Structured products provider Incapital Europe has stopped issuing products in the UK and is considering exiting the market.

A source at Incapital in the US told SRP that given regulatory and other developments in the UK, the firm has paused to reconsider its structured business.

"Regarding Incapital's London-based operations, there will be no change in our service or support of Incapital's existing structured product plans," read a statement issued by Incapital. "We are pausing our issuance of new plans until we get a better understanding of the UK market landscape. Additionally, Incapital continues to advance plans for growing its European corporate note programme."

SRP has also confirmed that James Chu (pictured), the company's managing director, has left the US-owned firm after two years at the helm.

A source told SRP that this is another example of the difficulties small providers face in a very competitive arena where a strong capital base and access to counterparties is pivotal.

"I think Incapital Europe failed to access counterparties and get traction," the source said, mentioning other recent cases of failed operations including Jubilee Financial Products, Merchant Capital and SPGO. "Obviously, the firm did not get the volumes it was expecting."

The firm's website is re-directing queries for its existing structured products to plan administrator and custodian Reyker Securities, for investors seeking "indicative month-end bid prices" for Incapital Europe and Blue Sky Asset Management products.

Incapital Europe is a wholly owned affiliate of Incapital LLC, a US-based securities and investment banking firm. Incapital acquired UK structured products boutique Blue Sky Asset Management (BSAM) in July 2010 and merged it into its London-based office, Incapital Europe, shortly thereafter.

James Chu, the former chief investment officer at BSAM, was appointed MD of Incapital Europe in June 2011 following the departure of Chris Taylor, MD, and Mark Dickson, MD of operations.

Reyker Securities confirmed that it is dealing with queries on existing products marketed by the Incapital Europe but declined to comment further.