Activity in Europe's listed products market has increased over the last three months despite a lower turnover.
Turnover in investment and leverage products on Europe’s exchanges was down 21% quarter-on-quarter (QoQ) and 37% year-on-year (YoY) in the fourth quarter of 2022, bringing the total to €25 billion, according to the European Structured Investment Products Association (Eusipa).
Fourth-quarter turnover in investment products on European trading venues amounted to €8 billion, 33% of total traded volume. Investment product turnover increased by four percent QoQ and decreased by 43% year on year.
"It is gratifying that open interest held up in 2022, and that issuers demonstrated their confidence by significantly increasing the number of product launches throughout the year,” Thomas Wulf (pictured), general secretary, Eusipa, told SRP. “It is always difficult to predict what comes next, particularly in a fast-moving market environment. But all things being equal, we anticipate that investors will increasingly turn to structured products to protect against volatility.”
Wulf noted that demand for yield enhancement structures with buffered payoffs, and products with other forms of protection “which the rise in rates has made possible” could increase.
Turnover in leverage products including warrants, knock-out warrants, and constant leverage certificates reached €16 billion in the period from October to December, a fall of 34% year on year and by 30% from Q3 2022 - turnover in leverage products represented 67% of the total turnover.
At the end of December, Eusipa member exchanges were offering 415,212 investment products and 1,695,721 leverage products - the number of listed products increased by three percent on a quarterly basis and by 17% on the previous year.
Banks issued 1,626,261 new investment and leverage products in the fourth quarter of 2022, down four percent on the previous quarter and up 19% annually. In total, 137,943 new investment products were launched, accounting for eight percent of new issues the 1,488,318 new leverage products represent 92% of the total.
There were 22% more investment products launched than in the same quarter of 2021. On the leverage products side, issuance decreased by five percent from Q3 2022 and increased by 19% on an annual basis.
For Austria, Belgium, Germany, Switzerland and Luxembourg, the market volume of investment and leverage products decreased by one percent year on year and increased by eight percent from the previous quarter to a total of €312 billion.
At the end of December, the market volume of investment products stood at around €300 billion – up seven percent QoQ. The outstanding volume of leverage products totalled €11 billion at the end of December, a 22 percent decrease on a YoY basis.