Products offering regular coupons and strengthened capital protection, as well as frequent autocall observations combined with descending and strike-min autocall triggers continued to be regular features during the first quarter of 2018, according to SRP data.

Defensive "phoenix" structures distributing coupons even in the case of market decline saw increased traction during the quarter, representing 32% of all products launched during Q1 2018, 19% up from the same period last year.

"This type of structure makes full sense today, given the current high levels of the indices, because even if the product has not been called, the client is still entitled to his coupon," said Yoni Kabalo (pictured), partner at i-Kapital.

An axis of innovation since the beginning of the year consisted in offering fixed coupons regardless of the level of the underlying. With DS Investment Solutions' Rendement Plus France Mars 2018 the coupon is set at 4% p.a. but will be increased with 2.5% per elapsed year if the SBF Top 80 EW Decrement 50 Points index has not fallen from its initial level on any annual valuation date.

"This type of mechanism allows to be immune from market trends during the first years and to guarantee a coupon (except in case of bankruptcy, default of payment or resolution of the Issuer) even if the product has not autocalled," said Brice Gimeno, chief executive officer of DS Investment Solutions.

Unconditional coupons bring innovation in the French retail structured products market as coupons used to be only possible within a limited fall of the underlying [20%-40%], according to SRP data.

DS Investment Solutions has also distributed Eurozone Garanti Mai 2018, a 10-year capital guaranteed medium term note linked to the Solactive Eurozone 50 Equal Weight 5% AR Index. "We note a demand for more security by investors, and hence, the guaranteed capital at maturity (excluding fees, commission and taxation applicable to the investment and unless bankruptcy, default of payment or resolution of the issuer) with an annual autocall mechanism, from the 4th year onwards, allow to answer the double need of a capital guarantee and an early exit, conditional on the market," said Gimeno.

An increasing number of products based their strike level on the lowest out of several measurements of the underlying (Lookback) or calculating it as the average of several readings. Basically, the 'lookback' mechanism seeks to address the risk of market fluctuations, as volatility is expected to remain one of the key indicators to follow in 2018, according to the industry.

Twenty-seven products launched in 2018 year-to-date and distributed by Caisse d'Epargne, Crédit Agricole, Banque Privee Europeenne, Equitim, LCL and Societe Generale, feature a 'lookback' or averaging mechanism.

Boosting the frequency of the early redemption dates has continued to be a trend in 2018, according to SRP data. The number of products with annual valuation dates stood for 51% during 2018Q1 down from 56% in 2017Q1. Semi-annual and quarterly observations recorded an increase: semi-annual (20%, +4%), quarterly (19%, +7%). Monthly (1%) and daily (6%) observations lost 3% and 4% respectively compared to Q1 2017.

"While an annual observation date makes you wait till the next, year the more frequent dates give much better chance to unlock investor's positions. This is exactly what investors want to avoid staying locked if the market ever hits a bottom," said Kabalo.

Two-hundred seventy-four of the products striking in the first quarter were linked to equities, including two-hundred and four products linked to a single index. Eighty-eight products, worth an estimated €2bn, were linked to the Eurostoxx 50 up from 69 products worth €1.4bn striking in Q1 2017. CAC Large 60 Index, Euro iStoxx Equal Weight Constant 50, Euro iStoxx 70 Equal Weight Decrement 5%, Euronext France Germany Leaders 50 EW Decrement 5% Index and SBF Top 80 EW Decrement 50 Points have been the most popular optimized indices, accounting for 43% of the products striking in the quarter.

Thirty-two products were based on a single share underlying. Of these, the Societe Generale share was used five times as a single underlying by Privalto, Morgan Stanley and Crédit Industriel et Commercial (CIC). The share was followed by Bouygues, Electricite de France, and automobile manufacturers Renault and Peugeot, each featured three times in a structured product.

Amundi has led the sales in France as a manufacturer, holding a 35% share of the French retail structured products market in Q1 2018, according to SRP data. Six of Amundi's products in the quarter were distributed by LCL while Credit Agricole's retail banking network distributed four products.

Societe Generale had a share of 24% of the French market during the quarter, according to SRP data. One hundred and seven structured products (including private placements but excluding leverage and flow) with estimated sales of €848m issued by the bank have struck between January 1 and March 31, 2018. The bank's products are distributed via, among other, Adequity, DS Investment Solutions, i-Kapital, Kepler Cheuvreux, KBL Richelieu, Irbis Finance and Banque Privée Européenne.

Natixis claimed a market share of 18% of the French market during the first quarter. The bank acted as a bond provider for 41 products (€641m) including offerings distributed via Equitim, Swiss Life Banque Privée, MMA Assurances, Groupama, i-Kapital and Banque Neuflize-OBC.

BNP Paribas had a share of 12% from 17 publicly offered structured products and 45 private placements, according to SRP data. The bank's products are distributed via, among other, Privalto, DS Investment Solutions, Arkéa Investment Services, Equitim and Gresham Banque.

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