SRP Digest: All things considered

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UBS has announced a new operating model and leadership team following the acquisition of Credit Suisse , which will operate alongside UBS and its business divisions, functions and regions under UBS Group.

UBS expects the legal completion of the acquisition to take place in the next few weeks. At this time, Credit Suisse Group will be merged into UBS Group and the combined entity will operate as a consolidated banking group. The combined firm will operate with five business divisions, seven functions and four regions, and in addition Credit Suisse. Each will be represented by a group executive board member, all of whom will report to CEO Sergio Ermotti.

The Australian Securities and Investments Commission (Asic) is urging investment product issuers to ‘lift their game’ after an initial review found significant room for improvement in how they meet their design and distribution obligations

Fellow European lender Barclays has appointed Yun Zhang as sole head of macro trading for Asia-Pacific as the UK bank seeks to bolster revenue from structured products sales, according to an internal memo seen by SRP. In her new role, Zhang will report to Hossein Zaimi , head of markets, Asia Pacific, and Michael Lublinsky, global head of macro. Zhang leads the bank’s structured rates business in the region and is also responsible for the flow business since September 2022, said the memo said.

On the regulation side of the equation, the Australian Securities and Investments Commission (Asic) is urging investment product issuers to ‘lift their game’ after an initial review found significant room for improvement in how they meet their design and distribution obligations (DDO).

The DDO, now into its second year, marks a significant shift to outcomes-based regulation which requires financial products to be designed and distributed with clear and contemporary consideration of the objectives, financial situation and needs of the consumers and retail investors being targeted.

Also in Asia Pacific, some 27 offshore investors traded onshore renminbi (RMB) interest rate swaps with a notional value exceeding CNY8.3 billion (US$1.2 billion) on the first day of Swap Connect. The Swap Connect is a new mutual access initiative between Hong Kong SAR and China’s interbank interest rate swap markets, and is an extension of the Bond Connect launched in 2017.

Starting with a Northbound channel, offshore investors will now be able to trade and clear onshore RMB interest rate swaps without changing their existing trading and settlement practices. The Swap Connect is run by the China Foreign Exchange Trade System (CFETS), Shanghai Clearing House (SHCH) and Hong Kong Exchanges and Clearings (HKEX) through its clearing subsidiary OTC Clearing Hong Kong.

Figure-wise, Société Générale (SG) Group posted revenues of €6.7 billion (US$7.3 billion) for Q1 2023 – down 3.8% year-on-year (YoY). Revenues for the global markets business, which houses the group’s structured products business, reached €1.7 billion – a 3.2% decrease versus Q1 2022 – despite ‘robust commercial activity, particularly in the rates activities and financing businesses’. The equities business recorded an overall positive performance, posting Q1 2023 revenues of €831m – down 17.7% against a record Q1 2022, but up 28.8% compared to Q4 2022. Market conditions were less favourable due to lower volumes and weaker volatility.

Citi’s Luxembourg domiciled issuance vehicle for structured products reported a significant decrease in sales volumes across notes, warrants and index-linked certificates during 2022 .

Citigroup Global Markets Funding Luxembourg (CGMFL) issued 10,160 structured notes worth US$22.7 billion under its global medium-term note programme in 2022 – down 49% by issuance and 25% by sales volume compared to the 19,726 notes that sold a combined US$30 billion in the previous year.

The company also issued 3,728 securities under the Citi warrant programme (2021: 7,106). Of these, 2,179 are index-linked certificates which sold US$1.8 billion – 31% less than the prior year when it gathered US$2.6 billion from 2,961 products – and 1,549 are warrants worth US$3.1 billion, a 35% drop in sales year-on-year (2021: 4,145/US$4.8 billion).