Barron’s: Simplifying the Pricing Puzzle

NEWS

22 Jan Barron’s: Simplifying the Pricing Puzzle

A new trading network will make buying and selling of complex structured products easier and more transparent.

Wealthy customers of private banks in Asia may end up getting a better deal on structured products now that six banks have teamed with a technology firm to create a network for buying and selling these popular, if complex, securities.

Initially, the network will only affect stocks-related products, creations like equity-linked notes – a combination of a bond and an option on a stock that is intended to boost the overall return – and so-called accumulators, which allow a buyer to benefit if a stock’s price keeps rising. Accumulators, of course, can inflict severe pain if the bet is wrong. Eventually more complex products may be added .

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