Structured Notes

Fruit shake

Wed, 08 Apr 2009 15:14:38 +0000

"When is an Apple an Orange?" was the rhetorical question posed in a speech made early this year by one of London's more prominent structured products bankers. The answer is, of course, never. You can't dial up friends or surf the internet on an orange. You can't store all your phone numbers; you can't write yourself notes; you don't even have a calendar on an orange.

You can do all these things and more on an Apple, and its snazzy i-phone. And impressive as all the phone, writing and storage applications are, you have to be overcome by a phone that now doubles up as a spirit level. Probably quite useless to almost all, but what a gadget.

So why can't you trade on exchanges using the phone and, more to the point, why can't you buy an application that creates whatever structured product you would like. Well you can, or you could, if the creators spent a little less time inventing spirit levels and clever advertising campaigns.

It is not a myth in any way. There are banks - and UBS is prominent among them - that have design your own structured products packages. In terms of technology we are streets ahead of where we were 10 years ago. When this all comes about, the man next to you may not be texting his mum, playing dingbat death or solitaire, he may be constructing his very own structured product. Only qualified investors need apply, and the only people that need to be worried are the bankers that the world's latest widget will make redundant.

The right to win, and the right to lose

Wed, 14 Jan 2009 12:46:14 +0000

A recent snapshot of investors undertaken by an amalgamation of regulatory bodies in Canada will do little to raise the spirits of the structured products industry. The survey was issued by the Joint Standing Committee on Retail Investor Issues (JSC) last Autumn, which is made up of the Ontario Securities Commission, the Ombudsman for Banking Services, the Investment Industry Regulatory Organisation of Canada and the Mutual Fund Dealers Association. Since spring 2008, the committee has been trying to spot potential snares for retail investors, so they decided to quiz investors themselves on product suitability.

Euphemism euphoria

Mon, 05 Jan 2009 14:25:01 +0000

When kids’ TV starts reporting on the ‘credit crunch’ with the kind of authority that would make children believe that the world’s biggest and finest financial crisis is one great calamitous cock-up, it’s time to analyse exactly what it is that we are all suffering from.

Answer only two questions

Mon, 22 Dec 2008 09:39:07 +0000

Will any one sell a structured product now that all the banks are rated single A?

To be sure

Thu, 27 Nov 2008 11:35:30 +0000

It is always hard to give any credence to articles that include typographic mistakes – or we could just call them typos. It is equally difficult to understand some of the structured products that are released into the market. But it is hardest of all to have any faith in an article containing coruscating assertions about structured products that has two typos in the headline.

Pinnacle investors duped by ratings agencies

Fri, 14 Nov 2008 12:29:53 +0000

Another day, and into the limelight comes yet another credit-linked note whose underlying collateral was a synthetic collateralised debt obligation. And once more, it is Singapore’s battered retail investors that are reeling following a principal writedown on Series 9 and 10 of Pinnacle Performance Notes. Expected return to investors is, you guessed it, zero.

The blogging blame game

Thu, 30 Oct 2008 15:58:26 +0000

The Minibond debacle engulfing both the Hong Kong and Singapore structured products industries has provoked a flurry of blogging activity from the Asian region. Blog subjects have ranged from outright attacks on product issuers, distributors and regulators condemning the selling of the financial instruments to retail investors. Other blogs have taken aim at regional publications which have posited that the blame should not rest on product providers’ and distributors’ shoulders alone but with investors too. The ‘unbiased’ blogging blame game certainly has no shortage of villains.

Stop the press: Investors lose money as stock prices fall

Thu, 02 Oct 2008 11:19:48 +0000

As if structured products weren’t suffering enough bad press already this week, a story appeared in the Financial Times this morning firing another bullet at our embattled quarry. The article, ‘Clouds gathering around Blue Sky structured product’ alerts readers that a product launched by Blue Sky Asset Management (BSAM), The Accelerated Recovery Plan, which is linked to five UK banking stocks, is close to breaching its 50% soft protection barrier following the plummet taken by HBOS equity. The plan was launched in April, with BSAM trumpeting that the “RBS rights issue and central bank action signal beginning of the end for bank crisis”.

It would be nice to do business with you, wouldn’t it?

Tue, 30 Sep 2008 09:24:19 +0000

The Swiss dancers in their lederhosen are coming to save us all the way from Paradeplatz, home to Credit Suisse, the bank that has just offered to buy damaged Lehman products from those privy to the Credit Suisse private banking network.

Combien???

Thu, 18 Sep 2008 11:08:31 +0000

If you follow English football – and apparently the whole world does – you may have noticed a striking similarity between what is happening in the financial markets and what is occurring at the football team Manchester City.

Showing the money

Tue, 16 Sep 2008 15:13:49 +0000

There is one man left standing at Lehman Brothers and he has money. It’s not Dick Fuld, and it’s not HR or marketing, or even the asset management team. We won’t tell you his name but we will tell you that he is still spending his money wisely, at last. For a bank that has spewed so much cash into the ether from the swashbuckling boom that preceded the credit crunch, sense has now prevailed.

Asian Minibond misery is put to rest

Mon, 15 Sep 2008 17:43:08 +0000

The decision by many an Asian distributor to stop using Lehman Brothers as an issuer has proven both prophetic and prudent, even though many of the distributors believed the US Federal Reserve would come to the rescue if the worst was to happen. But the worst did come to pass and the Fed, contrary to most people’s expectations and against the Bear Stearns precedent, refused to guarantee a portion of the US investment bank’s losses.

Say hello, wave goodbye

Mon, 15 Sep 2008 12:08:45 +0000

The investment banking sector received its first slug of good news this weekend, with the US$50bn acquisition of Merrill Lynch by Bank of America. Although BofA’s stock fell, Merrill’s rose. And it’s been a long time since the stock of an investment bank has risen on any event in continually trampled financial markets.

Enforcer FSA catches hedge fund manager using insider information

Thu, 11 Sep 2008 12:01:21 +0000

Custodian of the Treat Customers Fairly initiative in the UK, the Financial Services Authority (FSA), has declared its intent by taking a hedge fund manager to task. All well and good, and you might say it was about time these clever ex-investment bankers were taken to task.

Twin spin

Tue, 09 Sep 2008 11:20:39 +0000

You can’t miss iShares’ marketing campaign for ETFs if you live in London and take the time to look up as you walk around. The marketing campaign is slapped on the sides of buses and taxis, peers at you while you ascend tube escalators, and has taken over the front and backside of one of the capital’s free newspapers.