A lot of positive news came out of banks’ earnings report in the past week, and two important EU regulatory appointments were made.
Over in Italy, Intesa Sanpaolo posted a net income of €1.5 billion (US$1.8 billion) for the first quarter of 2021 (Q1 2020: €1.1 billion). The bank held a 47.3% share of the Italian structured products market in Q1 2020, ahead of BNP Paribas (12.4%) and Banco BPM (8.9%), according to SRP data.
In South Korea, NH Investment & Securities has issued 16 derivative-linked bonds (DLBs) with a tenor longer than 15 years through private placements, which derived around KRW560 billion (US$494m) – translating to 93.3% of its total sales of DLB and derivative-linked securities (DLS) in Q1 21. The surge, which was mainly recorded in January, elevated NH in the country’s league table as the fourth most active issuer of DLB/DLS with a market share of 11.6% in the first quarter.
In slightly less glowing news, Mexico’s Monex sold MXN56 billion (US$2.8 billion) in structured products during the first quarter of 2021, a steep decline from its volume of MXN116 billion in the same period of 2020, SRP data shows. Monex’s product issuance has remained steady over the past year decreasing to 803 (MXN34 billion) in the second quarter of 2020 from 988 in Q1 20.
Remaining in the Americas region, the neighbouring US has seen fixed indexed annuity sales drop by 15% in the first quarter to $13.7 billion amid an overall boost in fixed annuity sales of 4% in Q1 21 to US$31 billion, according to data recorded by the Secure Retirement Institute (SRI). Despite the first quarter decline in FIA sales, the steadily improving interest rate environment is anticipated to bolster FIA sales throughout the year. SRI is forecasting FIA sales to increase by between eight and 17% in 2021.
Two major regulatory people moves were announced this past week.
Esma has appointed Natasha Cazenave as its new executive director. She will take up her new position on 1 June. Cazenave replaces Verena Ross, and is appointed for a five-year term, renewable once. She is currently deputy secretary general and head of the policy and international affairs directorate at France’s Autorité des marchés financiers (AMF).
Mark Branson, former head of Swiss financial markets regulator Finma, has been nominated by German finance minister Olaf Scholz to lead his country’s financial regulatory authority, Bafin. Branson left Finma on 30 April. He replaces former Bafin president Felix Hufeld, who left the regulator in January this year, following the Wirecard scandal.
Bank of America’s global head of equity derivatives, and equity client solutions, in New York, Cyrille Walter, has left the US bank, SRP has learned. Walter was a colleague of Fabrizio Gallo, co-head of global equities and Emea global markets at BofA, who left the bank at the end of 2020. Gallo had been demoted amid allegations he had not been sympathetic to staff’s concerns and requests to work from home at the beginning of the Covid-19 pandemic.
Swiss asset management and trading services provider Valeur Group has acquired LinkedTrade Technologies, the SaaS structured products multi-dealer platform, to strengthen its ‘positioning and enhance its investment solutions offerings’. London-based fintech LinkedTrade launched in 2018 to connect the buy- and sell-side offers of end-to-end automation for the design, pricing, trading and risk monitoring of structured products.
Family offices in Hong Kong SAR are increasingly using structured products as a risk management tool for portfolios given the ample liquidity in the equity market.
“We use structures like ELNs [equity-linked notes] and FCNs [fixed coupon notes], which enable us to customise our target limit on the upside and downside. That's one way we express our view that I think will pretty much fit in the scenario,” said Edmond Lau (right), senior investment director of Far East Consortium International.
Finally, Barclays has recorded an increase in investor interest regarding its Barclays iPath Series B Carbon ETN since the fourth quarter of 2020 amid rising popularity of environmental, social governance (ESG) strategies in the US structured product market. The exchange-traded note (ETN) was re-launched in 2019 and tracks the Barclays Global Carbon II Index, which holds EU Emissions Allowance futures. According to Barclays director Gavin Filmore, the bank developed its first carbon credit index over a decade ago. At the time, the concept of carbon credit schemes was in its infancy though there was the expectation that carbon credit markets would develop globally across multiple regions.