A week in news all about expansion and adapting to current (and future) market movements.
The rise of concentrated equity positions among wealthy investors is creating new opportunities for structured solutions, according to Morgan Stanley, which has launched an integrated coverage model aimed at better serving registered investment advisors (RIAs) and family offices. Lou Mandia, head of RIA strategy and distribution at the bank, said the move was designed to address an underserved segment where clients increasingly require solutions that span multiple parts of their portfolio.
For its part, New York-based wealth management company NewEdge Investment Solutions has expanded access to its structured note strategies through Envestnet’s Unified Managed Account (UMA) platform, allowing wealth managers to manage structured note portfolios alongside other investment strategies within a single account.
The integration enables advisers to incorporate NewEdge’s Structured Note Income Portfolio (SNIP) and Structured Note Advisory Portfolio (SNAP) solutions into UMAs, extending their availability beyond the existing separately managed account (SMA) structure.
The VIX is around its long-term average but that’s not because risk is low - Chris Murphy, Susquehanna
The options market is showing a market defined less by broad risk reduction and more by constant rotation, with investors shifting exposure between sectors, single stocks and thematic trades, according to Chris Murphy, co-head of derivatives strategy at Susquehanna, the US quantitative trading firm.
While index volatility remains near historical averages, the strategist say that masks significant moves beneath the surface as dispersion rises and correlations fall.
Murphy told Bloomberg Intelligence in a podcast of its All Options Considered series recorded on 14 July, that the subdued level of index volatility is not a sign of calm. Instead, it reflects a market where winners and losers are rotating rapidly, keeping index moves contained while individual sectors experience much larger swings.
“The VIX is around its long-term average but that’s not because risk is low,” Murphy said. “It’s because dispersion is high and correlations are low.”
The summer of sport continues Chicago-based FutureSports has launched as an independent index administrator focused on converting sports performance data into rules-based financial indexes that can be referenced by tradable financial products.
The Chicago-based firm said its FutureSports Performance Indexes (FSPI) will use officially reported statistical outcomes from professional and college sports to create benchmark values designed to underpin products including listed derivatives, ETFs and OTC swaps. The company said it is developing partnerships with sports leagues and financial market participants to create risk management and trading opportunities linked to team and athlete performance.
Regulation
Hong Kong's Securities and Futures Commission (SFC) has revised its regulatory framework for authorised leveraged and inverse (L&I) products, introducing a flexible leverage structure that allows providers to adjust daily leverage within existing regulatory limits. The changes, prompted by rapid growth in single-stock L&I products, are designed to support orderly market trading while strengthening disclosure requirements around daily leverage exposure.
In South Korea, the Financial Supervisory Service (FSS) sanctioned KB Securities following an inspection that identified deficiencies in over-the-counter (OTC) derivatives trading, investment product sales and regulatory reporting. The regulator issued an official warning and imposed financial penalties on the firm.
Indexing
S&P Dow Jones Indices and Pantera Capital launched a digital asset benchmark that screens cryptocurrencies based on protocol-level revenue and applies adjusted market capitalisation weighting with defined caps.
Stoxx introduced a new global equity benchmark architecture covering 46 markets and approximately 99% of the investable equity universe, providing a consistent framework across more than 1,300 indices.
SRP data
Looking at SRP market data, the Belgian market recorded an increase in fund-linked products which nearly matched fixed-income issuance during the quarter.
Best-selling products league tables showed that fixed income remained the dominant underlying, with Jefferies and BBVA leading best-selling products in the US and Mexico whilst in Europe Natixis topped the French market, exceeding €2.5 billion in sales.
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Awards & Insights
We also published coverage of the SRP Apac Awards, alongside exclusive interviews examining regional market trends with UBS discussing the next phase of Asia's structured products market; Barclays outlining its expansion strategy beyond fixed coupon notes (FCNs) and S&P Dow Jones Indices explaining how demand for custom indices is evolving across structured products, insurance and ETFs.
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