The inaugural European SRP Euromoney Structured Retail Products ranking and awards is a joint venture between www.structuredretailproducts.com and Euromoney magazine. It is the first in a series of comprehensive quantitative and qualitative studies of the structured retail products market Best manufacturer awards
The best manufacturer awards are based on a survey designed to understand investment banks’ market share by apportioning distributors’ market share to the various investment banks that hedge the products.
Since the survey does not reach every market participant, it is not intended to reflect European structured retail product activity as an entirety. However, given the geographical spread and participant types the survey covers, Euromoney believes it provides an accurate assessment of trends in the main areas of activity polled and accurately indicates the relative performance of the investment banks.
Given the nature of the market, www.structuredretailproducts.com is the only other reliable, aggregated source of global statistics against which to benchmark the survey.
The survey was conducted over three weeks in June 2011 and covers the previous 12 months’ activity. All voting was carried out electronically via a secure, dedicated data collection website. All answers were subsequently vetted and verified by Euromoney and www.structuredretailproducts.com for authenticity.
Nearly 400 valid respondents were polled across Europe, representing over €100 billion in volume.
Definitions
The survey groups products and volumes by geography and asset type. These are defined as follows:
Geography: The location in which the product is sold, rather than the domicile or head office of the institution that the voter represents or the location in which the respondent is resident.
Asset type: The underlying asset of the product in question: equities, commodities, interest rates, currencies, hybrids and real estate.
Volume: Not nominal but actual sales volume. All amounts are denominated in euros.
The survey falls into two main sections:
PART 1 – Quantitative
This section is concerned with quantitative measures of overall market share. Each producer/distributor was asked to provide its total sales volume for a particular asset type and then to distribute that volume between up to five investment banks used as manufacturers.
The following restrictions and definitions apply:
1. Responses that do not include an annual total volume for the respondent organization do not count towards the quantitative rankings in the survey. Where we have been able to do so, we have provided volume figures from www.structuredretailproducts.com. Where there is no figure, the responses have been discarded.
2. Responses that identify manufacturers without allocating business proportionately have had their volume equally distributed between the named banks.
3. Captive votes and votes representing internal transaction flows have been excluded from the results.
This includes votes cast by:
• Banks that are part of banking groups that use their parent group for 100% of their activity.
• Internal structuring desks
Additionally, votes have not been included in the survey where:
• Providers vote for themselves.
• The respondents do not confirm their identity.
• An individual submits more than one ballot and we cannot resolve the duplication.
• A respondent’s volume duplicates that of a colleague’s from the same institution.
PART 2 – Qualitative
This section is concerned with qualitative rankings of various aspects of investment banks’ services:
• price competitiveness;
• understanding client needs;
• innovation and structuring capability, and;
• after-sales support.
The ranking in each category has been calculated as the arithmetic mean of all the voted ratings (from 1 to 7, where 1 = very poor and 7 = excellent) given to a bank for that category. Any responses that allocate 1 or 7 for every category voted have been excluded.
Rankings
The overall rankings comprise a combination of the quantitative (70%) and qualitative (30%) responses. The quantitative score is constructed relative to the top volume represented in any ranking. The qualitative rankings are the average of the scores across Europe where the bank received at least 2% of the total individual vote count in the qualitative survey.
Index awards
The index rankings relate purely to the equities asset class and have been compiled by referring to volume figures and respondents’ selection of index provider and index. We have produced a ranking for both the most innovative and responsive index provider as well as the most important index for product.
Best distributor awards
The best distributor awards are based on the 19 European structured products databases compiled by www.structuredretailproducts.com: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Norway, Poland, Portugal, Slovakia, Spain, Sweden, Switzerland, the Netherlands and the UK.
Sales and performance information was extracted from the data continuously gathered by the research team of www.structuredretailproducts.com.
Where a company has provided data that were used to construct the rankings under confidentiality agreement, and it did not want its name used, we have replaced its name with "name withheld".
PART 1 – Best distributor: sales
Sales reflect the amount that was placed with retail investors by each distributor group.
Over 586,000 structured retail products distributed in Europe, representing €183 billion of sales, were analysed. The products all struck between June 1 2010 and May 31 2011. Sales were mostly concentrated within a core offering of around 14,000 non-flow and non-leverage products.
The volume of each product has been aggregated by distributor group within the country and across Europe to give a ranking of the distribution networks with the largest volume of structured products in each country or region.
PART 2 – Best distributor: performance
The performance of a product is the annualized return that an investor in a structured product would have received had the investor taken a buy-and-hold approach from the strike date until the effective maturity date.
The dataset was over 14,000 European structured retail products for which performance was known. Only products that matured between June 1 2010 and May 31 2011 have been retained. The maturity was either triggered by an early maturity feature (typically, a knockout) or because a product reached its planned maturity.
Products with an actual term of investment of fewer than 160 days, as well as warrants, were excluded from the dataset. In addition, any company that was known to have subsequently withdrawn from the structured products market was removed from the dataset, even if it had older products coming to maturity during the period.
This left over 5,000 products with initial sales of around €70 billion on which to base rankings. Each product’s annualized performance has been weighted according to its sales to give a weighted average performance of the distributor’s portfolio of products maturing in the period of interest.
Any company with only one or two products maturing has been removed from the country rankings for the performance awards. For the European rankings, in addition to the above restriction, any company with a volume of maturing products of less than €100 million has also been removed from the ranking.
PART 3 – Best overall distributor
The best overall distributor award recognizes distributors that have experienced both strong sales and performances over the period.
A 50% weight has been assigned to sales data and 50% to performance. Each distributor has been given a separate score for performance and for sales, each of them constructed relative to the top distributor represented in any ranking.