Latest: Europe’s listed products turnover falls, structured products dominate HKSAR market

Turnover in investment and leverage products on European exchanges has decreased by 22% quarter on quarter and 20% year on year in the second quarter of 2023, bringing the total to €25 billion, according to the European Structured Investment Products Association (Eusipa).

At the end of June, trading venues located in reporting Eusipa markets were offering 439,791 investment products and 1,778,755 leverage products

Second-quarter turnover in investment products on European trading venues amounted to €9 billion, 36% of total traded volume - investment product turnover decreased by 21% quarter on quarter and by five percent year on year.

Turnover in leverage products including warrants, knock-out warrants, and constant leverage certificates reached €16 billion in the period from April to June, representing 64% of total turnover which decreased by 27% year on year and by 23% from Q1 2023.

At the end of June, trading venues located in reporting Eusipa markets were offering 439,791 investment products and 1,778,755 leverage products which represents an increase of the number of listed products by four percent on a quarterly basis and by 11% on the previous year.

In total, 150,098 new investment products were launched, accounting for 11% of new issues while the 1,273,128 new leverage products represent 89% of the total - there were 13% fewer investment products launched than in Q1 2023.

At the end of June, the market volume of investment products stood at €371 billion – up three percent quarter on quarter, and the outstanding volume of leverage products totalled €13 billion at the end of June which represents a 37% increase on a year-on-year basis.

European retail investors turn sharply bearish on UK equities

Pan-European trading venue for securitised derivatives Spectrum Markets has revealed a steep decline in sentiment towards the FTSE 100 index, dropping to 87 points.

According to Spectrum, the FTSE saw a notable uptrend in the first half of September, reaching its peak around September 20^th before declining towards the month's end. The movement in the FTSE 100 price can be closely tracked to the sentiment of retail investors, as reflected in the company’s SERIX index.

The alignment of the two indices suggests that in September a significant proportion of activity on Spectrum linked to FTSE 100 was directional trading, though it’s likely there was still an element of hedging wider equities portfolio positions, which is also common, according to Michael Hall (right), head of distribution at Spectrum.

In September 2023, 158 million securitised derivatives were traded on Spectrum, with 31.6% of trades taking place outside of traditional hours. More than ninety percent of the traded derivatives were on indices, 6.4% on currency pairs, 2.2% on commodities, one percent on equities and 0.1% on cryptocurrencies, with the top three traded underlying markets being DAX 40 (41.1%), Nasdaq 100 (20.4%), and S&P 500 (10.7%).

Structured products remain most prevalent product in HKSAR

A survey jointly conducted by the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) shows that money market funds were the top-selling collective investment schemes (CIS) in 2022.

However, according to the survey, structured products remained the most prevalent type of products sold by the respondent firms during 2022, constituting 51% (US$1.9 billion) of the total transaction amount. CIS and debt securities followed, accounting for 23% (US$884 million) and 17% (US$648 million), respectively.

Equity-linked structured products remained predominant, representing 53% of all the structured products sold in 2022 – according to the survey, some investors shifted to other product types such as currency-linked products owing to weak sentiment in stock markets in 2022.

On debt securities, some investors shifted their interest to sovereign bonds, such as HKSAR Government Bonds including green bonds and silver bonds, which were perceived to be of lower risks with more stable returns.

The number of firms distributing investment products online increased to 83 in 2022, up 19% from 2021. CIS remained the most common product type distributed through online platforms, which represented 83% of total online sales.

Of all CIS investors, the proportion of investors transacting online also increased from 65% in 2021 to 72% in 2022. Notably, online sales of debt securities increased significantly to 15% of the total online sales in 2022 from 6% in 2021.

The survey was designed to collect information about the types and value of investment products sold.

‘The information collected helps the SFC and HKMA better understand market trends, identify risks associated with the selling activities of intermediaries and coordinate their responses to address areas of common concern,’ said the HKMA in a statement.

BITA to release fintech index

BITA Indexes has partnered with financial publication AltFi to launch a global fintech index which will offer exposure to a basket of approximately 60 ‘pure-play’ fintech companies.

To be included in the index, companies must have an AltFi revenue-based fintech exposure score of at least 50%, a market cap of US$100m and a three-month average daily trading volume of US$300,000.

AltFi’s fintech exposure score is calculated through analysis of a company’s business lines via the collection of publicly available data such as regulatory filings and quarterly earnings reports. Companies are weighted by market cap with each constituent capped at nine percent while the cumulative weight of all constituents above 4.5% cannot exceed 40%.

The index has returned 14.3% so far this year versus 10.7% for the MSCI World, as of 29 September.

The move makes AltFi the first specialist financial publisher to launch a dedicated fintech industry benchmark.

Sam Ridley (right), managing director at AltFi, said: ‘The launch of the index will bring the most definitive benchmark available yet to the fintech ecosystem, bringing clarity to investors and companies. It will help track the performance of listed fintech companies, especially important as the IPO market begins to open in the coming years.’

Basler Kantonalbank enters BX Swiss’ trading segment deriBX

From 13 October 2023 investors will be able to trade structured products from Basler Kantonalbank in the BX Swiss trading segment deriBX.

With the addition of Basler Kantonalbank as a new issuer on BX Swiss, the Swiss Exchange is expanding its growing range of exchange-traded structured products.

Basler Kantonalbank offers tailor-made and innovative certificates in the categories of capital protection, yield optimisation and participation and has credit ratings of AAA from Fitch and AA+ from Standard & Poor's.

‘The partnership with Basler Kantonalbank is another milestone in our efforts to provide our investors with high quality products and to continuously expand our range of exchange-traded structured products,’ says David Kunz (right), chief operating officer of BX Swiss.

Raiffeisen International becomes issuer on Easy Euwax trading segment

Raiffeisen Bank International is listing structured securities as an issuer in the Easy Euwax trading segment of Boerse Stuttgart Group.

As an exchange-based zero-fee segment, Easy Euwax complements the Euwax segment of Boerse Stuttgart Group for structured securities trading and is open to all issuers. Morgan Stanley was the first issuer to list its products in Easy Euwax. In total, the trading segment now comprises around 224,000 leverage and investment products on a wide variety of underlyings.

‘Transparency and product clarity are important cornerstones of our product offering, which are particularly appreciated by investors,’ said Philipp Arnold (right), head of certificates sales at Raiffeisen Bank International.

For the approximately 4,000 leverage and investment products of Raiffeisen Bank International listed on Easy Euwax, no exchange transaction fees are charged while the independent exchange’s trading surveillance office monitors price fixing and transaction settlement for exchange trading in the Easy Euwax segment.

Pixels Hunter/Adobe Stock.