The exchange-traded products market in Italy has enjoyed impressive growth in recent years with figures released by the European Structured Investment Products Association (Eusipa) for 2015 showing that the certificates and covered warrants (Sedex) part of Borsa Italiana the biggest stock exchange for leverage products in Europe, on ta rading volume of €28.7bn.

Constant leverage certificates now represent more than 50% of this market, with the Italian exchange reporting, at the end of June, over 6,900 transactions involving leverage products from 20 issuers, 44 intermediary companies accounting for over €2bn of trading volume, representing a 179% increase in the number of contracts transacted and a 196% increase in turnover.

Following Vontobel's recent launch of its leverage products in the Italian market, SRP spoke to Pietro Poletto (pictured), head of fixed income market at the LSE Group about the exchange's leverage products, how to increase the size of the market and which products are responsible for the increase in activity.

What kind of underlyings or assets are driving most of the activity in 2016?
Unsurprisingly, around 85% of turnover concentrates on the leveraged domestic FTSE MIB x7 Long and Short Index. Nevertheless, the range of listed underlyings is expanding rapidly to other asset classes: commodities, currencies, interest rates, foreign equity indices and so on. Vontobel has contributed considerably to the expansion of the number and variety of underlyings on offer.

Is there anything the exchange can do to assist in the development?
We recently announced that, starting from September, the market will list the first constant leverage certificates on single stocks with a maximum 2x leverage on a selection of the most liquid Italian shares. We expect that these new underlyings will generate a large increase in turnover. Furthermore, we recently worked on the release of a new market model that introduced enhancements that should improve the market conditions for specialists and the market quality in general.

Do you expect other issuers to enter this market? What other products within Sedex are stimulating activity?
We regularly strive to enhance market competitiveness in relation to other exchanges in Europe. Vontobel's decision to enter the Italian market is confirmation that Sedex is now an attractive market for investors. Hopefully, other players will follow. We are working on it.

Warrants still represent 25% of the market and their turnover is increasing. Turbo and mini future certificates are also expanding, thanks to a favourable new system of listing fees introduced in 2015 that encourages new listings. Since 2015, the number of listed products has increased from around 100 to over 600.

Related stories:
WisdomTree deploys Vix and emerging markets leverage/inverse trackers on the LSE

Societe Generale seeks to capitalise on record S&L trading

LSE and Deutsche Borse merger would put near $20bn of benchmark linked AUM under one roof