Vontobel's expansion into the Italian market for leveraged products with a range of constant leverage certificates is already bearing fruit for the Swiss bank which has climbed to the top of the Italian certificates market after just a few weeks.
The market for structured products in Italy has enjoyed significant growth in recent years with figures released by the European Structured Investment Products Association (Eusipa) for 2015, showing that the SeDeX segment of Borsa Italiana was the biggest stock exchange for leverage products in Europe with a volume of €28.7bn.
"Italy is the biggest market for leverage products in Europe with impressive growth rates during the last years," said Roger Studer (pictured), head of Vontobel Investment Banking. "Self-directed investors are very active and mainly trade constant leverage products referred to FTSE Mib and Dax with a leverage factor of seven. They are also quite experienced as well as educated and are characterized through a high affinity to capital markets."
According to Studer, due to the dominance of constant leverage products in Italy, Vontobel is using its "strong experience" as well as its "technical competencies" to launch a broad portfolio of various certificates, covering also leveraged market access to Dow Jones, Nikkei, Silver and Palladium.
"Further expansion plans also include covered warrants as well as turbos," said Studer. "Above all, the client drives our business. So, this philosophy is running our portfolio of future underlyings as well as the sort of products we will issue in the next few months. The appetite for new products and underlying assets is strong. We want to meet this client need with our successful platform, but also our great market expertise and customer proximity."
After entering the market on May 24, 2016, the bank expanded the initial product offering with a "comprehensive suite" of factor certificates within four weeks from four to over 70 products -providing private and institutional investors in Italy a wide range of underlying instruments such as global indices such as the DJ Industrial Average index, Eurostoxx Banks index, Dax index and Mib index; precious metals such as palladium and silver; and raw materials such as coffee, corn and wheat soft red futures to customize their investment portfolios.
"The listing of more than 70 instruments (76 "leva fissa" products) deeply expands the offer of certificates with constant leverage listed on the market," said Pietro Poletto, head of fixed income market of London Stock Exchange Group. "This debut on SeDeX is a further confirmation of the attractiveness of the market, already the first in Europe in turnover for certificates with leverage."
According to Poletto, Italy has a strong tradition of active retail investors, which operate as semi-professional or professional traders. "SeDeX is prominently a retail market, with more than 50 % of trades on SeDeX with a size below 2,000€," said Poletto. "The simple functioning of constant leverage certificates together with the liquidity expressed on book have made these products very popular."
Constant leverage certificates represent now more than 50% of market share and in the past four years have increased the market turnover, making SeDeX the biggest market in Europe in terms of total turnover, according to Poletto.
Vontobel is one of the leading issuers of structured products in Europe and ranks second in Switzerland with a market share of 26.6% and fifth in Germany with a market share of 8.2% as of March 2016. The expansion into Italy's leverage products market followed the bank's debut in the Swedish and Finnish markets in 2015, where it has already gained a market share of 20.7% (top two) and 10.1% (top four), respectively as of April 2016. The Swiss bank also joined the Austria certificate association (Zertifikate Forum Austria - ZFA) in January 2016 as it continues to expand beyond its core market.
According to Wolfgang Gerhardt, head financial products, Germany, who is in charge of Vontobel's leverage range in Italy the "successful expansion" in Sweden and Finland and the bank's expertise in leverage certificates was key to be able to expand its product range in Italy within a few weeks.
"The decisive factors here are our technological leadership and high level of process quality," said Gerhardt. "We are providing a multitude of market access options for active investors, liquidity and strong market-making capabilities of Swiss quality."
Bank Vontobel Europe AG, the German subsidiary of Vontobel Holding AG, is responsible for the distribution, quoting and trading of the certificates in Italy. The issuer is Vontobel Financial Products in Frankfurt.
Before launching in Italy, Vontobel bundled its global digital offering which covers the creation and distribution of structured investment solutions with the expansion of its front-to-end offering for insurers and financial services providers via a 'white labelling' service and the addition of two units within its new Partner Solutions business. This move was aimed at driving Vontobel's expansion of its existing platform deritrade MIP forward.
Vontobel enters Italy's leveraged products market, expansion in Europe continues
Vontobel opens Deritrade to third parties, adds two units to its investment solutions biz
Vontobel introduces Industry 4.0 in certificate form
Vontobel's Deritrade notional volume up by 267% YOY