After a tough few years during and after the financial crisis, the structured products market has pulled itself back together and is in reasonably good shape. However, dealers say new capital rules from the FSB could kill off the business altogether, just as it has begun a shift towards more automation and greater execution efficiency.  

Structured products investment is becoming more mobile, with investors looking to new regions for higher returns. European and Japanese markets have proved enticing over the last year or so, while China is moving ever closer to releasing its full potential as an investor destination.  

Frustrated by poor returns from traditional long-only portfolios, investors are increasingly examining the possibility of venturing into cross-asset derivatives strategies. And dealers are keen to offer such products, with Risk Premia indices proving particularly popular. 

Regulators have looked to central clearing as a solution for many ills in the derivatives market, but banks are now saying that they may be unable to offer a clearing house connection to clients because of costs imposed by another new regulatory measure: the leverage ratio.