Europe’s structured products exchanges generated turnover of €30bn in December with the European market volume standing at €266.3bn at the end of 2014, according to the European Structured Investment Products Association (Eusipa) and Derivative Partners Research.
Exchange turnover in investment products and leverage products rose sharply in the final quarter of 2014 in Europe, with the volume increasing by 15% compared with the third quarter of 2014 and increasing 13% year on year.
The results for the last quarter of 2014 show market confidence in structured products is back: open interest, turnover and new products launches were all up year on year and quarter on quarter, said Thomas Wulf, secretary general at Eusipa. “One underlying reason may be caution among equity investors, many of whom believe markets have primarily been pushed since last October by the prospect of Eurozone quantitative easing,” said Wulf. “Where a market rise is not accompanied by a change in business fundamentals, many investors consider fixed-yield structured products safer than a direct stock investment, and are prepared to forego participation in any price pick-up above the product’s cap.”
In the fourth quarter of last year, the trading volume of investment products on European exchanges was €9.7bn, which represents 32.1% of the total turnover. Exchange turnover was up 6% compared with the previous quarter and down 14% compared with the fourth quarter of 2013.
The trading volume of leverage products, such as warrants, knockout warrants and factor certificates, totalled €20.4bn, with leverage products accounting for 67.9% of the aggregate transaction volume. Exchange turnover was up 20% percent compared with the previous quarter, which corresponds to year-on-year growth of 32%, stated the Eusipa report.
At the end of December, the exchanges of Eusipa member countries were offering 495,422 investment products and 709,954 leverage products. The number of products listed increased by 1% overall in comparison with the third quarter, although was down by 8% year on year.
Issuers released 757,288 new investment products and leverage products in the fourth quarter of 2014, an increase of 30% on the previous quarter and a rise of 27% on the year. The banks issued 170,102 new investment products, which represented 22% of all new issues with leverage products accounting for 78% of new issues.
The market volume of investment and leverage products in Austria, Germany and Switzerland at the end of December was €266.3bn, up 6% on the previous quarter, and 7% on the year.
At the end of the fourth quarter of 2014, the market volume of investment products was €242.6bn, which represents a 3% increase on both the previous quarter and the fourth quarter of 2013. At €23.7bn, the outstanding volume of leverage products was up 36% compared with the previous quarter, and 77% year on year.
The members of Eusipa include Zertifikate Forum Austria (ZFA), Association Française des Produits Dérivés de Bourse (afpdb), Deutscher Derivate Verband (DDV), Associazione Italiana Certificati e Prodotti di Investimento (Acepi), the Swedish exchange-traded Investment Products Association (Setipa), the Swiss Structured Products Association (SSPA) and the Netherlands Structured Investment Products Association (Nedsipa).