SRP Americas 2025: navigating macro trends in structured products

The impact of changing interest rate environments, inflationary pressures, tariffs and geopolitical factors were among the topics discussed during ‘Navigating macro trends in structured products’, the opening panel of the SRP Americas 2025 conference, which was held in Scottsdale, Arizona on 16 September.

People are doing everything they can to find as much yield as possible in the market - Vishal Desai, Citi

“People are doing everything they can to find as much yield as possible in the market,” said Vishal Desai (pictured), head of structured notes, North America at Citi Global Wealth Management.

“Investors are going to names in their portfolio that rally,” said Desai adding that earlier this year, there was a notable movement toward capital protection structures, especially when interest rates were tight, allowing investors to gain exposure with a degree of safety.

“There was a shift towards simplicity to manage that pricing environment,” Desai said.

_{Left to right: Thomas Chin, Bloomberg; Christopher Schell, Davis Polk & Wardwell, Vishal Desai, Citi Global Wealth Management; Allison McCord, TD Securities and Nataliya Popel (moderator), Stifel).}

According to Allison McCord, director, global equity derivatives at TD Securities, a significant volatility spike in April caused market declines and highlighted the need for issuers, who are mostly ‘short volatility’, to use additional hedging strategies to manage risk.

“The current higher-rate environment makes options cheaper and coupons higher but also increases sensitivity to other factors like dividends and forward curves,” McCord said.

Panelists emphasized the importance of adapting pricing and risk management strategies to account for changing volatility conditions in the market.

Snowballs were recognised as a popular solution in the current environment to enhance protection and adapt to changing market conditions, providing “additional protection and flexibility for investors,” according to to McCord.

Regulation was discussed as a significant factor influencing the structured products industry with Christopher Schell, partner, Davis Polk & Wardwell highlighting the need for regulators to consider the market dynamics and the impact of regulatory changes.

“The industry faces challenges from unexpected regulations – sometimes rules created for other financial areas have unintended, outsized impacts on structured products,” Schell said.

_{Left to right: Thomas Chin, Bloomberg; Christopher Schell, Davis Polk & Wardwell, Vishal Desai, Citi Global Wealth Management; Allison McCord, TD Securities and Nataliya Popel (moderator), Stifel).}

Customization and leading innovations are becoming increasingly important for meeting diverse client requirements, noted Thomas Chin, global head of structured products at Bloomberg, while the convergence of technology and investment advice is expected to make it easier for advisors to deliver tailored recommendations and outcomes to clients, with the potential for significant improvements in speed and accessibility.

According to Desai, technology is increasingly being used to automate and streamline the delivery of investment advice and products.

“Investors are looking at exposure to AI, technology.

“We can put the universe, things that we're thinking about into different tools, and those tools can answer those questions a lot faster than the five of us,” said Desai.

Product trends and features that resonate strongly in the current market environment, include a focus on "pushing innovative indexes" to provide new investment opportunities and address evolving client needs, according to Schell.

The importance of education – ensuring that partners, CIOs, and advisors can clearly explain the rationale behind investment recommendations to clients, was highlighted by Desai, with McCord adding: “Putting advisors and classical advising structures in place allows professionals to focus more on delivering high-quality advice.”

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