bank          Kenanga Investment Bank in July used for
quarter-on-quarter (QoQ) – the number        (56), CIMB Bank (52), Maybank (48) and        the first time the Hang Seng Index – the
of products listed stood at 1,088 in the     RHB Investment Bank (41).                     index was first introduced to Malaysia’s
first nine months, up 22% year-on-year                                                     structured warrant market by Macquarie in
(YoY) driven by ‘easy access to foreign      The Australian securities house saw its       early 2017, SRP data shows.
underlying assets’.                          quarterly issuance reach its peak this
                                             year – this quarter’s issuance comprised      The issuer eventually marketed six of HSI-
Listing and issuer services revenue at       108 call warrants and 33 put warrants, SRP    linked warrants with a tenor of six months
the exchange increased by 10.9% to           data shows. The warrants featured the         in Q3 21, making Hang Seng Index the
MYR17.9m QoQ ‘mainly due to higher           underlying assets of Hang Seng Index and      most utilised underlying asset followed
initial listing fees earned from IPOs and    Hang Seng Tech Index, which were tracked      by Hong Seng Consolidated, a Malaysia-
structured warrant listings,’ according to   by 18 and 12 products, respectively.          based investment holding company.
Bursa Malaysia’s Q3 21 earnings release.
                                             Macquarie, which entered Malaysia’s           CIMB Bank, on its part, has been issuing
The exchange posted a revenue growth         structured warrant market back in 2014,       Hang Seng Index warrants since April
of MYR52.3m during the first three           is currently the sole issuer of Hang Seng     2019 – 12 new listings on the index were
quarters of this year, up 30.5% YoY, while   Tech Index warrants.                          added in Q3 21, SRP data shows.
operating revenue rose by 6.5% to
MYR590m YoY, which was partly attributed     Meituan Dianping, a Chinese shopping          RHB Investment Bank in September
to the increased SW listings.                platform listed in Hong Kong SAR,             rolled over 10 new structured warrants
                                             also stood out as one of the preferred        on Chinese companies listed in Hong
In September, the exchange embarked          underlyings - its shares were tracked by      Kong with renewable energy as the
on a blockchain-powered proof-of-            three call and two put warrants during        main theme, including China Longyuan
concept to reduce the manual work            the quarter. This Hong Kong stock was         Power Group, Xinyi Solar Holdings and
for creating and managing securities         first seen in the Malaysian SW market         Ganfeng Lithium.
certificates with an initial emphasis on     in September 2020 with RHB Bank as
SWs by leveraging ‘Daml smart contracts’     the issuer – the Meituan Dianping also        The Malaysian bank plans to list up to a
from Digital Asset and a distributed         appeared on a call warrant marketed by        total of 60 Hong Kong stock warrants from
ledger platform from VMware.                 the bank in March.                            multiple sectors by the end of the year.

18       www.structuredretailproducts.com
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