Contineo, a Hong Kong-based structured products platform, plans to offer a new lifecycle management tool that leverages distributed ledger technology–usually associated with blockchain–to private banks on its network, the firm’s MD tells Asian Private Banker.
“We are introducing a new tool, lifecycle management, for our private banking clients that will allow them to receive notifications regarding the events around a structured product,” says Mark Munoz.
Notifications via the post-trade processing tool include information on expiration dates, redemption/maturity dates, coupon payments, barrier hits, corporate action and autocalls.
Munoz says an additional component being developed will use distributed ledger technology to verify product notifications, adding that the eventual use of smart contracts will provide a “trust source for both the investment banks and the private banks to distribute information”.
He explains that the decision to develop the tool was the result of a number of requests from private banks.
“When we first started Contineo, many private banks expressed interest in lifecycle management, particularly as processes were becoming digitised, like pricing and trading.”
Contineo plans to roll out the tool, which will use a flat-fee pricing structure for private banks, by the fourth quarter of 2017.
In February, the firm unveiled its data analytics service, I/O, which provides private banks with insights into their businesses and performances, based on equity-linked structured products data gathered on the platform.
Structured product volumes pick up
Last year, structured product platforms felt the pressure of a slump in structured product sales at private banks on the back of weak client appetite owing to the Shanghai Composite collapse. According to Asian Private Banker data, structured product sales fell by 14% in first three quarters of 2016. In December, Munoz said volumes had dropped by as much as 30% across the industry.
However, Munoz says demand has rebounded in early 2017. “This year has seen structured product volumes on our platform rise up by more than 20% YTD,” he notes.
According to Contineo, eight private banks–including J.P. Morgan Private Bank, BSI and Julius Baer–have officially signed on to the platform’s buy-side, while 15 investment bank have signed on to its sell-side.
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