Senior departures and ETF growth rocked the structured product world in the last week.
SRP reported exclusively last week on a significant staff move – the departure of one of the most high-profile figures in the industry, Roberto Lazzarotto, senior managing director and global head of sales, from Qontigo.
Lazzarotto was appointed to this role in Q3 2019 following the launch of Qontigo by Deutsche Börse Group after the acquisition of portfolio construction and risk analytics firm Axioma. Qontigo combines Deutsche Börse's Stoxx and Dax indices, and Axioma’s tools.
In this role, Lazzarotto was responsible for the distribution and promotion of Stoxx and Dax index concepts across all asset classes to institutional investors. Prior to that appointment, he spent six years at Stoxx first as head of Emea and Latam, deputy head of global sales, and most recently as global head of sales and marketing.
Another move saw has seen Credit Suisse appoint a new head of Asia Pacific trading solutions (ATS) sales and advisory for private banking business in Asia Pacific. In his new role, Emmanuel Triomphe will be based in Hong Kong, and report to Yves-Alain Sommerhalder, head of ATS with a dotted reporting line to Francois Monnet, head private banking North Asia as well as to Benjamin Cavalli, head private banking South Asia.
André Buck, head of sales at Swiss exchange Six, told SRP that the feedback he was getting from banks is that “they have had a very good month, with people wanting to reinvest in new structures at current levels, taking advantage of the volatility”.
“That is a big difference from 2008 when investors no longer wanted to touch structured products, and there was a dramatic decrease in activity,” he noted.
He also shared some new developments the exchange is working on to comply with the new trading model introduced in Switzerland in June - the price validation market model. “Now, when a request for a trade comes in it gives the issuer time to refresh the price to the current level of the underlying,” he said. “We are aiming to have a tool that provides the current price for the underlying so that more products can be issued with tighter spreads for the benefit of the investors.”
Turning out attention to Canada, Yves Rebetez, chief investment officer of Canadian fintech platform Pascal Financial, said he believes ETFs have been the most significant financial innovation in the last 30 years.
“What is most remarkable about the ETF value proposition is that it is generally very cost effective. It's mostly fully transparent and effective in terms of reaching the various desired investment solutions and it's extremely good at giving you that exposure,” he said.
However, he also noted that while the Canadian ETF marketplace has grown quite rapidly in the past five to seven years, it remains a fraction of the size of the mutual fund industry. “What happens here in Canada is slower and innovation does not necessarily happen as fast as it would in the US. This may be because we are 1/10 of the size, population wise. You also don't have the kind of potential scale that you have in the US,” he said.
On the regulatory side, Belgium’s national financial regulator banned only one-third of the 35 products with new features it analysed during 2019. Of these, 10 products did not meet the criteria of the moratorium and were deemed ‘particularly complex’ by the regulator. As such, these products were not sold in the retail market, according to the FSMA’s annual report. The number of products banned (10) is the lowest since the introduction of the moratorium in 2011. In 2018, 20 products were prohibited for sale while in 2015, 46 products were deemed too complex by the watchdog.
In Cyprus, the local Securities and Exchange Commission has completed its investigation into market manipulation by the Cyprus Popular Bank (CPB) and Commerzbank. It found that historical market manipulation occurred between Commerzbank and CPB, and imposed an administrative fine of €650,000 (US$ $730,800) on the German bank for market manipulation. This investigation is part of the regulator’s probe into CPB’s activities and role in the run up to the financial crisis and subsequent bail-in of the Cyprus banking sector in 2013.
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