Natixis and Nasdaq launch new US market access index for structured products

Natixis has entered into an exclusive licensing agreement with Nasdaq to launch the Nasdaq-100 Target 25 Excess Return Index. The index aims to address the market capitalization biases of traditional indices and will be used as an underlying index for structured products. The strategy can also be used as a smart beta diversification asset for Nasdaq-100 investors.

'This partnership illustrates our commitment to providing smart and unique equity solutions that will expand our offerings to both our distributors and institutional clients,' said Dennis Shikar, head of equity markets Americas at Natixis.

The newly-created index selects 25 of the 100 companies included in the Nasdaq-100 Index. All 25 companies have smaller market capitalizations, are equally weighted, and possess the highest free cash flow yields. The index then replicates the performance of the total return version, where dividends are reinvested, and discounts a fixed dividend of 2.5% in order to calculate the excess return.

Price return, total return, net total return, excess return and net excess return versions of the index are available, and the index, which will be rebalanced on a quarterly basis, is calculated in US dollars.

Dave Gedeon (pictured), head of index research & development at Nasdaq, said in a statement that the agreement demonstrated the index provider's 'continued efforts in driving index innovation' by seeking out partners 'to bring new concepts out into the market'.

Nasdaq indexes play a marginal role compared to other brands such as the Eurostoxx 50 or the S&P 500, however SRP data shows that a number of Nasdaq indexes have been deployed in the structured products market, especially in the US and Sweden. There are over 146,500 products featuring Nasdaq indexes of which over 45,800 are live products linked mainly to the Nasdaq 100 which takes the lion's share and the Nasdaq OMX Stock Market.

Natixis has been increasing its activity in the retail structured products market over the last year and acted as bond provider for 133 structured products (€3.8bn) in 2016, a significant increase from the 98 products worth (€2.3bn) the previous year. The bank is mainly active in its home market France, were it was involved in 64 products (€2.8bn). In Sweden the bank issued 24 products via Erik Penser, Exceed, Garantum, Mangold and Strukturinvest. Twenty-eight products were distributed via Reyker, Meteor and Mariana in the UK; seven in Belgium via Deutsche Bank and Crelan; two in Finland (Garantum) and Japan (SMBC Nikko Securities) and one in Italy.

Natixis also reported 'strong momentum' in core-business with revenues at €2.1bn in Q4 16 (+3%/Q4 15). AUM of the Asset Management division was up to €832bn at end-2016 and outflows came to a halt in the fourth quarter. Global markets saw a 28% increase in Q4 16 (excluding credit valuation adjustments (CVA)/debit valuation adjustments (DVA) desk) driven by fixed income and equity (net revenues up 20% and 47%, respectively.

The partnership with Nasdaq follows the recent appointment of Fabrice Hugon, former senior managing director, structured products, at Elkhorn Securities, who joined the bank's corporate & Investment Banking (CIB) division in New York, as head of equity derivatives sales & financial engineering, Americas, reporting to Dennis Shikar, head of equity markets Americas at Natixis CIB, and globally to Eric Le Brusq, global head of sales and financial engineering, equity derivatives.

Natixis beefs up global markets division

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