The Belgian Structured Investment Products Association (Belsipa) is one of the youngest trade associations for structured products around. Founded in February 2013 by Belfius, BNP Paribas Fortis, Commerzbank, ING Belgium, KBC and Societe Generale (Natixis became a full member at a later stage), the Belgian trade body hit the ground running in June 2013 with a response to the International Organisation of Securities Commissions (Iosco) consultation report on the regulation of retail structured products and despite its relatively short lifespan Belsipa already lists a number of achievements.
Belsipa joined the European Structured Investment Products Association (Eusipa) as an associate member on May 1, 2014 before becoming a full member on March 1, 2016 while in April 2015 the association published the first of its half-yearly market reports, offering important insight into market trends. In July 2015 Belsipa published another position paper, this time in response to the Belgian regulator Financial Services and Markets Authority (FSMA) consultation on the circular letter concerning the marketing Royal Decree.
Belsipa chairman Alain Flas (pictured), who is also the head of sales structured products for private investors at ING, spoke to SRP about the trade bodies' accomplishments so far, the collaboration between the members, the relationship with the FSMA and the challenges which lie ahead.
"Despite being such a young association [Belsipa] already obtained several achievements," says Flas. "We publish a market report covering structured notes, structured funds and insurance (Branch 23/Tak 23) products on a regular basis - every semester until now but on a quarterly basis as of 1Q16 - which is an important step to increase available market information."
AXA, Crelan, Bank Nagelmackers, AG Insurance and Deutsche Bank, currently non-members, also provided data for the report which covers approximately 95% of the Belgian structured product market, according to Flas. "That is a clear sign on how positive the market players view our goal to bring more transparency to the Belgian market. Providing correct market data is one of the initiatives to reach this goal," says Flas. "The fact that we share our general secretary Thomas Wulf with Eusipa is another positive factor."
Belsipa is now seen as an established industry speaking partner for both the FSMA and Febelfin, the umbrella organisation for the Belgian financial sector, according to Flas. "It allowed us to have several interesting technical discussions around risk classification, but also around the preparation of the Royal Decree concerning information obligations when distributing financial products to retail clients," he says. "I'm convinced that all these interactions lead to a better understanding of our point of view by the FSMA and vice versa.
"Belsipa is always very supportive in trying to solve issues by having an open dialogue with our local regulator. Regular discussions in the past have indeed improved our mutual understanding and we want to continue this dialogue with the FSMA," says Flas.
One of the main topics of discussion right now is the impact early termination events may have on the prospectus, not only for the parties issuing in the Belgian market but also for the global prospectus. "This is a very technical topic and we are currently analysing the impact it may have on prospectuses of issuers being active in the Belgian market. Most of the time, issuers are using a global issuance program instead of a prospectus specific for the Belgian market," he says. "Although we have started the first discussions with the regulator it is too early to give more details at this stage."
The various members of Belsipa are collaborating very well, according to Flas. "We look much more at our common interest. Of course, we remain competitors on the local market but this doesn't mean we cannot work together on topics such as risk, legal and regulation which are important for our structured product industry."
Flas sees numerous challenges ahead for 2016 and beyond, not only regulatory but also in terms of markets. "Negative interest rates for example will be a major challenge for the market," he says. "I am nevertheless convinced the industry will adjust to them and come out stronger. There is and there always will be added value for retail investors willing to invest in structured products."
Three hundred and twenty-five structured products with combined sales of €5.7bn had strike dates in 2015 according to SRP's Belgian database. Last year's offerings included 52 structured funds (€1.6bn), 49 insurance products (€1.4bn) and 224 structured notes (€2.7bn).
Click here to read the Belsipa reply to Iosco on the structured products consultation.
Click here to read the Belsipa reply to the FSMA consultation on the circular letter concerning the marketing Royal Decree.
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