Nasdaq has licensed its new Nasdaq Yewno Global Innovative Technologies Index to BNP Paribas which is seeking to provide exposure to technology companies on a structured products format. The new index has been designed to track the performance of companies engaged in artificial intelligence, robotics, automotive innovation, healthcare innovation, internet of things and data computing & processing.

Aside of the main technology sectors, the Nasdaq Yewno Global Innovative Technologies index also provides exposure to various sub themes, according to Baris Parla (pictured), managing director at Nasdaq.

"We have teamed up with Yewno to come up with a new sector classification," said Parla. "Yewno has created new sector and sub-sector classifications reviewing innovative technologies by analysing millions of approved patents to link them to the appropriate sectors. Patents demonstrate the extent to which a company has intellectual property and invests in research and development."

Technology companies are very difficult to measure because the parameters of the stocks in this sector are not price efficient and makes it difficult to use in structured products, according to a senior specialist in structured products underlyings at BNP Paribas in Paris.

"The bank wanted to respond to growing demand from investors for technology assets with an index that was price efficient from a structured products perspective but that a number of indices offering exposure to this sector have issues around the selection process, the type of activity, etc. which raises questions around the risks embedded in those indices," said the banker.

First, Nasdaq and Yewno developed a benchmark with the broadest universe available in this area-more than 1,200 securities-and then developed tradable sub-indices, according to Parla. "We have launched two tradable indices for BNP Paribas from that benchmark, a top 100 by market cap and a subset which excludes companies that derive more than 5% of their revenue from what are considered controversial industries, which is screened by ISS Ethix - Oekom," said Parla.

The index provides a much more comprehensive selection process because it does not look at revenues or past activities but at the current focus of each company, according to the BNP Paribas structurer.

The index provides a live indicator of each company's activities and it's offered in two versions with the same methodology: one with a 3% synthetic dividend in order to be price efficient and another one with an ESG feature in order to meet specific demand from distributors around sustainable investment assets. "BNP Paribas is planning to build a whole range of products around both indices and will issue dedicated products in different markets," said the BNP Paribas banker, adding that the partnership shows that there is scope to work on a collaboration basis with index providers to develop strategies to respond to specific needs and investment goals.

BNP Paribas has used Nasdaq indices in its structured products in the past but this is the first time the French bank has partnered with the index provider to develop indices.

More than 190,000 structured products across markets feature Nasdaq indices but the US index provider remains a marginal supplier of underlyings to the structured products market, according to SRP data. There are over 64,800 live structures linked to Nasdaq indices - mainly to the Nasdaq 100 (64,746 products). Other Nasdaq underlyings featuring in live products across markets includes the Nasdaq Biotechnology Index (three products), Nasdaq OMX Commodities (three products), Nasdaq Internet Index, Nasdaq Nordea SmartBeta Momentum Volatility Eurozone PR, Nasdaq OMX Emerging Markets Technology Index, and Nasdaq OMX Stock Market.

In addition, year to date, the iShares Nasdaq Biotechnology ETF has been deployed in 47 products sold in the US market and 32 in Taiwan with individual appearances in Germany/Austria, Canada and Sweden.

BNP Paribas has hedged over 18,000 products featuring Nasdaq indexes most of which were sold in Germany/Austria as well as in France and Italy. The French bank has also acted as a distributor of more than 20,000 products linked to Nasdaq underlyings with most products sold in Germany/Austria but also in Sweden (59), The Netherlands (44), France,

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