Bloomberg Newsletter- Multi-Issuer Services in Asia will have to Consolidate, Contineo's Munoz says

Multi-issuer platforms in Asia eventually will have to consolidate to survive in the region’s fragmented structured-note market, according to Mark Munoz, managing director of Contineo Ltd., which provides one of four such services in Asia. Viren Vaghela of Bloomberg Brief spoke with Munoz by phone.

Q: Contineo has been operating as a multi-issuer platform in Asia for 10 months. What have you achieved?

A: We have seven bank issuers: HSBC, Barclays, Goldman Sachs, JP Morgan, BNP Paribas, Societe Generale and Natixis, and hope to announce two more later this year. We also have five private banks including Julius Baer, JP Morgan Private Bank and BSI, and two more are lined up to join by June. They are both medium-sized firms based in Singapore.

We have an indication [from our research] that the size of the [Asia structured-note] market could be as big as $125 billion in [sales] each year, which is larger than the combined value of the Hong Kong and Singapore stock markets.

Q: Have you seen any recent trends in Asia structured-note issuance?

A: As volatility is low, trading volumes are flat, not just for our subscribers but for the industry as a whole. However, we have seen a lot of interest in Asia and US technology stocks as underliers, but less so for Europe (click here for March breakdown).

Q: Is there space for more than one multi-issuer structured-product platform in Asia?

A: I look at how networks for other asset classes work and you can have multiple networks. For Asia, it may be more challenging given how [spread out] the market is, so fragmentation will only hurt us and consolidation is inevitable.

Q: What big initiatives do you have planned for this year?

A: We expect to tackle issues such as common term sheets for the industry as it’s a cost and a pain. The private banks want standardized term sheets and the issuer banks on our network would like to do that to lower everyone’s costs.

Our big initiative, and we haven’t announced it officially, is that we are adding life-cycle management to the network this year. Life-cycle management includes notification of knock-in and knock-out events, notification of maturity and expiration dates, corporate actions and valuation information.

When we met with the private banks last year this was a constant source of pain for all of them.

Q: Given the huge structured-note markets in Japan and Korea, will you be expanding into these countries?

A: While we are focused on Hong Kong and Singapore, we are expanding our team and expect to grow our market presence in Japan and Korea in the coming years. Once or twice a month we are approached by an issuer or private bank in Korea, Japan and Thailand, so there is interest, but we are focusing on our two core markets until our platform reaches full scale.

Q: What’s the biggest challenge you and Contineo had to overcome to get to this point?

A: One is perception. There’s a lot of information in the market that it’s controlled by the investment banks which is unfair in some respects. We are a small company that has been able to make big strides in large part as we have been able to work with buy-side and sell-side banks on a number of standards that bring efficiencies to the market.

Q: You have companies from the same financial group on your platform as issuers and private banks. How do you ensure no information leaks from say JPMorgan’s private bank about issuing banks’ pricing to JPMorgan’s investment bank? Is there a Chinese wall in place?

A: Other issuers can’t see their competitors’ pricing, so issuer A can’t see issuer B’s pricing on the request for quote, but the private bank can see multiple pricing. We are careful on data dissemination and mindful of confidentiality.

Q: Now that you have secured a broad range of issuers and private banks, what are the chances of bringing on some of the biggest issuers and private banks in the market like UBS and Credit Suisse?

A: Without mentioning names, certain investment banks want to control their internal flow so a multi-issuer platform is a threat to their core business, but it’s inevitable in terms of what private banks want to see.

Even though some banks have their own networks and have invested heavily in them, they recognize the benefits of a centralized hub like Contineo. As the network grows and adds more payoffs, the value-add will become apparent.

This interview was edited for length.

The Asset: Contineo expands its network of Private Bank clients

J.P. Morgan Private Bank, BSI and two other private banks have joined Contineo’s messaging network for structured products, bringing the list of subscribers to 40% of Asia’s top private banks measured by AUM. Natixis has joined the network as a new issuer.“We went live just seven months ago and have had an enthusiastic response to our offering,” says Mark Munoz, managing director of Contineo. The Hong Kong-based company is the first industry-supported, open messaging network aiming to facilitate quoting and trading in structured products by linking private banks and wealth management firms with issuers.

Four out of Asia’s top 10 private banks by AUM subscribe to Contineo network, while the issuers include Julius Baer, Barclays, BNP Paribas, Goldman Sachs, HSBC, JP Morgan and Societe Generale. The private banks are based mostly in Singapore and the issuers in Hong Kong.

Contineo facilitates a high level of automation in what has traditionally been a cumbersome process based on email and spreadsheets. The online platform is capable of delivering hundreds of quotes for structured products upon a single request. It facilitates placing of orders, communicating their status and delivering term sheets after a trade is executed.

“One of the reasons we’ve been able to have such quick adoption is that we have compliance support, regulatory reports, best execution reports… and about 25 others,” says Munoz. Compiling them has traditionally been very time consuming.

The company has been also leveraging its data analytics. “We’re able to deliver back some useful information to our subscribers about what’s happening in structured products across Asia,” says Munoz.

Contineo supports six types of equity-linked structured payoffs: equity-linked notes, knock-out equity linked notes, accumulators, decumulators, fixed coupon notes, daily range accrual notes and OTC options. “We’re looking at two or three other payoffs to add,” says Munoz.


Business Wire: Contineo Grabs 40% of Asia’s Top Private Banks With JP Morgan Private Bank, BSI and Natixis


Contineo, the industry-backed messaging network for equity-linked structured products, today announced that new subscribers JP Morgan Private Bank, BSI, and two other global private banks are joining the network on the buy-side, and Natixis has joined as a new issuer.

Contineo now has four of Asia’s top ten private banks and six of the top 20 as subscribers, as measured by AUM. Current network participants include Julius Baer, Barclays, BNP Paribas, Goldman Sachs, JP Morgan and Societe Generale.

The platform has been live since June last year and is already seeing a significant flow in RFQs and orders.

Nicolas Reille, Head of Sales, Equity Derivatives, Asia Pacific at Natixis, said that Contineo adds transparency to the structured products market. “Natixis is a strong supporter of more transparency. We believe the higher the transparency, the better for investors, distributors and products providers. In particular, a more transparent market will help to further diversify the range of structured products commonly traded by investors, improving the returns of their structured products portfolios in different market conditions, leading to a growing share of structured products in investors’ portfolios.”

Contineo Managing Director Mark Munoz expressed that in just seven months the firm had made enormous strides. “We went live just seven months ago and have had an enthusiastic response to our offering and now we see usage growing month over month with our new subscribers,” he said. “The business is growing rapidly and we are very pleased with its development alongside all our partners.”

Contineo acts as a communications hub for products including Equity Linked Notes; Knock-Out Equity Linked Notes; Accumulator; Decumulator; Fixed Coupon Notes; DRAN and OTC Options. The network also offers bespoke data products that illuminate for the first time the intricacies of the equity-linked structured product market.

To Read More, click here.

Mondo Visione: Contineo Recognised For Outstanding Wealth Management

Contineo, the industry-backed messaging network for equity-linked structured products, was awarded a Highly Commended award for Outstanding Wealth Management Technology Initiative – Front End at the Private Banker International Wealth Awards in Singapore last week.The awards, now in their 10th year, recognise global leaders in private wealth management. CEO Mark Munoz said the award was a welcome endorsement for the Contineo team.

“These awards are based on nominations, and we are proud that the industry saw fit to nominate us,” he said. “Contineo is unique in that our network and products are designed by the industry, for the industry with our Advisory Group and subscribers driving the development agenda. Public recognition like this shows us that the industry is really on board with what we are doing.”

Contineo went live in June as a communications hub for products including Equity Linked Notes; Knock-Out Equity Linked Notes; Accumulator; Decumulator; Fixed Coupon Notes; DRAN and OTC Options. Since go-live the firm is also launching new data products to illuminate the ‘black hole of trading.’

“Contineo is developing a range of data products that will bring transparency to the structured product market for the first time,” he said. “We’ve had terrific feedback from our industry partners and look forward to bringing further insights to the industry in the near future.”

Read the article on Mondovisione

Mondo Visione: Contineo Wins Best Multi-Issuer Platform Asia Pacific

Contineo, the industry-backed messaging network for equity-linked structured products, last night won Best Multi-Issuer Platform Asia Pacific at the annual Structured Retail Products Awards in Hong Kong.The award was based on votes from over 700 private, retail and investment banks across the region. CEO Mark Munoz said the award was testament to the traction Contineo had got in the market since going live in June.

“This award is particularly valuable because it’s based on direct feedback from the industry,” he said. “From our inception, we have designed Contineo to fulfill the needs of both the buy- and sell-sides. Our product decisions are made with our Advisory Group, and we think this is key to being the best network that serves the entire industry. This makes our business unique in the space and we’re very proud to see that being publicly recognised.”

Contineo went live exactly three months ago as a communications hub for products including Equity Linked Notes; Knock-Out Equity Linked Notes; Accumulator; Decumulator; Fixed Coupon Notes; DRAN and OTC Options. Munoz said the firm had received great feedback.

“Thanks to the support of our subscribers, we continue to enhance our offering,” he said. “Our wholehearted thanks to all who voted for us, recognising the value we bring as the only neutral, unconflicted platform of our kind.”

Read more at Mondovisione Multi-issuer Platforms Clash Over MIPs’ Purpose

Contineo and deritrade are divided on whether MIPs are simply an information exchange hub or an all-inclusive tool enabling private banks to check, trade and manage structured products

Multi-issuer platforms (MIPs) are jostling over more than just customers. Contineo describes an MIP primarily as a hub where private banks can exchange information with issuers, while deritrade offers a competing definition, saying these networks should go further and facilitate all activities linked to the trading of structured products.

Hong Kong-based Contineo went live in June, challenging deritrade, a platform by Swiss banking group Vontobel that launched in Asia in early 2015. MIPs provide the buy side with standardised access to structured product issuers, simplifying price discovery and reducing costs and risks compared with direct dealer-to-client transactions.

Six key regional structured product issuers – Barclays, BNP Paribas, Goldman Sachs, HSBC, JP Morgan and Societe Generale – have pledged to issue structured products on Contineo, which is active only in Asia. Vontobel’s platform currently has only one issuer – Vontobel’s investment bank – on its roster in Asia, though it boasts seven buy-side subscribers in the region compared to Contineo’s one.

Speaking at the Structured Products Asia conference in Hong Kong on September 1, Mark Munoz, Contineo’s managing director, said an MIP should be seen as a “messaging hub” where issuers and private banks can find information on the prices and popularity of different structured products.

“Think of it as your WhatsApp or WeChat that you use for getting information from point A to point B. It is not the all-singing, all-dancing solution – that’s not what an MIP is about.”

In contrast, Anup Gupta, in charge of deritrade and financial products distribution in the Asia-Pacific region, said Vontobel’s platform was designed to provide not just product prices but also full life cycle management of each trade, as well as relevant documentation.

“We don’t just cover the pricing and trading aspects. We look at pre-trade, at-trade and post-trade activities as a complete MIP solution. That needs to be there in order [for an MIP] to make sense for both investment banks and private banks,” he said.

Gupta added that Vontobel’s all-encompassing platform could generate substantial efficiency savings by automating client booking and confirmation orders, and drive up sales thanks to its speed. Compared with the traditional way of achieving best execution – telephoning a variety of issuers and waiting for indicative prices to be passed back – an MIP accelerates the process by listing all the prices on its interface.

While Contineo’s Munoz agreed on the volume-boosting potential of MIPs, he argued that the real prize would be the data on pricing, structuring and sales that the platforms could offer users. “When you have an MIP that can deliver those kinds of analytics and show what is being traded in the market, feeding that data back to the private banks and investment banks all of a sudden gives them a whole new set of data to say, for example, ‘Oh, I’ve been focusing on the wrong area for the past months and I need to shift it based on what I see on the analytics side’.”

Pre- and post-trade services could also benefit from innovation, Munoz added, but outside the confines of an MIP as he defines it: not so much a bolt-on to private banks’ existing infrastructure as an intermediary between issuers and distributors. “With MIPs you can see trends, and those trends can be drilled down into product classification, and you end up being able to see the hit [sales] rates across different products in different banks,” he said.

Gupta’s definition of an MIP also raised questions from Jean-Marc Eber, founder and chief executive of Lexifi, a supplier of sales and distribution software for structured products providers. He said it was important for private banks using MIPs to maintain their own trading records, contract terms and post-trade management systems rather than outsource the responsibility to the platforms themselves.

“Centralising data in an MIP is going to be interesting for private banks, but they must be able to have full control over the contracts they are buying or selling and be able to reflect precisely the contract described on the MIP system in their own systems,” he said.

Link to the article Hong Kong House of the Year: HSBC

HSBC came out top in Hong Kong, its home market this year, winning plaudits from the region’s hard-to-impress private banks for its strong performance during a choppy July and its backing for the Contineo platform.[…]

The bank is also a vocal cheerleader of the Contineo initiative, an industry-supported multi-issuer platform for equity-linked structured products. Contineo went live on January 20 with the industry’s first open messaging network, designed to act as a high-speed conduit between issuers and their private banking and wealth management distributors. HSBC was one of the seven founding backers.

Pantone says: “Automation will allow the Asia structured product industry to grow and evolve and we expect Contineo to play a big role. Contineo has an experienced management team, best-in-class technology and the backing of the leading derivatives providers in the region. We are excited to be part of it.”

Read more at Contineo plans Asia expansion

Mark Munoz, managing director of Contineo, discusses the multi-issuer platform’s future move into Europe and its aggressive expansion plans in Asia.

The competitive atmosphere in Asia’s structured products market has ramped up after the June launch of multi-issuer platform (MIP) Contineo. Managing director, Mark Munoz, says the platform – backed by six big investment banks – has the drive to attain a dominant position, as it squares up against established players such as Vontobel and FinIQ.


Structured Retail Products: Contineo eyes Europe for next stage of development

In the second part of an interview with Marc Muñoz, chief executive of Contineo, he explains the firm’s plans and scalability on the back of new networking security requirements for banks. The multi-issuer structured products platform and messaging network went live at the end of June.Some of the banks in the consortium backing Contineo are fierce competitors in other markets. How do you square this?
That’s how the market works and different players have different interests and issues to address in specific markets. We have just gone live and we are still building the platform, but we are confident and have the capital to eventually launch in Europe. We have already had interest from a number of issuers active in Europe. We want to build a robust service in the Asia-Pacific region and leverage our capabilities to grow organically, while also seeking opportunities and partners.

Competition is healthy and good for the market and investors, and it serves the sell- and buy-side, particularly the latter, which can benefit from a model that will significantly reduce operational costs. Competition is driven by the demand for access and transparency as well as better information. In that sense, Contineo is well positioned and has a distinct advantage. We are not burdened by any legacy systems or ‘single-to-single’ or ‘point-to-point’ connections; and we are not an issuer, so we don’t have any bias around where we direct our network. Our focus is around providing connectivity and access to data.

Who will come out as winners in multi-dealer platforms? What do you need to offer to make Contineo a preferred partner?
Our approach to standards and data will be a game changer over the next year. Connectivity is very important to get a critical mass of products and transactions, but we see even more value in providing information to the banks on a number of different levels (such as operational or compliance).

What’s next?
Our focus for the next three to six months is on-boarding private banks and new issuers and our pipeline is full. What we offer is different from other platforms. Contineo has been built on a $1m+ infrastructure and had to go through the IT and compliance departments of six different investment banks as well as multiple private banks, which gives an idea of our scale compared with others. If you can manage and address the significant networking security requirements banks have that puts us in a very good place for expansion.

Contineo is backed by foreign banks operating in the Asia Pacific. Is that an issue in any way? Is it important to have some sort of a local profile to be successful in the region?
What is important for us is the liquidity that passes through the network as well as the balance sheets of our backers. That’s what makes Contineo attractive to the buy-side, and sets it apart. Our strength is in our capital and the commitment and obligation we have from our subscribers.

What other factors make you an appealing partner? What’s your forecast for the next few months and next year?
The focus is to deliver for private banks, and the key is not only about providing access but about providing a good service. We are not interested in adding bells and whistles but about providing a solid infrastructure to add value to our users. Our platform cannot be built overnight and needs careful planning. This is not a standard start-up as it is backed by six banks and is on-boarding a number of private banks. This is important as the kind of investment to set up this platform is not something that banks would take lightly. Contineo is future-proof and has the commitment of a consortium that has signed multi-year contracts which is something that other platforms don’t have. We are the best capitalised of all the platforms, we are building an extensive pool of users, and we have the right infrastructure and set-up to respond to any challenges the market throws at us.

Do you think multi-issuer platforms will eventually replace the reverse inquiry model?
We are already seeing that trend. It might not replace that model completely but we are already getting requests for big tickets, and it’s something we would be able to accommodate. Conversations and requests over the phone will always be there, but we see multi-issuer platforms taking a chunk of that pot as the efficiency of the process will outweigh any issues related to the size of the transaction. The use of technology also allows us to add new features to speed up communication, and this will benefit the sell and the buy-sides equally and will streamline the bringing products to the market.

What developments should we expect at a product level?
We are working very closely with our partner banks to introduce new asset classes in a standardised way. Demand for foreign exchange products is high in the region and we can provide added value around those products. We will continue to respond to demand and build the platform by addressing the needs of our clients.

Contineo launched in January 29, 2015 as the industry’s first open messaging network to provide private banking and wealth management firms with greater access to equity-linked structured products. The platform has backing from a consortium comprising technology firm AG Delta and six investment banks – Barclays, BNP Paribas, Goldman Sachs, HSBC, JP Morgan and Societe Generale.