Europe's Structured Products Feel Market Chill

Editorial Staff

19 December 2022

Structured products' turnover in Europe dipped 1 per cent in the third quarter of this year from the previous three-month period, and fell 10 per cent on a year ago, reaching €31 billion ($32.9 billion), pointing to weaker financial markets and depressed activity.

The data came from the European Structured Investment Products Association and was analysed by Avaloq Evolution. The EUSIPA data includes material from Austria, Belgium, Germany, France, Italy, the Netherlands, Sweden, Switzerland and Luxembourg. (WealthBriefing has asked the UK Structured Products Association for its latest data and it may update this article in due course.)

Covering a variety of strategies, a structured product is a term covering a pre-packaged structured finance investment strategy based on a single security, a basket of securities, options, indices, commodities, debt issuance or foreign currencies and, to a lesser extent, derivatives. The sector has waxed and waned within the private banking/wealth management space, suffering in the aftermath of the 2008 financial crash and a period of ultra-low interest rates.

Third-quarter turnover in investment products on European trading venues reached €8 billion, 25 per cent of total traded volume, the data showed. Investment product turnover decreased by 16 per cent quarter-on-quarter and by 39 per cent year-on-year.

Turnover in leverage products, such as warrants and constant leverage certificates, reached €23 billion in the period from July to September, representing 75 per cent of total turnover. Turnover in leverage products increased by 6 per cent year-on-year and by 4 per cent from Q2 2022.

At the end of September, trading venues located in EUSIPA markets were offering 414,250 investment products and 1,641,658 leverage products.