Nomura offers protective safeguards with Flexis

Nomura has launched Flexis, a new structured product that offers protective safeguards to calm the default, valuation and liquidity concerns of investors. The predefined process for the resolution if an arranger defaults - in the form of resilience mechanisms - sets the product apart and takes it beyond the standard techniques adopted for bankruptcy remoteness. "In the old generation SPVs (special purpose vehicles), there may not have been rights or procedures ensuring an unwind should the arranger disappear, which led to lengthy and complex negotiations to restore the funds owed to investors," says Raphael Lebrun, executive director, Equity Derivatives Structuring at Nomura.

Within the new structure, investors specify at the outset their choice of collateralising assets and a timeline for any liquidation. Less liquid assets will attract a longer time for the unraveling than those that are more liquid - the bank is not looking to making illiquid assets more liquid and vice versa. After an initial 10-day period that applies in all cases, the time period starts at days and can be months. "We insulate the assets within the compartment (each issue is launched from its