Barclays Bank has stood out as the Best House, Japan at the SRP Apac Awards 2021, which were announced on 16 June.

The UK bank accomplished a record year in the Japanese structured product retail market in 2020 with revenues nearly doubling compared with 2019, as its extensive investment on automation began to pay off.

“We achieved a milestone in Japan in June 2020 as the first country within Barclays to launch our global online pricer,” Nicolas Reille (pictured), head of equity derivatives structuring Asia Pacific & distribution non-Japan Asia, told SRP. “The introduction [of this tool] provided full business-to-business (B2B) solutions with automated booking and documentation. By the end of 2020, we were onboarded by several dozen clients.”

Decreasing volumes mean distributors have more time to focus on diversifying their product offering - Nicolas Reille

Primarily used by private banks and securities houses, the pricing tool has become available globally supporting price discovery, trade execution and marketing, according to Reille.

As part of its drive towards automation globally, Barclays also bolstered its email pricing automation for the Japanese market which went live in December 2019, leading to a 15x increase of the average weekly pricing replies throughout 2020. This tool is able to automatically parse the entire client flow through a server bot as emails are converted into streamlined requests, which are subsequently sent to the pricing servers.

The two pricers for structured products are connected and enable clients to leverage their internal systems through email mass batch pricings, then select the trades and automate the entire execution workflow, according to Reille. Programmed in HTML5, Python and Java, the pricers process data in the cloud and price through a GPU-based cluster while big data analytics are in regular operation to improve user experience.


“The massive growth in automation rate led sales and structuring to focus on new initiatives,” said Reille.

In a first for the market, Barclays issued a structured Uridashi with full principal protection on 30 June 2020. Distributed by Shizugin TM Securities, the five-year autocall offered a callable digital coupon of 0.8% pa. or 0.1% pa depending on the performance of Nikkei 225 and derived JPY5 billion, SRP data shows. Prior to this launch, principal-guaranteed Uridashi structures usually came with fixed coupons that may step up periodically but did not allow investors to cash in any rise in the underlying asset.  

“The team identified latent demand from the most conservative investors who were still sidelined by high market volatility from going back into the market, despite historically high coupon levels on standard structures,” said Reille. “The response was enthusiastic with distributors. Just in the two following months, [we] had already issued JPY25 billion (US$228m) with regional security brokers across both rates and equity payoffs.”

Last month, Barclays issued the first strategy linked Uridashi which “can be seen as a hybrid between structured note and structured fund”. “We’re looking forward to adoption of this new format by the market,” said Reille.  

In addition, he pointed out the popularity of hybrid autocalls on emerging market (EM) FX and equities through private placements, which expanded from the retail to the institutional space. Barclays traded its first FX contingent equity hedging strategy with an institutional investor in Japan in 2020. 

“The usual combination is a benchmark index like the Nikkei 225 and the Eurostoxx 50 and an EM currency pair, such as TRY/JPY and BRL/JPY, since Japanese investors are already familiar with both underlyings on a stand-alone basis,” he said.

Structured funds

The UK bank was also active in the retail fund space, adding in December 2020 Mitsubishi UFJ Securities to the pool of distributors of the Doubleline Shiller CAPE US Equity Plus fund (FX hedged/unhedged) run by Asset Management One. 

The fund uses a total return index swap to gain exposure to the Barclays Shiller CAPE US Sector Index while the remaining assets are then invested into a lower-risk bond portfolio with the goal of trying to outperform cash.

In February 2021, the investment bank rolled out the Powered Income Fund (monthly distribution/asset growth) with Sompo Asset Management as the manager and Daiwa as a distributor. The fund invests through a total return swap into a strategy that optimises a fixed income portfolio to select the least risky combination of assets that provide an expected yield target of 10% after fees.

2021 outlook

Barclays has seen a ‘very high’ amount of Uridashi and private placements in the markets in the first quarter of 2021 driven by elevated investor appetite and recall volumes, similar to Q1 20.

“We expect this to cool down with markets having now moved to a more range bound regime,” Reille said. “Decreasing volumes mean distributors have more time to focus on diversifying their product offering, and structured funds, which have already seen a renewed interest since last year, are expected to benefit most from the current environment - carry remains popular, as well as products embedding a risk-off component.”

With tighter rates and funding, principal protected Uridashi are less attractive in the current environment, but the issuer expects “their popularity to come back when levels widen back”.

As ESG investing takes off in Asia and Japanese distributors move to catch up, Barclays has included this theme as one of its focus in 2021.

The UK bank rolled out its first ESG products in Japan in August 2019 via several principal-protected notes offering digital coupons linked to the Barclays Japan ESG Quality Equity PR Index.

“We have further plans in store in the coming months,” concluded Reille.