Global index provider Nasdaq has increased its visibility in the European structured retail products market after licensing two indices to Credit Suisse. This is the first time the US index provider is launching an OMX-branded multi-asset index designed to be used as the basis of structured products, according to Baris Parla (pictured), managing director at Nasdaq.

"Nasdaq has a comprehensive flagship series for Scandinavia and also several index families that cover technology (Nasdaq-100), dividend and income (dividend & buyback achievers), growth and value (AlphaDEX), momentum (Nasdaq Dorsey Wright), and thematic (ISE)," said Parla. "We also offer single and multi-factor indexes."

Nasdaq is seeking to increase its profile and visibility in the structured products market, according to Parla. "We want to increase our visibility in Europe and this kind of partnership with Credit Suisse will allow us to leverage our index manufacturing capabilities via existing market players," he said. "We are well established in the Nordics but we want to increase our market share and capitalise on our index expertise across Europe. We think our indices can offer value to product manufacturers and end investors, as an alternative to existing underlyings."

The Nasdaq OMXS30 Duo Index aims to improve the risk profile of OMX Stockholm 30 Index (OMXS3) by allocating between the OMXS30 and the exchange rate of gold to Swedish krona (XAUSEK), according to Parla. "It relies on the historical correlation between equity and gold based on realized volatility of the OMXS30 and XAUSEK," Parla said.

The new index is a modified market capitalization weighted index, and the value of the index equals the aggregate value of the index share weights of each of the index securities multiplied by each such security's last sale price, and divided by the divisor of the index. If trading in an index security is halted on its primary listing market, the most recent last sale price for that security is used for all index computations until trading on such market resumes.

Credit Suisse has licensed the new Nasdaq OMXS30 Duo Index and will use it as the underlying of a range of structured products, according to Kerim Haddad, head of equity derivatives structuring for distribution, Credit Suisse. "The Duo family of indices is an exciting project in the 'smart beta' industry," said Haddad. "[The] concept is perceived as a multi-asset strategy, designed to capture the anti-correlation pattern between gold and equities, leading to an opportunistically diversified portfolio."

The index aims to improve the risk/return profile of the investment while maintaining a strong exposure to equity, and it is "an interesting alternative to what is commonly known as 'vol control' in the structured products space", according to Haddad.

"Gold is generally perceived as an efficient hedge in periods of market drawdowns," said Haddad. "[The Nasdaq OMXS30 Duo index] is suitable for investors seeking to invest in capital protected notes with a powerful performance engine on-board to boost their returns in a low interest rates environment."

The Nasdaq OMXS30 Duo Index comes as an addition to Credit Suisse's multi-asset offering, and makes part of the Swiss bank's plan to develop further indices "as they provide appealing alternatives to domestic equity benchmarks", according to Haddad. "Recent smart beta developments have contributed to the success of our retail franchise, particularly in markets like the Benelux, and we certainly aim to develop our presence in the Scandinavian market in partnership with Nasdaq," said Haddad.

The new indices represents Nasdaq's strategy to develop innovative strategies around its flagship indices, according to Parla. "The Nasdaq OMXS30 Duo index has been developed with extensive feedback from Credit Suisse and rigorous testing to create the best possible methodology. This index has a defensive profile in the sense that it allocates to gold when equities decline more than gold."

More than 190,000 structured products across markets feature Nasdaq indices but the US index provider remains a marginal supplier of underlyings to the structured products market, according to SRP data. There are over 64,800 live structures linked to Nasdaq indices - mainly to the Nasdaq 100 (64,746 products), of which 59,333 were sold in Germany, 8,267 in Switzerland, and over 2,000 in France.

Other Nasdaq underlyings featuring in live products across markets includes the Nasdaq Biotechnology Index (three products), Nasdaq OMX Commodities (three products), Nasdaq Internet Index, Nasdaq Nordea SmartBeta Momentum Volatility Eurozone PR, Nasdaq OMX Emerging Markets Technology Index, and Nasdaq OMX Stock Market. In addition, year to date, the iShares Nasdaq Biotechnology ETF has been deployed in 47 products sold in the US market and 32 in Taiwan with individual appearances in Germany/Austria, Canada and Sweden.

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