Societe Generale rolls out SG Markets as Alpha is discarded

Societe Generale (SG) has closed down its Alpha electronic trading platform for structured products following the migration of all its clients to a new umbrella platform for structured products desks, distributors, private banks and wealth managers called SG Markets Structured Products which will offers an integrated offering.

"We've closed our previous platform and relaunched it as SG Markets which includes a wider set of services and coverage such as our research, trading, document generation, commodities offering, as well as pricing/valuation, life cycle management, etc.," said David Wood (pictured), managing director, cross-asset sales and head of electronic business at SG Corporate & Investment Banking (CIB). "The new platform brings everything together under one roof as opposed to having to access separately all the offerings developed by the different business lines. We have kept some level of segregation to address the fact that it is bespoke to the types of users and their needs."

The migration of all SG clients to the new platform has been a gradual process with the bank working closely with clients through the validation process to achieve an optimum structure since the design of the new platform begun back in April 2015, said Wood, adding that SG soft-launched the platform with some clients in December 2015 "as a pilot to gather feedback about the different functions and capabilities".

With SG Markets, clients will have a single user name and password, and will be able to access the full SG offering for any market/jurisdiction in one place, according to Wood. One of the main changes in the platform is the interface which has been revamped via the new HTML 5.0 technology which is a "future-proof platform-agnostic technology" that is supported by the different types of devices (smart phones, tablets, PCs), to "recognise the fact that the world is going global, and use different devices".

"The old interface was based on the concept of a 'cube' and was quite heavily focused on sophisticated active traders, as opposed to the new SG Markets platform which is more balanced and can support a bigger number of users," said Wood. "Also, because our product set has grown the interface changes have allowed us to offer those products in an easier-to-understand way."

In the development stage, the bank looked "very closely at the ergonomics of how people price products" and was able to reduce the number of key strokes (clicks) by a factor of four by changing the order of establishing the different parameters and using a defaulting logic approach, said Wood.

All the pricing data going through the platform will be stored in the platform's back-end and "can be extracted" from any of the services offered by the bank. The platform also includes a real time jargon/educational tool to access concise and clear information about how payoffs work, as well as detailed product summaries for any products priced through the platform, according to Wood.

"We have a pipeline of new functionalities and features such as stress testing that will be added to the platform in different stages," said Wood. "The platform has been designed to accommodate any requirements resulting from market changes. For instance, once the Priips (packaged retail and insurance-based investment products) rules come into effect the platform will generate a Kid (key information document) alongside the term sheet of the product, and any other documents required."

SG Markets has been fully developed internally by an IT team based in London, Paris and Montreal, with help from another London-based team focused on usability aspects from an end-client perspective and provides increased "flexibility in a more user friendly set up", according to Wood.

"To achieve that level of granularity we have deconstructed the process and put it back together again in a really logical way based on feedback and input from clients," said Wood. "We process thousands of price requests per day and not all of them are successful, and there is always a reason why. We have spent a lot of time developing the error message functionality and make it useful for the user by decoding errors and providing logical explanations so that users can see where the problem was (coupon is too high, dates are wrong) and be more self-serviced."

The underlying universe of the products -around 1,500, remains unchanged and will grow/contract as the market changes, said Wood pointing that the launch of SG Markets has also allowed the bank to include some new product types (participation, call/put spreads, outperformance and bonus certificates) to respond to demand from clients.

"We are in stage one and hope to continue expanding the platform with new products, underlyings, payoff types and functionalities such as stress testing, high efficient tools for high volume users, etc.," said Wood. "There are a number of developments in the pipelines which will be dropped in within this quarter."

The platform can also be accessed in different languages (English, French, German and Japanese) and includes all of the tools offered by Alpha such as the OTC functionality and SG's credit linked notes range added to the Alpha platform last year, as well as the secondary market capability to "address the different angles as of how clients can deploy and use the platform".

The bank has also plans to connect other product ranges such as IFA-targeted and bespoke offering in the near future, and is understood to be in talks in Germany to deploy the technology via the front-end of a tier one third-party to complement its direct offering.

"The main achievement of the new platform is to bring together different functionalities and information but we are also building a comprehensive database to inform the process of building a product and follow its performance through its life cycle," said Wood.

A number of investment banks active in the structured products market have focused their efforts in the click and trade segment over the last few years in Europe with differing grades of success including JPMorgan; HSBC in China; BNP Paribas and UBS in the US; as well as RBS, Credit Suisse and Santander. Barclays, which was one of the first providers to develop an electronic platforms for structured notes via BARX IS shut down its Bmarkets platform in December 2016.

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