Back to Normal (Whatever That Means)

After a challenging 18 months in which conferences and networking events were forced online, a semblance of pre-pandemic normality returned between 7-8 September to Lucerne, where the Swiss Stock Exchange, in partnership with the Swiss Structured Products Association (SSPA), hosted the 11^th International Structured Products Forum (ISPF) in person. Nearly 100 senior figures from the structured products industry attended the fully-booked event, where an impressive number of highly respected speakers shared their unique insights on current affairs. Highlights included the keynote speaker Dr Zeno Staub, CEO at Vontobel talking about ‘The Future of Swiss Wealth Management’ and the keynote speaker, Wall Street journalist Jens Korte on some of the main changes taking place under the Biden Presidency, along with Thomas Wulf, Secretary General of EUSIPA, who provided an excellent overview of the dynamics shaping Brussels’ politics.

The Swiss Stock Exchange looks at some of the main themes to emerge from the event, and what all of this means for the structured products universe. 

Christian Reuss, Head SIX Swiss Exchange, highlighted the challenges being caused by the increase in regulatory divergence across Europe. Although its impact has since subsided, the EU’s decision to remove share trading equivalence from Switzerland continues to raise questions. “What is interesting for us today is the signalling effect of this episode. If equivalence can be withdrawn by the EU literally overnight for purely political reasons, how desirable is it really to be equivalent? This may have significant repercussions for the development of the future regulatory landscape in Europe,” says Reuss. He adds that the entire saga could exacerbate market fragmentation across the EU, Switzerland and a post-Brexit UK with each regime adopting its own divergent regulatory policies. Reuss notes the UK is already pursuing a number of reviews and implementing financial regulations that are likely to deviate from EU law. The risk of regulatory arbitrage between the UK and EU does create a major dilemma for Switzerland, according to Reuss. “Moving forward, the question remains as to whether Switzerland should remain close to EU regulation or rather look towards the UK,” explains Reuss. 

At a time when fixed income performance is under severe pressure and equities are proving volatile, it is vital wealth advisers identify ways in which to produce alpha for their clients. Keynote speaker Dr Zeno Staub, CEO at Vontobel told the Conference that  individualisation of wealth management offerings will be critical to this. André Buck, Global Head Sales & Relationship Management at SIX Swiss Exchange, concurs and stresses that customization of portfolio investments – especially around structured products – will be essential if firms are to win market share and post decent returns in today’s incredibly competitive environment.

Fuelled by a combination of the COVID-19 crisis, growing investor appetite and the introduction of new regulations – most notably within the EU – the structured products industry is now taking the challenges of ESG (environment, social, governance) commitment and compatibility more seriously. Buck says structured products increasingly require a stamp attesting to their ESG credentials if they are to attract investment. Nonetheless, Buck adds that the industry is awaiting the release of the EU’s Taxonomy, a benchmark set of guidelines designed to help investors ascertain whether an economic activity is environmentally sustainable. The Taxonomy should bring more clarity around ESG –  a welcome respite given there are so many data providers and ratings agencies giving their own – often contradictory – scores on ESG . “One of the challenges facing the industry is the risk of greenwashing, and it is hoped the Taxonomy – with its clear rules and guidance – will help mitigate that,” says Buck. Buck continues that once the Taxonomy’s details are released, the Swiss Stock Exchange will provide its clients, through its reference data tool CONNEXOR, with concise ESG data based on the taxonomy’s standards.

The next Forum will take place next year on 6 and 7 September 2022, again in Lucerne.

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