Turnover of listed structured products in the Netherlands in 2015 remained stable according to the latest figures released by Euronext Amsterdam.
At €9.1bn, turnover of the predominately leverage products was almost level compared to 2014 while the number of transactions on the exchange, at 1,983,047, was also on par with the previous year (2014: 2,024,113 transactions). When including the figures for Binck turbos, which do not get a listing at Euronext but are available via the Cats trading platform of Börse Stuttgart instead, turnover for 2015 stands at €11.5bn, the highest since 2011 when a turnover of €16.2bn was registered.
The Dutch landscape for leverage products has somewhat changed during the last few years. Online broker Binck entered the market in 2014, while BNP Paribas took over the market making activities of Royal Bank of Scotland's (RBS) turbos during the same year, which led to the latter exiting the market. ABN Amro, which in 2004 became the first provider to rollout turbos in the Netherlands, left the market after selling its turbo operation to Goldman Sachs in January 2015.
SRP asked the six providers of leverage products in the Netherlands how they fared in 2015 and what their expectations are for 2016.
BNP Paribas - Erik Mauritz, head of exchange traded solutions sales
In 2013 it became clear that RBS was going to sell its derivatives department and new ideas and products were put on hold. When the business [the market making activities of the majority of the listed investment products] transferred from RBS to BNP Paribas in the Netherlands at the end of 2014, we were given new energy and space to rebuild everything. I think this [increase in market share] is partly a reflection of the fact that at BNP Paribas we got the chance to go full-on in the market. Apart from that, 2015 has of course been a year in which a lot has happened. Our products are aimed at active investors and they had plenty of reasons to trade last year. That has also helped increase our market share. We have actually continued on the same footing as when we started at first ABN Amro and then RBS - meaning a focus on content and service. Only towards the latter stages of the RBS period we did not quite get the opportunity to push new ideas and products.
We have re-introduced a number of product lines. Most other issuers concentrate on turbos and boosters but in our product range there are also other products such as our Rendement certificates and Memory Coupon notes. At the moment we are looking if there are any new products which we could possibly introduce.
Another factor is that, compared to other parties, I think we spend a relatively large amount of time and effort on content and education. Finally our spreads and market making are very competitive. You can no longer say the best because obviously everybody says that, but let's say our spreads are very competitive. That's the story behind the increase of our market share.
It is a fairly complex market right now. But what you can see is that that there is a lot of trading going on at the moment. Our market shares are similar, if not better, than the numbers seen throughout 2015, so in that respect we just continue where we left of last year.
Goldman Sachs - Jan Erftemeijer (pictured), executive director Benelux
When Goldman Sachs took over the turbo activities from ABN Amro in January 2015 - including issuing, marketing and market making - we made sure that the product offering was accurate, we expanded the number of underlyings and we ensured that the bid-offer spreads belonged to the most competitive in the market. We also took very good care of after sales. If investors have questions they know how to find us and they know they will get a quick response.
For 2016 we aim to come with a new website with new functionalities which will hopefully be of interest to the investor. Product development is also something that is always on the 'to do' list.
Binck - Jean-Paul van Oudheusden, head of business development for retail
I am always tempted to look at the market instead of the products. We have had a lot of volatility in 2015 and actually we expect the same for 2016. The market is really volatile. In general this is not good for investors. Sometimes you have traders who like this but for the investor who invest for the long term a little bit more tranquillity would be nice.
ING - Sander van Baren, head of sprinters
The year 2015 was fairly stable. We did not see too many highs or lows. Our market share remained at about the same level compared to 2014 and we expect it to remain stable for 2016 as well.
Commerzbank - Christophe Cox, derivatives public distribution Belgium and the Netherlands
We have improved our market share both in turnover and number of transactions compared to last year. That's not new, because we also strengthened our positions from 2013 to 2014. So, in the last few years we have been growing in the turbo market as a whole. We have expanded our product offering significantly. We used to work with 150 underlyings and now we have more than 350 underlyings at our disposal. For us, our vast offer of underlyings is a way to distinguish ourselves from our competitors.
On the one hand we have increased our offering and that's where the market-making capabilities of Commerzbank have been deployed. We constantly check our prices, especially the spreads, and we make sure they are very competitive. What we have also done in recent months is to expand the academy section on our website, with videos, learning modules, product pages, question and answer sessions, etc. In addition we have started organising events, both offline and online. Think of webinars and online seminars. We have also visited various towns and cities in the Netherlands and Belgium were investors could meet us and ask questions. Those are the pillars we have focuses on in recent years. We see that this is appreciated, we are bringing in more transactions and have also increased our revenue.
For 2016 we want to further expand our offer, not only in terms of underlyings, but also with a number of new product types. We are now preparing this, starting with our academy section, to provide sufficient information about these new products which are going to be launched later this year.
Citi - Robin Said, head of turbos the Netherlands
2015 was indeed a good year for us in terms of market share for the number of trades and turnover. The levels are higher in percentage and also in absolute value, which is important for us. There are several reasons behind the increase. A key driver has been our focus on product education. We have been touring across the Netherlands, doing seminars to explain our products and how they can be used by investors. Investor services has always been the core of our business. We are convinced that replying to investor requests in time and providing comprehensive information about our products, is key to long term success.
Another key element is our competitiveness. We have the lowest financing rates on most of the underlyings - or at least on most of the Dutch underlyings which are the underlyings that count. On the AEX, which is still the most popular underlying by far in the Dutch market, we have a 1.34% yearly financing rate on bulls in January which is substantially lower than the competition. Our focus, as Citi, is trying to get investors to compare the product and its financing rate before buying it. That has been a big focus for us.
What also helped was that we no longer had to use the term speeder as opposed to turbo. Prior to the name change we always had to explain first that speeders and turbos were the same products. Now it's much simpler, we just say we are also offering turbo's but our financing rate is 1.34% on the AEX.
For 2016 we will continue that strategy. Product education and competitive pricing. As we will be celebrating our 10th anniversary of issuing leverage products in the Dutch market we'll double the efforts so we'll be even more present, visible and engaged. We know the market well, even though we are less well-known than some of the bigger issuers, we are here for the long haul, we are proud of what we have achieved in these 10 years and we have appetite for more.
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