The final In Brief of 2022 sees India relax rules around structured products, a social bond issuance and top payoffs and issuers in the US.

BNP Paribas has debuted a €50 million social bond linked to the performance of the MSCI Eurozone Social Select 30 index. The new product is aimed at investors seeking to engage on social impact and supports social causes through a donation mechanism embedded into the transaction structure. The product was structured by BNP Paribas CIB’s global markets unit with BNP Paribas’s insurance arm, BNP Paribas Cardif, purchasing the note.

The BNP Paribas’ social index-linked bond integrates the three features of an ESG product - a social bond, a social index and social sharing through donations.

This is the second ESG structured product with a social focus recorded in the European public offering market following the launch in December 2021 of the Garantum Social Fix the Best Note linked to a Basket of Shares which was issued under Crédit Agricole’s social notes issuance programme, the Crédit Agricole Social Bond Framework, and under a social bond framework on Nasdaq’s Sustainable Debt Market in Stockholm.

French lender BNP Paribas has also announced the appointment of Robert McDonald as head of strategic equity solutions and equity-linked origination and Nadim Siddique as head of strategic equity derivatives trading within the bank’s global equities business. Based in New York, they both will report to John Gallo, head of global markets Americas. Strategic equity solutions and equity-linked origination are key pillars of growth within the bank's global equities and corporate sales in global markets. The French bank reorganised the set-up of its global markets business in February with the creation of a global equities business line which houses prime services, cash equity and equity derivatives.

The foreign branches of Indian banks can now offer financial products, including structured products, which the regulator does not allow onshore without prior approval. Effective from 1 December, a framework set up by the Reserve Bank of India (RBI) enables the foreign branches or foreign subsidiaries of Indian banks and all India financial institutions to deal in financial products, including structured financial products, which are not available or are not permitted by the central bank in India without prior regulatory approval. Cooperative banks, regional rural banks and local area banks are excluded from the list of eligible banks.

In the UK, the regulator is seeking market feedback on a new regulatory framework to replace the Priips and Ucits rules. The UK Financial Conduct Authority (FCA) is seeking views on when and in what format information must be delivered to retail consumers in relation to investment products. The UK regulator, which has received the mandate from the UK government to revoke the Priips regime and the Undertaking of Collective Investment in Transferable Securities rules, wants to ensure that the information provided to retail investors is useful and supports the experience of buying a product. The FCA is also considering who should have responsibility for producing disclosure.

As we approach the year end, SRP looks at the best payoff types and top issuers of structured products issued year-to-date (YTD) across the US, Canadian, and Latin American markets.

The combination of knock out and reverse convertible continued to dominated in the US market YTD with sales volume amounting to US$10.6 billion across 5,006 structured products. This represented a 42.4% decrease in sales from the prior-year period.

The knockout payoff appeared in 12,929 products, down 14.4% year-on-year (YoY), while sales totalled US$32 billion. The autocall wrapper saw several stocks gaining popularity as underlyings including the Tesla share (615 products/US$1.4 billion), Apple (504 products/US$1.4 billion) and Amazon (464 products/US$1 billion). The callable option replaced the knockout as the second most favoured payoff used in combination with the reverse convertible and worst-of profiles compared with a year ago. This combination of payoff types was deployed across 2,861 structured products sold at US$10.2 billion, which represents a market share of 11.6%.

On the issuer side, J.P Morgan will end 2022 with the US market’s top ranking position with a 15.74% share YTD across 6,764 structured products worth US$13.8 billion. The US investment bank took over from Goldman Sachs, which slipped to third place with a market share of 14.43%.

Citi, the second most active provider in the US market, collected US$13.6 billion across 4,653 structured products, which translates to a market share of 15.52%. Following Goldman Sachs on the SRP’s US league table are Morgan Stanley (3,493 products/US$9.8 billion), UBS (3,560 products/US$6.2 billion), Bank of America (767 products/US$4.7 billion) and Barclays (1,112/US$4.2 billion).