The issuance of 'bonus cap' structured certificates in the Spanish market has rocketed during the second half of 2012, with Commerzbank becoming the main provider of such products.
Since June, when Commerzbank issued its first 11 bonus cap certificates in the Spanish market, 244 have been added to the Spanish database. BNP Paribas, the other bonus cap provider in the Spanish market, has issued 26 so far this year. In 2011, a total of 16 bonus cap were registered in the Spanish database, all of them issued by BNP Paribas.
Gina Mendes Reis (pictured), Commerzbank's equity derivatives product manager for Spain told SRP that the rise in customer demand is due to two very specific reasons: Product features are simple to understand by investors and the payoff profile is appealing in the current market environment.
"Because of the possibility of fully over-the-counter (OTC) electronic trading between us and brokers, we are able to deliver products overnight with very low transaction costs," she said. "This fact provides our customers with a wide range of products and underlyings, with the same guaranteed liquidity provided by our market making capabilities as we do with the products listed on the stock exchange."
Reis also told SRP that currently only brokerage firm Renta 4 is connected to Commerzbank's OTC service.
SRP data shows that out of the 270 bonus caps registered in 2012, 251 were linked to single shares, 18 to singles indices and one to commodities.
The increase in the issuance of bonus cap structured certificates across a number of jurisdictions resulted in SRP launching a new specialised database, the Flow & Others section, which already includes callable-only and putable-only products, as well as other similar products marketed worldwide.