Buoyant structured products market in Nordics sees more banks listing in the region

The appeal for soft protection and ways to boost the upside remains strong in the Nordic region, with more banks issuing or listing products, including bull-and-bear certificates with a leverage of five for the first time in Sweden

Royal Bank of Scotland (RBS) has expanded its suite of exchange-traded products by listing of the first bull-and-bear constant leverage certificates to offer an intra-daily leverage of five on Sweden’s Nordic Derivatives Exchange (NDX).

“There has been a lot of interest from investors in leverage certificates in the Nordic markets and we expect interest to continue growing as more underlyings become available,” says Christian Bährne, head of public distribution for the Nordics at RBS in London. “Bull-and-bear certificates are aimed at self-directed investors who are interested in daily leverage and have a short-term investment horizon.”

Constant leverage certificates are one of the most popular listed products traded in the region, boasting the highest turnover with more than 112,000 products traded so far in Sweden in the first quarter, followed by warrants and turbo warrants with over 61,000.




Lower volatility since the start of the year is also making soft protection and leveraged upside more appealing.

Société Générale recently launched its first autocall warrant in Sweden, linked to Swedish stocks with a return of 11% and the possibility of receiving up to 30% if the stocks perform well and the product gets called.

“Due to the recent fall in volatility and a good start of the year for equity markets, investors are increasingly looking at participation notes to get exposure to the upside of the market,” says Henrik Ottosson, managing director for cross-asset solutions and head of sales for the Nordic Region at Société Générale in London. “Instead of getting fixed coupons, investors will get 100% participation to the increase of the OMX index, for instance.”

The French bank has also launched autocalls that combine a coupon with participation in the upside of the market. The products offer 20% every six months or the equivalent performance of a basket of Swedish stocks if the product is called, whichever is lowest.

Meanwhile, BNP Paribas entered the Nordic market in February with the launch of its first turbo warrants. The French bank is planning to launch more listed products, including minifutures.

“This product segment is well suited to Swedish private investors as they are highly sophisticated in the management of their portfolios,” says Conny Myhrberg, head of sales and marketing for exchange-traded solutions, Sweden at BNP Paribas in Paris. “Our first products are listed in Sweden are a natural entry for the Nordic market. Turbos and mini futures are established products and will help us get a foothold in the market before moving on to other products.”

ABN Amro has re-entered the Nordic market with a product aimed at the Swedish independent financial adviser market – a five-year maturity booster linked to the OMXS30 index with 50% soft capital protection. The bank has also issued floating interest-rate notes linked to Stibor and floored at 3.6%.

“Floored floaters are quite in demand as it is a regular income type of product that is capital protected with an upside linked to interest rates that is floored, so investors can receive a minimum coupon,” says Paul Cauberg, executive director in derivatives sales at ABN Amro in Amsterdam. “We also see growing demand for inflation-linked products where the payout structure is similar to floored floaters, with a guaranteed minimum payout and a yearly coupon, for instance.”

The bank had been absent from the Nordic market for the past two years following its acquisition and break-up by RBS, Santander and Fortis, and started rebuilding its derivatives platform in 2009.


This article was first published at Structured Products

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