Low volatility and low yields are making life tricky for structured product providers. But by broadening their range of products and by doing more to tap upcoming markets, such as Asia, they have been able to ensure they get plenty of business.
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New regulations are having a profound impact on structured finance and securitisation markets. But the bigger banks are mostly coping, with some even exploiting the situation to build their investor-advisory services.
Index-based structured products have grown in popularity since the financial crisis, as investors have sought flexible and bespoke ways to gain exposure to certain assets. And while the threat of tougher regulation looms, bankers are confident it will not slow down the market.
Regulators struggling to define what activities are covered by hugely detailed new rules governing financial markets might do better by returning to first principles.
The fundamental review of the trading book set out to simplify the capital management of market risk, but has ended up drifting away from the reality of the business.
The impact of low interest rates, new EU regulations and the predicted lessening of quantitative easing in Europe and the US mean structured product providers are being called upon to provide innovative solutions to reduce risk in both retail and private banking.
Across all asset classes and from retail to sophisticated clients, new regulations agreed at the international, regional and national level are occupying an increasing share of business managers’ time. The Banker crystallises the latest thinking on the acronyms that are keeping financial market participants awake at night.
With markets lacking a clear directional trend, uncertainty over the scale of global central bank interventions and an ongoing wave of regulatory initiatives, asset allocation must remain highly adaptable. Five European portfolio managers explain their responses to the changeable conditions.
A few short years ago, securitisation was blamed for triggering the financial crisis and was seen as the root of all evil. However, there are now signs of change, with issuers slowly beginning to reconsider the market as investor appetite returns.
Global Risk Regulator
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