Month: March 2015

“[Julius Baer] will benefit from this industry backed initiative, as it aims to enhance the execution of equity-linked structured products in the Asia-Pacific region,” said Roger Meier, head of structured products sales Asia at Julius Baer.

The Hong Kong-based open messaging and price discovery platform expects to bring onboard a number of issuers and private banks before the end of the year, according to Mark Muñoz, managing director of the multi-dealer platform.

“We have been operating for a little more than a month and the response from issuers showing interest has surpassed our expectations,” said Muñoz. “We have a huge amount of momentum because on one side private banks are interested in standardising the market and on the other hand issuers are interested in lowering their costs.”

The biggest challenge for Contineo is to make sure there is a clear understanding of what private banks need and for this purpose the firm has formed an advisory committee, said Muñoz.

Contineo is in talks with five technology firms servicing the Asia Pacific wealth management market to capitalise on the connectivity they have to add value to what they are offering and lower operating costs including infrastructure management and maintenance faced by issuers when dealing with multiple private banking technology interfaces, said Muñoz.

“From the outset, Contineo was launched to be a platform open to other third parties, not just from an issuer perspective, but also from a technology perspective,” said Muñoz. “Contineo’s aim is to provide a transparent platform where third parties can connect to access structured products.”

“There are a number of tech providers out there that offer pre-and post-trade processing services, and we want to make sure we can connect those vendors that offer full back-to-front solutions service in one place.”

The new platform will continue to add functionalities beyond price discovery, said Muñoz. “We don’t want to limit this to a few issuers, private banks and tech platforms,” he said. “This is not about connecting issuers but about building a community.”

Contineo, which is backed by a consortium of banks including JP Morgan, Goldman Sachs, HSBC, Barclays, BNP Paribas and Société Générale, and technology firm AG Delta, was launched in January to provide greater access to equity-linked structured products for private banking and wealth management firms.

Contineo supports messaging for equity-linked notes, including knock-out equity linked notes, accumulators/decumulators, fixed coupon notes, daily range accrual notes, and over the counter products through a single API connection for Hong Kong and, more recently, the US, Singapore and Japan.

by Pablo Conde

www.structuredretailproducts.com

Contineo is opening its doors to more technology providers, allowing them to increase access, lower operating connectivity costs, and build networks offering more products.“Technology providers only need a single connection to write an API (application program interface), versus the large infrastructure with multiple protocols they deal with today,” says Mark Muñoz, managing director of Contineo Limited in Hong Kong.

Contineo already offers structured products to private banks through a consortium of six investment banks: BNP Paribas, Goldman Sachs, Société Générale Corporate and Investment Banking, HSBC, J.P.Morgan, and Barclays.

The addition of multiple technology vendors will result in more options for the private banks, as well as lower error rates, according to Muñoz. He added that there were no limits to the number of certified technology providers Contineo can partner with, and the price of the platform for private banks remained independent of the number of vendors.

Signing onto a multi-dealer and multi-vendor platform will also lower operating connectivity costs faced by many providers when adapting to various private banking technology suites. This is in addition to providing greater access for external product providers.

“Technology providers must manage a costly infrastructure where they have dedicated servers and lines to multiple issuers,” says Muñoz. “They must also manage a divergent set of templates or protocols with each issuer. Not only is there high capital expenditure to manage the infrastructure, but there is also a high maintenance cost to keep up with each bank’s interface.”

Contineo supports messaging for equity-linked notes (ELNs), including knock-out equity linked notes (KOELNs), accumulators/decumulators, fixed coupon notes (FCNs), daily range accrual notes (DRANs), and over the counter (OTC) products through a single API connection for its Hong Kong and, more recently, US, Singapore and Japan markets.

Muñoz believes there is room for more products on the platform because of the expected influx of issuers and technology vendors. “For example, it is feasible that a technology provider like Sungard could connect to Contineo and supplement its current equity network,” he says.

Muñoz added that Contineo was in discussion with five technology companies that cater to the wealth management sector. “We see about 10 firms that could benefit from connecting to Contineo just in Asia alone.”

The company officially launched in Asia earlier this year after spotting a significant gap in the market for a technology platform that allows private banks to gain access to multiple third-party providers in a broker-friendly manner.

The six investment banks joined with Singapore-based technology provider, AG Delta, to automate the sale of equity-linked structured notes to private banks in the region. The launch came as multi-dealer technology providers began infiltrating the market, with the likes of Vontobel’s deritrade. The Swiss bank’s platform is known for distributing its own products. However, Contineo’s arrival has brought a choice of products through different bank offerings onto one platform.

At present, many banks, including BNP Paribas, operate on in-house single-dealer platforms that utilise Cortex FX and Smart Derivatives to cater to non-flow structured products. While many acknowledge the merits of using one dealer, the cost cutting and efficiency of multi-dealer platforms is evidenced by the French lender’s signing on to Contineo.

www.asianprivatebanker.com