After almost 13 years as head of direct and listed solutions at Barclays where he was pivotal in the development of the UK bank’s internet-based services and investor solutions, David Wood (pictured) joined Societe Generale Corporate & Investment Banking in December 2014 as managing director, cross-asset sales and head of electronic business with responsibility for the management and further development of the bank’s Alpha trading platform. SRP spoke to Wood about his new responsibilities, the challenges in the click and trade platform segment and what SG CIB is doing to remain at the forefront of the industry’s electronic push.
What are your responsibilities as head of electronic business at SG Corporate & Investment Banking?
My mandate is to look after the electronic business for SG CIB’s cross-asset solutions, which essentially covers multi-asset structured products distribution, and to take the Alpha platform and build on it as an embedded part of the overall cross-asset solutions.
There are scenarios where we have clients that want to operate on a purely electronic basis, but they are a minority and don’t represent at this stage how the market generally works.
My role is to continue building our electronic platform to provide scalability to offer a choice from a client’s perspective on how they interact with us. We want to give clients the choice across the board.
The core platform is already pretty comprehensive, but there are parts that can be improved and expanded across many aspects to cover the future areas of growth, but also the areas that clients are demanding in terms of our service offering.
What is your take on the reverse enquiry model versus the platform model?
Our approach is based on our conviction that the two models will co-exist and support each other. The market has moved a lot over the last years. A few years back, having a platform was a differentiating factor in the market, but that is no longer the case. The next stage in the development of electronic structured products platforms came with the expansion of product types and asset classes covered, and that would give you an edge over your competitors. However, the market is moving at such speed that this has also become a core competency. There are a number of platforms out there that are still focusing on reverse convertibles or more vanilla products, but we see that set-up as core competence and we want to add more to it as otherwise it is very difficult to differentiate your service from your competitors. For us, the point is that if you need that human support, you can have it. What we have seen is that for very vanilla products clients are pretty much self-serviced, but they have the ability to go outside if they need assistance with variations or transaction size.
What recent developments would you highlight?
Our credit-linked notes (CLN) offering is a good example of how we’re building up our capabilities and offering. But as a service offering we are now looking beyond products, and we are moving into areas such as how you present pricing, execution and post-trade. In other words, how you provide coverage for the full product cycle. This is not about price discovery any more. We’re well beyond price discovery, which is the easy part. Trading became the next stage to focus on, and we also developed that part. Being one of the main global structured products houses, we are always looking for the next complicated problem to try and resolve, and provide simple solutions. There are parts of the trading process that we still can enhance and grow, but we believe post-trade is where issuers can make a difference.
Issuers can still make it a lot more efficient, and we can still do a lot, not only in terms of operational efficiency but also in terms of transparency around how the products behave throughout their life cycle. This is an area of focus for us and we have a lot to do as there is not a simple answer because every client has their own preferences and processes.
How do you see the electronic platform competitive landscape evolving?
This segment of the market has been driven by a change in behaviour from investors, which are now looking for a place where they can price and trade fully electronically. We can offer that service, but we don’t think that is what will set us apart. What clients want is to access pricing but also to engage in conversation with us and work with us rather than having to have many different conversations. An integrated offering is what will add an edge. This will give the end client the freedom to build their own products, pressing the buttons themselves and trading or moving onto a voice transaction because they need to discuss a feature that is not available on the platform or the ticket size is higher than the average. The improvement comes from the fact that, for a good number of our products, clients have now a starting point to experiment where the market is and what the options are.
One of the things platforms have done is to create a new problem for clients but it is a good problem because we have given investors a lot of choice. Alpha has over 1,000 underlying assets and thousands of products that allow variations. That’s where the electronic platform and the service of the salesperson come into their own.
David Wood will be attending SRP's 4th Annual Americas Structured Products & Derivatives Conference 2015. Click here to see the Conference brochure.