Smarttrade has introduced the German-speaking market to Profit Maximizer, a tool that identifies the best performing warrants and their issuers by defining market expectation (with a choice of 45,000 market scenarios) rather than product parameters. While Smarttrade created the analysis the tool was the result of a collaboration between the technology provider, Citi, Guidants and Börsego. "As we launched the tool, we received requests from investors and issuers to identify why, for a specific market scenario, a product from a certain issuer was the top performer," said Simon Ullrich (pictured), managing partner at the technology company.

The technology is aimed at investors and financial advisers seeking to streamline searches of the 350.000 warrants currently listed on Germany's structured product market. "The tool will not only return an estimated price for a warrant based on the customer's expectations, but will also provide selected products that offer a higher performance for this scenario," said Dirk Hess co-head, Europe, Middle East & Africa, warrant sales & distribution at Citi.

Smarttrade's evaluation shows which issuer offers, in a broad range of market scenarios, warrants with the best yields. As well as the product structures and underlyings, pricing also forms part of the analysis.

Citi has the biggest share (16%) of the 45,000 best warrant performances, followed by Commerzbank (13%), Deutsche Bank (11.9%), UBS (11.6%) and BNP Paribas (10.2%). "Citi has been issuing warrants in the German market for almost 28 years," said Danny Treffer, vice president at Citi. "Our customers value our experience and the quality of trading we are offering to them every day."

Deutsche was the most successful issuer of warrants linked to the Dax Index, issuing half of the best performing warrants linked to the benchmark. BNP proved to provide best performing products linked to the Eurostoxx 50. Warrants based on European bank shares are currently the most popular 'speculative' underlyings, and the basis for a commensurately high number of warrants, according to Smarttrade. As well as issuing the best performing warrants linked to the shares of Deutsche and Commerzbank, Citi was also responsible of 34% of warrants linked to Deutsche's shares, followed by Societe Generale (22%), UBS (19%), UniCredit (8%) and Commerz (7%).

"The competition among issuers has increased continuously in the past as the number of issuers grew over the years," said Hess. "We are not aiming to further increase the number of products, as customers already have an outstanding choice. Of course, we issue new products to keep on top of market movements, but we also reduce the number of products that no longer offer additional value."

Smarttrade has analysed the warrants market as well as the intermediary platforms that investors currently use to select and trade warrants, according to Ulrich. "One of the major findings was that investors need far more clicks to select and trade a warrant compared to other leverage investment products," said Ulrich. "This was a competitive disadvantage for warrants. With our new tool, we are providing a solution to overcome this disadvantage and make the warrant market more attractive to investors."

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