Brokerage, clearing and execution services firm Nissan Century Securities (NCS) has entered the Japanese uridashi structured products market with its first structured note, targeted at bullish investors seeking to take advantage of the movements in the equity market in recent months.
Shigeo Kobayashi, a director at NCS told SRP that uridashi bonds have their own unique risks but that they are also an attractive alternative investment product to diversify investors' assets if investors understand the risks.
"We have been receiving a lot of requests from our clients for a structure that can take advantage of the cheap valuation of the Nikkei and the high option price but with an opportunity for a quick exit," he said. "This gives us a perfect timing for our first equity-linked uridashi product."
NCS's first equity-linked note is a four-month structure linked to the performance of the JFE Steel Corporation share. The product - which uses Norway's Kommunalbanken as the bond provider and HSBC as the derivatives provider - features a combination of payoff types including knockout, reverse convertible and protected tracker. The product will offer a 10% annualised return with a knockout barrier at 105% and a knock-in barrier at 80%.
The JFE share has been the most frequently used single share underlying in the Japanese market and has featured in 13 structured notes with $154.28m in sales so far this year. Most of these products have a structure that is based on knockout and reverse convertible payoff profiles and, in a number of instances, in combination with protected tracker and digital options.
In relation to the firm's plans in the structured retail products market, Kobayashi said that although NCS may not be an active player in the market it will consider any opportunities the market may provide.
"We will monitor the market environment and client demand closely and will position ourselves for the opportunities ahead," he said.