Standard Chartered has announced that it will launch a distribution platform for a number of tradable custom indices in Hong Kong.
The platform, which is set to be ready within two months, is for wholesale and institutional banking.
With the platform Standard Chartered aims to provide its clients with greater access to a range of indices according to their investing preferences – with indices available from all asset classes including equity, credit, high yield bond and hybrid securities, the bank said.
According to Steven Phan, global head of structured equity financial markets at Standard Chartered in Hong Kong, the continued outperformance of custom indices are making them more and more popular among investors who are searching for alpha amid volatile markets.
“Our Gold Plus Index has recorded a strong performance with 2.5% alpha produced over gold,” he said. “[The index] was one of the most popular custom indices in the past year.”
A number of new custom indices are in the final stages of testing before opening up to clients, Phan said. “All of them are designed for a group of clients with interest in specific investment themes, where there is no appropriate index used as the benchmark.”
Phan added that investors prefer products with simple structures, so they will build future custom indices-linked products with vanilla payoffs. “Most options will be simple Asian calls, although they can be referenced to baskets of indices.”
Standard Chartered launched a capital-protected deposit linked to its custom Gold Plus Index in China last September. The bank has also launched products offering exposure to the bank’s Asian Dividend Index over the past year.