A return to simplicity
A paradigm shift is taking place in the structured note market, away from highly mathematical, complex payouts in favour of underlyings that leverage bank research and systematic trading strategies. John Ferry reports
The structured products business has, over the past decade, occasionally resembled an arms race. Equity derivatives desks have rushed to hire the best quantitative experts, able to put together ever more sophisticated, mathematically complex payouts. As sales grew, marketing of products increasingly focused on the next great payout, inevitably a step-up in complexity on what had gone before.
The market is changing, however. Dealers are now moving away from complex payouts in favour of compelling
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Markets
AI and Trump tariffs spur hyped-up dispersion trade
Popular vol strategy pays off in January despite highest entry costs on record
Development banks team up for FX hedging push
Banks such as EBRD and World Bank club together to improve emerging market funding tools
TD, Goldman make strides with Ucits in FX forwards trades
Counterparty Radar: JP Morgan AM notional crossed $100 billion threshold in first half of 2024
Esma climbs down on active account reporting rules
Industry in ‘wait-and-see mode’ after Löber comments suggest softer approach by EU regulator
FX defs look to calculation agents for close-out rates
New Isda rule book also set to streamline ‘impossibility’ standard for disruption events
Autocall curbs hit long-dated Nikkei and HSCEI options
Collapsing Asia structured products inventory saps market-makers of long-dated vol supply
Markets worry EU’s reporting simplification will add to burden
Rather than reducing firms’ obligations, market participants fear it could end up increasing requirements
Corporates turn to structured notes to juice cash returns
Dual currency notes find favour with treasurers under pressure to boost yields amid higher rates
