FEATURE
Listed products: riding the innovation wave The steady rise of listed products over the course of the last decade has attracted the interest of an increasingly large investment audience.
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inancial products and service providers and growing numbers of institutional and retail investors are using different listed wrappers to take advantage of their tradability, overall transparency, and low ownership cost. Depending on the jurisdiction, listed products may also be benefit from tax advantages. Exchange-traded funds (ETFs) have been the main driver of activity and volumes within the broader exchange-traded product (ETP) universe as measured by flows, but the listed structured products market - known as the flow & leverage market, has spurred a wave of slice and dice innovation triggering significant underlying asset growth. Investors now have an ever-increasing choice of exposures to accommodate virtually all types of desired allocations in their investment portfolios via structured warrants, daily leverage and turbo certificates, as well as callable bull/bear contracts (CBBC) or leveraged/inverse notes. Over the course of the last decade, ETPs have witnessed a spectacular growth, breaching US$7 trillion in assets under management (AuM) at the end of 2020. Research firm ETFGI reported recently that ETFs and ETPs listed globally gathered
a record US$1.14 trillion in net inflows in the first eleven months of 2021 Of these, approximately 97% were invested in ETFs. LISTED CERTIFICATES – TRACKERS, LEVERAGE AND AMCS In Europe, according to the European Structured Investment Products Association (Eusipa), the turnover in investment and leverage products on reporting European financial markets reached €35 billion in Q3 2021. This represents a two percent drop quarter-on-quarter (QoQ) but a five percent rise year-on-year (YoY). For investment products on European trading venues, the turnover amounted to €13 billion in Q3, translating to 37% of total traded volume - a 20% decrease QoQ, or a 40% increase YoY. In the meantime, the turnover in leverage products (warrants, knock-out warrants, and constant leverage certificates) came to €22 billion in Q3 21, forming 63% of total turnover. In addition, the turnover in leverage products climbed 13% QoQ, or fell nine percent YoY.
Leverage instruments drove high levels of trading activity and volumes in 2020 Didier Imbert, head of public distribution Europe at Société Générale
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