Sales volumes of structured products in the US market in the third quarter of 2017 have increased by 22.9% on the year on the back of a 25.6% increase in issuance. Sales of structured products in the US in the quarter stood at US$47.6bn across 12,230 products compared to $33.9bn across 8,278 products marketed in 2016.

UBS was the most active provider during the third quarter of this year, with almost 1,000 products striking and $2.2bn in sales. However, Baml took the lion's share, with sales of $2.3bn across only 131 products. SRP reviews the data and the financial results of the top six US structured products manufacturers.

Bank of America-Merrill Lynch continues to dominate the distribution of structured notes in the US, with a 16% market share, according to SRP data. The bank marketed 131 products worth $2.39bn in the third quarter 2017, compared to 168 during the same period last year, when it sold over $3.3bn for a 25% market share.

Most of Baml's products in the third quarter were digital structures (50) as well as enhanced trackers and knockout products (45), combining other payoff types such as protected trackers (30) and worst of (9) profiles. Reverse convertibles (14) and callable structures (15) played a marginal role in the quarterly issuance. The most popular underlying for Baml over the quarter was the Eurostoxx 50 Index (41 products), followed by the S&P 500 (32), and the Russell 2000 (24).

Baml reported a 19% increase in net income this year, to $15.7bn, with consumer banking revenue also rising, by 10%, to $8.8bn, driven by a 21% increase in assets managed by Merrill Edge brokerage. Income from global wealth and investment management rose 6%, to $4.6bn, on the back of an increase in client balances from $186bn to a record of nearly $2.7 trillion. The division posted record assets under management (AUM) balances of more than $1 trillion. Global banking revenue rose 5%, to $5.0bn, with deposits up by 3%. Investment banking fees were up 1%, at $1.5bn. The bank's global market division sales and trading revenue stood at $3.1bn, including negative net debit valuation adjustment of $21m: fixed income, currencies and commodities were down 22% while equities were up 2%.

Morgan Stanley almost matched Baml's figures, with structured product sales volumes standing at $2.35bn at the end of the quarter, giving the bank a 16% market share. The bank marketed 411 retail structured products, of which almost half (45.5%) were reverse convertibles (187). Issuance was dominated by enhanced (138) and protected (119) trackers, capped calls (108) and worst-of options (98).

In its quarterly report, Morgan Stanley posted net revenues of $9.2bn for the third quarter, compared to $8.9bn a year ago. Institutional Securities net revenues were $4.4bn, reflecting strong advisory results and solid performance in underwriting and sales and trading. Wealth management net revenues were $4.2bn and pre-tax margin was 26.5%, with fee-based asset flows for the quarter at $15.8bn. Investment management net revenues were $675m with AUM of $447bn.

Goldman Sachs was the third most active US provider in the retail structured products market in terms of sales in the third quarter, with a 15% market share. The bank sold over $2.13bn across 510 products, according to SRP data. Goldman's products in the quarter were sold in the form of enhanced (229) and protected (185) trackers, capped calls (148) and worst-ofs (134). The S&P 500 and Russell 2000 indices were used in 209 and 159 products, respectively, with the Eurostoxx 50 the third most used, with 101 appearances. The bank also featured a number of proprietary indices, including its Momentum Builder Multi-Asset 5S (58 products), and Momentum Builder Multi-Asset 5 (eight products) ER indices. Thematic indices relating to the bank's partnership with Motif included the Motif Capital National Defense 7 ER (12 products), Motif Capital Aging of America 7 ER (five products) and Motif Capital National Defense Price Return (two products) indices.

Goldman Sachs Group reported net revenues of $8.33bn and net earnings of $2.13bn for the third quarter. 'Our overall performance this year has been solid and provides a good foundation on which to execute and deliver our growth initiatives,' said Lloyd Blankfein, chairman and chief executive officer, in a statement. Investment banking net revenues were $1.80bn for the quarter, 17% higher than the third quarter of 2016 and 4% higher than the second quarter of 2017. Net revenues in financial advisory were $911m, 38% higher than the third quarter of 2016, 'reflecting an increase in completed mergers and acquisitions', according to Blankfein.

JP Morgan took a 13% market share in US retail structured products market in the third quarter on the back of a $1.9bn sales volume, selling 772 products, mainly worst-ofs (271), enhanced trackers (269) and reverse convertibles (233). The bank also sold bull bear structures (34), snowballs (three) and lookbacks (two). Its underlyings of choice in the quarter were also the S&P 500 and Russell 2000 indices, which appeared in 264 and 261 products, respectively. The third most used underlying by the bank was the Eurostoxx 50, which featured in 181 products. The bank also used a number of proprietary indices, including the Efficiente Plus DS 5 (84 products), Meridian (four), Mozaic II (five) and the Meridian (four); as well as ETF-linked structures tracking the iShares MSCI EAFE ETF (34) and the iShares MSCI Emerging Markets ETF (22), among others.

The bank reported revenue of $25.3bn; and managed revenue of $26.2bn, with corporate and investment banking reporting net income of $2.5bn, a decrease of 13%, while net revenue was $8.6bn, down 9% compared with the previous year. Banking revenue was $3.1bn, up 5%. Investment banking revenue was $1.7bn, down 2%, driven by lower equity and debt underwriting fees, largely offset by higher advisory fees. Markets and investor services revenue was $5.5bn, down 16%; fixed-income markets revenue was down 27%, as lower revenue across all products was driven by sustained low volatility and tighter credit spreads, against a very strong prior year. Equity markets revenue was down 4% compared to a strong prior year, reflecting lower revenue in derivatives predominantly offset by strength in prime services and cash equities. Securities services revenue was $1bn, up 10%, driven by higher interest rates and deposit growth, as well as higher asset-based fees driven by improving market conditions.

Incapital finished in the top 10 distributors ranking in third quarter on the back of 85 products worth $441m. Wells Fargo and Citi slipped out of the top 10 provider rankings in the quarter, with UBS (15% market share/$2.22bn) taking third spot and Barclays (5% market share/$688m) sixth. The top 10 for the third quarter was completed by HSBC (178 products/$495m), RBC (147 products/$425m), and Credit Suisse (214 products/$377m).

Related stories:
US market sees 65% increase of sales in one year

US banks report mixed demand for securitized products and spread tightening

US investment banks see structured products sales drop despite increase in issuance