Our first In Brief of 2021 looks at some early staff changes at Qontigo and Citi, Asia Pacific payoff trends, and the first autocall note linked to Bitcoin.
BNP Paribas Wealth Management has set the tone for 2021, by outlining some key themes it believes will be the focal points of the coming year. It has selected a short-term tactical theme to benefit from the economic rebound in 2021 focused on vaccines and recovery; three medium-term themes with a focus on the search for yield; two investment themes based on sustainability to integrate ESG criteria; and four themes that focus on major long-term trends such as the opening of capital markets in China, new consumption habits, the impact of demographic trends and smart technologies.
London-based Marex Financial Products has rolled out the first ever autocallable notes linked to Bitcoin with downside protection
Structured products are in focus as BNP Paribas’ private bank is recommending them as a way to capitalise on some of the investment themes.
The structured product market never sleeps, and neither do staff move announcements.
Crypto Finance Group has appointed Rupertus Rothenhaeuser as CEO of its brokerage business, taking over from founder Jan Brzezek, who continues as CEO of Crypto Finance AG. He joins from Six Digital Exchange (SDX) where he was head business & ecosystem development and a member of the executive board since the end of 2018. At SDX, Rothenhäuser helped build the start-up SDX as the first regulated exchange and CSD for digital assets.
Nico Langedijk has started a new position as managing director, strategic accounts at Qontigo. The company, which was created in 2019 through the combination of Axioma, Dax and Stoxx, has restructured its sales organisation and Langedijk will be leading the newly formed strategic accounts team. In his new role, he will report to Greg Fenton, head of global strategic accounts, Qontigo.
Also making the headlines was Citi appointing Lucy Baldwin as global head of its independent research business from April. Baldwin will be joining Citi as the head of markets & securities services research & equity advisory. In her new role, she will report Fater Belbachir, global head of equities.
London-based Marex Financial Products has rolled out the first ever autocallable notes linked to Bitcoin with downside protection to capitalise on increasing demand from institutional investors. The three-month maturity USD-denominated structured notes offer downside protection barriers set at 69%, 56% and 70% levels, respectively - using a European barrier style each note will deliver 50%, 25% and 35% pa at maturity as long as the price of bitcoin futures remain at the same or above their strike levels.
In South Korea, the total balance of equity-linked securities (ELS) and derivative-linked securities (DLS) has amounted to KRW100.9 trillion (US$91 billion) following an upward trend of major stock markets as of 30 September, down KRW6.7 trillion from a quarter ago. On the DLS segment (including derivative-linked bonds), the FSS reported an increase of 19.2% to KRW6.2 trillion from July to September QoQ. The total repayment fell by 8.5% to KRW7.5 trillion and the DLS balance was down 4.9% to KRW28.9 trillion.
Staying in Asia Pacific, knockouts linked to basket of indices and reverse convertible notes (RCNs) were the most used payoffs by sales volume and market share (US$57.7 billion, 17.9%) in 2020, replacing range and accrual. Leverage long/short with stop loss stay on top by issuance (18,799/13,902) as Hong Kong SAR's callable bull/bear contracts (CBBCs) continue to dominate issuance.
The sales volume of autocallable structures in Asia Pacific (Apac) increased by 80.2% from 2019 – autocallables linked to baskets were deployed in 3,263 products (2,789 in Hong Kong SAR and 474 in Japan).
The combination of knockout, reverse convertible and worst of option, which raised an estimated US$52.8 billion (16.3%) in 2020, climbed by 41.1% to 2,961 from 2019 – 2,744 in Hong Kong SAR and 218 in Japan.
The dual currency deposit is one of the most popular payoffs within foreign exchange (FX) linked structured products around the world. While FX options and OTC derivatives are very widely used for hedging and speculative purposes, FX linked structured products comprise a relatively small part of the overall market dwarfed by the dominating position of equities.
Some FX linked structured products mimic their equity counterparts, for example a medium dated principal-protected product whose underlying is a basket of currencies (often emerging markets) against another (more established) currency. It is popular in many countries, with one of the most active being Mexico. FX is a particular focus in Mexico due to the relationship of the country and currency with the US and US dollar (USD). Dual currency deposits are issued very regularly by entities active in Mexico such as BBVA Bancomer and Santander.
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