Depth in research and execution and strength in structuring globally in vanilla and exotic products across all asset classes set UBS apart from its competitors in the retail and institutional structured product market over the last year. That, and its development of electronic trading platforms, helped the firm land the 2012 Structured Products House of the Year award from the editors of Derivatives Week/Derivatives Intelligence.
Buyside and sellside officials pointed to the firm’s acquisition of Luxembourg Financial Products, the structured products and asset management boutique, as a move that has strengthened the firm’s structured products business in the areas of wrapping, issuance and public distribution. UBS has also seen exchange-traded note gross assets grow to more than USD1 billion, while it has attracted around USD350 billion into its MSCI USA Growth exchange-traded fund over the last year.
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Aside from bringing in LFG officials, who include Johan Groothaert, now the global head of investment products and platforms, the firm also bolstered its team with the appointment of Eric Bensoussan as European head of equities structuring from Deutsche Bank. Private banks and other buyside users highlighted UBS’ Equity Investor platform. A number of structurers have been rushing to emerge first with electronic structured product platforms in the U.S., but UBS is the only firm to gain any headway. The platform has been opened to investors in the U.S. who now have the ability to trade autocallables through UBS Wealth Management Americas.
“The launch of UBS Equity Investor in the U.S. aims to reshape U.S. structured notes distribution as it is transformational from a distribution, efficiency and cost perspective, thereby substantially improving the attractiveness of structured notes and forcing the entire market to up its game in terms of client service and delivery,” said Groothaert.
An innovative structured product highlighted over the last year from UBS was a two-times leveraged certificate on the Russell 1000 Growth Index for an investment management client in the U.S. The manager was keen in having exposure to the Russell Growth index through swaps, but had issues in terms of putting these swaps into all its client accounts in this format.
“When structuring the trade, it was important to get a product with similar characteristics of a swap. Our approach to deliver a trigger based rebalancing rather than a daily reset leverage—which is more of the norm for leveraged ETFs—was key in achieving the client's goal,” said Bensoussan.
The structured notes, which sold for just under USD1 billion, allowed the manager to allocate the notes into each of its client’s accounts, with a Securities and Exchange Commission filing, across eight custodians in less than one week.
“The ability to trade it in a securitized way allowed them to get that exposure to the Russell through the client accounts with reduced initial equity amount,” added Bensoussan. “It was successful as the client could perform a trade for all of its clients rather than restricting itself to specific accounts.”