Leonteq: increase in demand for tailored investment solutions

Following the launch of Quote, Leonteq’s fully automated click ’n’ trade module within its multi-issuer platform, and the onboarding of Banque Internationale à Luxembourg (BIL) to LynQs, which was recognised as the Best Structured Product Technological Solution at this year’s SRP Europe Awards, SRP caught up with Alessandro Ricci (pictured), head investment solutions and member of the executive committee at Leonteq, to discuss this year’s activities, the firm’s recent achievements and the outlook for the rest of 2021.

The recent announcement suggests Leonteq is on a positive run. How would you rate YTD activity?

Alessandro Ricci: The positive investor sentiment and favourable market conditions in 4Q 2020 continued into the first months of 2021 and we are very satisfied with the progress made so far. We have continued to expand our multi-issuer platform with new partners, such as Basler Kantonalbank and BIL.

Digitisation and automation enable lower ticket sizes and reduce costs for investing - Alessandro Ricci 

In our home market we are now live on BX exchange, offering our clients in Switzerland another venue to source liquidity. We also expanded our product offering with fund derivatives and crypto assets, extremely well received by our clients, leveraging on the flexibility of our enhanced AMC platform.

Have investors shifted their priorities in the current environment? Can structured products capitalise in this context?

Alessandro Ricci: We see two major secular drivers for the increase in demand for tailored investment solutions. First the low interest environment, which triggers the need for additional investment opportunities besides traditional asset classes: structured investment products can certainly play a role when it comes to portfolio diversification.

Second, technology: digitisation and automation enable lower ticket sizes and reduce costs for investing, while providing a new and broader range of investors access to tailor made solutions.

We see decent increasing demand for thematic investing. We launched several thematic certificates in Switzerland through our collaborations with leading news and content platforms such as Finanz und Wirtschaft, The Market and cash. Furthermore, we launched a collaboration with Morningstar to access systematic indices via tracker certificates through which we make accessible promising investment ideas on global trends, such as big data & robotics or renewable energy.

What would you highlight since re-joining Leonteq almost a year ago?

Alessandro Ricci: With offices opening in Milan, led locally by Marco Occhetti, and Dubai, under Mohamed El-Buhali’s responsibility, we are closer and closer to our clients, allowing us to be more in tune with their demands and requirements.

From Dubai we plan to address the entire GCC market, adding a Sharia compliant offering to our existing platform. We also made further progress with the establishment of a service center in Lisbon, soon to develop in a fully-fledged office, and where we hired more than 20 employees in 2020.

How is Leonteq capitalising on its technology set up?

Alessandro Ricci: We are a technological company with the very deep know-how, expertise and risk awareness of a product manufacturer. I don’t think that there is anybody else in the market that combines these elements to the extent Leonteq does. Our technology platform is built bottom-up, thanks to the relentless work of our excellent in-house development teams and on the basis of a deep understanding of the whole value chain of investment solutions.   

Our digital marketplace LynQs embodies better than anything else our holistic approach to structured products, from pricing to Life-Cycle Management. We offer daily investment ideas, reflecting latest market trends, while providing a new level of transparency for clients’ structured products portfolio with our life cycle management module. We have recently launched Quote, LynQs’ pricing module, where we have transformed our clients’ experience in a multi-issuer pricing discovery process, a feature that is more and more required in our increasingly demanding regulatory environment. We will soon integrate our AMC Gateway into LynQs, for clients who want to leverage the full flexibility of our AMC offering.

Finally, as we remain a truly B2B4C company,  we can offer LynQs in a fully white-labelled format both to our (sell-side) partners and (buy-side) clients, a functionality that we believe to be truly unique in the market.

Can you tell us about any initiatives and plans in the pipeline?

Alessandro Ricci: At least three major ones. The first one would be to continue to enhance client experience in a truly open architecture framework. We are more than willing to partner with other product and service providers to enrich clients’ experience on our marketplace. More than 10% of our revenues YTD come from third party products or services, a percentage that I can only see growing in the future.

Secondly, recognising the ever increasing relevance of ESG, we have launched a sustainability initiative, through which we are both identifying how and where we can implement sustainable practices within Leonteq as well as looking at how we can support our clients and partners in investing responsibly. Our ambition is to become a leading ESG provider for structured products. As a first result of our focus, we are proud to be the first financial player in the market to launch a donation certificate (BeneFaktorZertifikate®), initiative matured in the Frankfurt office, under the sales leadership of Bjoern Geidel. Through our cooperation with the German asset manager Daubenthaler & Cie. we have launched the very first charitable certificates investing in socially relevant themes to address global challenges in the areas of environment and social matters.

Coherent with our quest to continuously democratise bespoke investment solutions, we have launched an online certification programme in structured products in collaboration with IMD, one of the world’s leading business schools and academic content provider. The objective of the program is to enable client relationship managers, working for our partners and clients, to master the main drivers behind structured products, so that they can better assist and guide their end investors.

Participants will receive a custom IMD-Leonteq certification upon successful completion of the program, which is expected to be made available via a dedicated LynQs module in September.