China’s snowball autocalls were in the spotlight. Elsewhere Solactive is planning to introduce a first batch of tech indices in Canada, while VLK stays loyal to benchmark indices in the Netherlands.

China Securities Index Company (CSI) debuted the CSI A50 index, a new blue-chip benchmark, prompting structured product market participants to mull over its potential application.

The index, launched on 2 January, has an industry focus on new energy, manufacturing, and healthcare companies, compared with traditional indices focused on the financial sector.

The news came at a time when China witnessed a concentration of knock-in events on snowball autocalls linked to two other CSI indices: the CSI 500 and CSI 1000. Most knock-ins concentrated on 17 and 22 January, when the equity index basis turned negative, making a big swing in the markets.

Analysts estimate that since the beginning of January, around CNY60 billion (US$8.3 billion) worth of CSI 500-linked products have hit their knock-in level, while the scale of CSI 1000-linked knock-in has reached around CNY62.5 billion.

Staying in Asia, the latest report from the Korea Securities Depository (KSD) showed that issuance activities for derivative-linked securities (DLS) and derivative-linked bonds (DLB) remained sluggish in 2023 with 1,900 products worth KRW16 trillion (US$12 billion) brought to the market.

We try to standardise our product offering as much as possible for better conviction and storytelling purposes - Floris van Iersel, VLK

In the US, fixed indexed annuity (FIA) sales registered US$24.6 billion in the fourth quarter, up 10% year-on-year, according to Limra’s US Individual Annuity Sales Survey, which covers 83% of the total US annuity market.

Several high-profile indices used in the FIA space, including products issued via Athene, Delaware Life and American Life, are provided by Solactive. The German index provider is also the supplier of building blocks for multi-asset custom indices, such as the Solactive 10-Year U.S. Treasury Future Index, according to Bernd Henseler, managing director, head of Americas at Solactive.

Solactive is also active in Canada where it is planning to introduce its first batch of technology indices with a synthetic dividend overlay. The new indices will be targeted at structured notes issuers seeking to develop new autocall and accelerator (geared participation) structures.

“One challenge is coming up with a ‘technology’ definition that resonates with the investor base – be it general industry classification of tech companies or thematic like artificial intelligence and semiconductor’s,” Henseler told SRP.

Over in the Netherlands, Van Lanschot Kempen (VLK) launched the Index Garantie Note Eurozone 24-29 as a public offer. The five-year structure is issued on the wealth manager’s own paper and offers 105% uncapped participation in the positive performance of the Eurostoxx 50 – an index still preferred by Dutch investors, as are other benchmarks.   

“More complicated custom-made indices have not really been in demand and the ones that have been used in the past often underperformed the regular benchmark indices,” said Floris van Iersel, associate treasury sales, structured products & FX at VLK.

“We try to standardise our product offering as much as possible for better conviction and storytelling purposes and therefore you will indeed see a limited use of non-benchmark indices in our product offering.”

SRP also reviewed the full year and Q4 2023 earnings for BNP Paribas, Citi, and J.P. Morgan while FVC’s Tim Mortimer analysed the dynamics around growth and income products in the US during the past three years with the help of the StructrPro valuation and lifecycle tool.

In people news, J.P. Morgan expanded the responsibilities of Jason Sippel and Pranav Thakur who were appointed joint co-heads of the markets trading business reporting to Daniel Pinto, president and chief operating officer at the US bank.

Sippel, who began his career with J.P. Morgan in 2002, takes on the new role after one year as head of global equities, global credit markets and public finance, in London. Thakur is also a long-standing executive at the bank. He was most recently global co-head of currencies and emerging markets and the head of fixed income for Asia Pacific.

Aleksandar Ivanovic, the former managing director, and head of Emea distribution and structuring at Morgan Stanley, was named president asset management on the UBS group executive board.

Image: Oleksandr/Adobe Stock.