The inefficiency of traditional approaches for price requests has triggered the need of revenue optimization and flow product distribution automation in order to drive business growth, according to Singapore-based multi-issuer platform (MIP), Contineo.
According to the firm's white paper, Multi-issuer Platforms satisfy a growing need for greater automation and improved best execution, increasing regulatory demands and constraints have also pushed the structured products market towards automation and optimization.'Regulation as well as distribution costs are constantly influencing and changing the structured products space,' states the paper, adding that 'a fully integrated solution with broad network coverage' has proven to have more scale in the longer term, as fragmented networks offered by software vendors result in exponential costs to connect and have complex multi-points of access.'
MIPs can 'bring greater efficiency from pricing to booking, decrease operational risks and cover best execution and regulatory needs', according to the paper. 'Efficiency gains resulted in up to a 54% cost savings for our clients overall,' the white paper states. 'By centralising the workflow across all roles, a multi issuer platform can also narrow the communication gap between dealers and relationship managers (RMs) in a fully transparent and easy-to-audit manner.'
The paper also describes what users can get by accessing the platform including access their internal pricing blotter, route orders for review, build order books and check live order status. "When the buy-side subscribers deploy Contineo, we have found an 18% reduction in errors, 40% efficiency gains and a cost saving of 54%," said Per Nordstrom (pictured), director, client engagement at Contineo. "This is a testament to Contineo's customer service level and changed management process with clients, but also to the innovation and state of the art technology solutions we have delivered."
Last year was a breakthrough year for Contineo, which saw volumes going through the platform increasing more than tenfold as a growing number of sell and buy side banks across Asia joined the network, according to Nordstrom. "Furthermore, in 2017 Contineo developed from a pre-trade network to include post-trade effectively making it an all-inclusive network for structured products," said Nordstrom.
The platform also implemented a number of new features to improve the user experience such as specific workflow for RMs, book-building, life cycle management (lcm) and new data insights to name a few, according to Nordstrom. "The workflow for RMs allows for easy interaction between them and the dealers," Nordstrom said. "RMs can access prices and draft orders to dealers for verification and dealers can edit and confirm orders for placement with the issuers in one click. Specific order restrictions can be configured as per each bank's compliance and regulatory needs."
Other popular features targeted at private banks include the ability to Book Build and Tap On. As a way to grow more interest in a transaction pre-launch and to reach minimum issuance size, selected deals can be made eligible for book buildingwhich means that users can monitor the book-building process in real-time to see nominal size reached and time to launch, according to Nordstrom. "As for Tap-Ons, users can request tap-on pricing by spot averaging or re-offer price," he said. "Pricing updates and subsequent orders are covered via the network."
Contineo's Lifecycle Module (LCM) is also available through the web, via an Application Programming Interface (API) or posted directly to the back-office. LCM grants dealers and RMs greater control of their open position by receiving event confirmations, like pending expirations, barrier hits and more, according to Nordstrom. "Users can easily sort and view all open positions in one screen and receive lifecycle details for all trades," he said. "Our strategic partnership with Six Group, operators of the Swiss Stock Exchange, includes the integration of their Connexor post trade system that will benefit the buy-side with straight through processing through an industry-recognized service and data model."
The main challenge the company faces is user adoption as RMs and traders are still accustomed to legacy email and phone trading, which leads to errors, is less efficient and creates more work for all participants, according to Nordstrom. "Contineo overcomes this with a dedicated on boarding team that works with traders, dealers, RMs and product owners to integrate the offering into the workflow, as well as connect their internal applications for straight through processing," said Nordstrom.
Contineo's statistics show that the majority of trades in Asia are done in flow equity payoffs such as equity-linked notes, fixed coupon notes, accumulators and deccumulators "which has been the case in the region for some time", according to Nordstrom. "However, it is important for us, at Contineo, to be able to react swiftly to the needs of the client," he said. "Most clients are now set-up as multi-asset desks and our ambition is to cover all asset classes and payoff types. We're launching bonus enhanced notes and expect to follow-up next year with additional payoffs and a new asset class."
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