Position changes at Citi, global issuance volumes and fines in the US all featured in the headlines in the past week.

Gidon Kessel, head of wealth management at Citibank Korea, has relocated to London to take a new position as head of investment and product at Citibank UK as the Korean arm winds down its retail business along with 12 other Asian markets for Citi. In his new role, Kessel reports to Mark Mills, Emea regional investment head, wealth management and Susan Shakespeare, head of UK consumer and Emea international personal bank at Citi, SRP has learned.

During his three years at Citibank Korea, Kessel managed deposits, investments, advisory and insurance divisions in addition to structured products featuring equity-linked securities. He played a role in arrangement of issuing ESG-linked principal protected notes, which was set to take place by mid-2021 but was scratched due to the retail exit.

Citi announced in early 2021 that it was ‘doubling down on wealth’ and focusing its presence in Asia and Emea on four wealth centres - Singapore, Hong Kong, the UAE and London. It also said it was exiting its consumer franchises in 13 markets including Australia, China, India, Korea, Poland, Russia and Taiwan.

As we approach the end of H1 2022 SRP looks at trends in the global market in terms of issuance, sales and outstanding notional. The outstanding volume of structured products globally for the last five years, split by region, stands just below US$2 trillion as of today - about half of the outstanding comes from our Asia Pacific database, and the other is equally distributed between Europe and the Americas.

The Apac markets were generally off to a good start in the first quarter 2021. China’s equity markets faced headwinds due to triple effect of the Chinese government crackdown on tech companies, the Covid-19 resurgence with on and off lockdowns, and recently the geopolitical situation with the Russia-Ukraine war taking centre stage.

The outstanding in the Americas was up 11% - a strong growth driven mostly by the US but also with solid growth in Canada - slightly offset by Mexico. The outstanding volumes in Europe are down three percent.

The Vienna Stock Exchange (VSE) has decided to discontinue the calculation of the Russian Depositary Index (RDX) and 14 other indices with Russian Depositary underlyings. The 15 indices suspended since the beginning of March were based on prices determined on the London Stock Exchange (IOB). Outstanding structured products can be switched to Russian indices with a local price source (Moscow Stock Exchange - Moex). The calculation of all Russian indices with the price source Moscow is paused until further notice. In addition, the composition of local Russian indices will be altered due to the exclusion of Russian companies that are targets of sanctions imposed by the European Union.

Deutsche Boerse Group’s data and analytics business reported a 72% percent increase in revenues year-on-year. It reported net revenue of €1.1 billion in the first quarter of 2022, an increase of 24% year-on-year (YoY) and considerably above expectations, according to its chief financial officer Gregor Pottmeyer. The key driver of the cyclical net revenue growth of 11% was the higher market activity across all asset classes in trading & clearing resulting from increased market volatility. Index derivatives, as well as power and gas products benefited from the growing hedging demand among market participants.

The US Securities and Exchange Commission (SEC) has charged Allianz Global Investors US (AGI US) and three former senior portfolio managers with ‘a massive fraudulent scheme that concealed the immense downside risks’ of its options trading strategy Structured Alpha.

According to the regulators, after the Covid-19 market crash of March 2020 exposed the fraudulent scheme, the strategy lost billions of dollars. The Allianz subsidiary which marketed and sold the strategy to approximately 114 institutional investors, including pension funds, has agreed to pay more than US$1 billion to settle SEC charges and together with its parent, Allianz SE, over US$5 billion in restitution to victims.

The SEC’s complaint, filed in the federal district court in Manhattan, alleges that Structured Alpha’s lead portfolio manager, Gregoire P. Tournant, orchestrated the multi-year scheme to mislead investors who invested approximately $11 billion in Structured Alpha, and paid the defendants over $550 million in fees.