The environment continues to be popular for Dutch retail investors, who also remain interested in commodities, notably oil, gold and silver in May. Royal KPN retained its attraction, appearing in a memory coupon note, according to SRP data.
ING issued the third tranche of ING Liric Duurzaam September 2023, an eight-year European medium-term note linked to the Sustainable Europe Low Risk Equity (SELRE), which was first launched in August 2015. Tranche 1 (€20m) and tranche 2 (€10m) sold out on the secondary market which did not come as a complete surprise, according to Zico Yeh, head of sales structured products for private investors at ING in Amsterdam. "We were aware of the potential, since sustainability in combination with capital protection is a hot topic, also internationally," said Yeh. For the moment, the bank has no plans to launch any new products linked to the index, he said.
BNP Paribas launched a memory coupon note linked to the Royal KPN share. The note, which has a term of three years, pays a fixed coupon of 8%, providing the share is at or above the predetermined barrier of 2.80 points (81.159% of the strike price).
To date, just four providers (Kempen, BNP Paribas, ING and Wilgenhaege) have distributed public offers this year; four years ago, in 2012, there were 11 distributors active. Twelve structured products, including offers from ING, MeesPierson and Van Lanschot matured during May. Rabobank's AEX Note May 2016, a medium-term note linked to the local Amsterdam Exchange Index (AEX), provided the highest return. The AEX closed at 260.14bp when the product first struck, on May 22, 2009. Seven years down the line, the index had risen to 432.57bp (May 23), resulting in a return of 166.28%, or 7.51% per annum.
Turbos linked to gold are among the most traded products at Euronext Amsterdam amid Belgian and Dutch investors, according to Christophe Cox, derivatives public distribution Belgium and the Netherlands at Commerzbank. "Gold is in third place this month in terms of volume and in numbers of trades as underlying of all listed structured products at Euronext Amsterdam," said Cox. "Silver is doing very well too. If we look at the overall figures for 2015, gold was in fourth place and silver was number 18."
Apart from gold and silver, oil is still traded seriously and oil related companies "think Royal Dutch Shell" are also doing well, while indices such as the AEX are "consistently good and trading in numbers", said Cox. "[Commerzbank] does not create products in response to specific events but, of course, investors could, from their own vision, anticipate on market expectations, including a possible Brexit. For example, recently, oil was very much in the picture; now it's mainly gold and we also see investors taking up positions in sterling."
The turnover of structured products on Euronext Amsterdam was €1,586m during the first quarter of this year, down €15m on the previous quarter and down €39m year-on-year, according to the latest figures released by the European Structured Investment Products Association (Eusipa). The figure was almost exclusively linked to leverage products (€1,572m) with turnover for investment products just €14m, split between yield-enhancement (€8m) and participation (€6m).
There were 12,680 new listings between January and March on the Amsterdam exchange, including 12,662 leverage products, 15 yield-enhancement certificates and three participation certificates, according to the trade body. The total number of investment products listed on Euronext Amsterdam is 167 (88 yield-enhancement, 79 participation) while the number of turbos stood at 16,278 at the end of March (10 without knock-out; 16,204 with knock-out; 64 constant leverage).
The Netherlands authority for the Financial Markets (AFM) has conducted an investigation into the trading strategies of high frequency traders (HFTs) and their interaction with the trading infrastructure. The regulator concluded that the identified trading strategies are derived from traditional earnings models such as market making and arbitrage.
As a result of new applications of technology in the market infrastructure and at market parties, order books can change rapidly today, according to the AFM. "An investor thinks he can enter into a transaction, but is unable to do so because orders seem to disappear suddenly." Investors perceive this phenomenon as apparent liquidity and blame it on the trading practices of HFTs, the AFM said. "The rapid and frequent amending or withdrawing of orders is an essential feature of a common earnings model known as market making."
Click the link to view the Eusipa 1Q2016 overview and the AFM report on high-frequency trading.
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Autocallables rule Dutch market in April
The Netherlands Market Review - April 2016