SRP Americas Awards Report

Transcription

1 SRP Americas Awards Report 2015

2

3 SRP Americas Awards Report Foreword Structured Retail Products Limited (SRP), part of the Euromoney group of companies, is a research firm based in London, New York and Hong Kong, providing research and training services related to all aspects of structured products. The company was founded in 2001 and our clients include hundreds of blue chip companies from around the world including all of the major global financial services groups, financial regulators, stock exchanges, index providers and professional services firms. SRP also owns and maintains the specialist industry website StructuredRetailProducts.com. The site was launched in January 2003, and has become the leading online information resource for the global retail structured products industry. With over 4,100 registered users and more than 7.2 million product listings, the website is the primary information source for a wide range of businesses involved in the manufacture and distribution of structured investment products globally. The service is used by financial regulators, index providers, investment banks, stock exchanges, retail banks, insurance companies, asset and wealth managers, consultants, lawyers and other firms involved in the market. Copyright Information This report is copyright 2015 Structured Retail Products Limited. All Rights Reserved. Reproduction and distribution of this report in any form without prior written permission is strictly prohibited. Furthermore It may not be sold for commercial gain, either in part or in its entirety. It may not be photocopied or printed for multiple use, with the exception of within the organization for which it was purchased. It may not be distributed electronically or otherwise in a manner other than that described above. Indemnity The information contained herein has been obtained from sources believed to be reliable. SRP disclaims all warranties as to the accuracy, completeness or adequacy of such information. Use of this report is at your sole risk and SRP accepts no responsibility for any problems or incidents arising from its use. Acknowledgements This report would not have been possible without the support of the structured products fraternity across the Americas. SRP would like to thank the participants in the SRP survey of March to April 2015, whose data underpins this report. Contents 1.0 Introduction 1.1 Foreword Scope Methodology Management Summary 2.1 Price Competitiveness Understanding Client Needs Innovation and Structuring Capability After Sales Service Overall Service Scores Americas Summary 3.1 Americas Overview Americas Trends and Predictions Qualitative Responses by Asset Class Bank Analysis 4.1 Barclays JP Morgan Morgan Stanley Top Canada Manufacturer Top Latin America Manufacturer Best Distributor USA Service Provider Analysis 5.1 Best Index Provider Best Law Firm Best Technology Provider Best Proprietary Index Provider Awards Results 6.1 Best House and Distributor Overall Winners Best Sales and Performance by Country Service Provider Winners, Runners-up and Shortlists 29 Appendix 30 Editor: Richard Jory T: +44 (0) E: Richard@StructuredRetailProducts.com Research: Wojciech Polowniak Marketing: Jon Riley, Margaux Palacios Sales: Joe Burris If you are interested in having a similar bespoke report produced for your organization, please contact Joe Burris +1 (212) or Joe@StructuredRetailProducts.com

4 2 SRP Americas Awards Report Scope This report is concerned with the manufacture of structured products in all forms including wrappers such as funds, notes, bonds, certificates, deposits, life assurance and usually linked to equities, foreign exchange, commodities, interest rates and hybrid underlyings. This report presents information on structured retail products markets across the Americas. Although the term structured product is widely used in the financial community, the term often means different things to different people. For the purposes of this report, a structured product is an investment product providing a predefined return linked to the price of one or more underlying assets. These are usually financial prices, rates or indices, but in rare cases can be sporting or other events. The product can usually be broken down into a number of separate financial instruments, one of which is usually a derivative product. Where a derivative is not used, the product will use derivativebased investment strategy or computation to provide the return. Although we exclude simple warrants, listed options and futures, and delta one products such as tracker funds, exchange-traded funds and notes, reference to these products may be made, where relevant. The report is based on both quantitative and qualitative analysis. StructuredRetailProducts.com (SRP) surveyed 224 structured products distributors across the Americas between March and April 2015, collecting data on structured product manufacturers from the point of view of their distributor clients. The results from the survey form the basis of this report. Details of both the quantitative and qualitative analyses are available in the Methodology section of the report. The report provides the following information: 1. A scope, methodology and management summary of the report s key findings 2. An analysis of the structured products market in the Americas based on survey responses 3. Separate analysis of top banks with How the bank ranked in terms of overall client service Whether client service was above the industry average in key service categories 4. The volume of business manufactured by the bank and breakdown by key countries 5. Table of the importance of the following key service categories for the bank s respondents: Price competitiveness Understanding client needs Innovation and structuring capability After sales service 6. Score and rank of the bank, in league table format For overall client service with a geographic breakdown Across the key client service categories with an asset class breakdown 7. Analysis of top service providers

5 SRP Americas Awards Report Methodology Description of the Survey Between March and April 2015 StructuredRetailProducts.com (SRP) surveyed American structured products distributors, receiving 224 responses. The survey was composed of three areas of investigation: Part 1 Quantitative We asked respondents to the survey to specify up to three investment banks that they use for hedging purposes, for each asset class in which the respondent was active, and specify the volume of business for that asset class and the percentage split by bank. Part 2 Qualitative The respondents were then asked to rank the investment banks they dealt with for each asset class as 1, 2 or 3 (where 1 = below average, 2 = average and 3 = above average) according to four key service categories: Price competitiveness Understanding client needs Innovation and structuring capability After sales service Part 3 Data Validation Captive votes and those representing internal transaction flows were excluded from the results. This includes votes cast by distributors that are part of banking groups which use their parent group for 100% of their activity and internal structuring desks. Also votes were not included in the survey where: Providers vote for themselves We cannot confirm the identity of the respondent A respondent votes more than once and we cannot resolve the duplication The survey results underpinned the 2015 Americas Structured Products Awards, which were handed out on June 11, 2015 during the 4th Annual Americas Structured Products & Derivatives Conference in New York City. For the purpose of this report, the scores for each key service category for the individual banks are calculated by averaging. Service scores are therefore suggestive of the level of service that a client might expect to receive when working with an investment banking counterparty. Each bank analysis contains graphs of the bank s score for each of the key service categories above as well a comparison to the industry average and a geographic breakdown. Where a bank receives a low score, it may need to improve or update its messaging, at least among some sectors of its target client base, rather than to improve its service. In order to help banks decide their tactical direction, we have sought candid feedback from their clients and use this to suggest areas that each bank excels in and where it might improve.

6 4 SRP Americas Awards Report Management Summary The following key service categories influence the decision of distributors to work with a particular bank for their structured products: 1. Price competitiveness 2. Understanding client needs 3. Innovation and structuring capability 4. After sales service Societe Generale 11% Morgan Stanley 10% JP Morgan 19% Barclays 9% 2.1 Price Competitiveness Key Success Factors Availability and cross asset capability: Always provide prices, regardless of the underlying Consistency: Maintain price levels throughout the transaction Speed: Both of pricing and response time Transparency/liquidity: Trading platforms/internet-based pricing are welcomed by clients for purposes of transparency and liquidity in light of regulatory pressures Pricing models: Possess cutting edge models Credit rating: Distributors still wish to mitigate credit risk, and this means that business is allocated to a variety of counterparties, representing an opportunity for banks with aggressive pricing CIBC 1% Monex 1% Citi 7% UBS 2% Other 2% Santander 2% RBC (Royal Bank of Canada) 2% Bank of America Merrill Lynch 3% Goldman Sachs 6% Natixis 3% BMO Financial 3% BBVA 4% BNP Paribas 4% HSBC 3% Credit Suisse 3% Deutsche Bank 3% Wells Fargo 3%

7 SRP Americas Awards Report Understanding Client Needs Key Success Factors Provide a seamless service that integrates with client operations Do not put the client under pressure to close the deal Understand the products offered Possess local market/regulatory knowledge preferably to have dedicated sales people in different markets Deliver good macro ideas Societe Generale 10% Barclays 9% JP Morgan 20% Have experienced sales people Provide a quick response to client enquiries Demonstrate a willingness to help clients grow their business banks need to understand their clients business in order to pitch suitable products - a cooperative approach is welcomed by distributors which can lead to further sales opportunities Spend time iterating suitable marketable ideas with the client CIBC 1% Monex 1% Santander 2% RBC (Royal Bank of Canada) 2% Other 2% UBS 2% Bank of America Merrill Lynch 5% Deutsche Bank 3% BBVA 3% HSBC 4% Credit Suisse 3% Natixis 3% Wells Fargo 3% BMO Financial 4% BNP Paribas 4% Morgan Stanley 9% Citi 7% Goldman Sachs 6%

8 6 SRP Americas Awards Report Innovation and Structuring Capability Key Success Factors Demonstrate the ability to structure across asset classes, underlyings and also wrappers Understand complex customer needs and turn these into innovative/ viable solutions Have experience of alternative issuing vehicles and pricing models Possess excellent knowledge of innovative products Societe Generale 10% Morgan Stanley 10% JP Morgan 20% distributors value banks that can come up with interesting products and innovative payoffs as long as these are not too complicated to understand or explain to their customers Offer leading research capabilities more openness and clever trades and strategies that deliver value are highly rated by distributors Provide flexibility to embed bespoke features into products CIBC 1% Monex 1% RBC (Royal Bank of Canada) 1% Santander 1% Deutsche Bank 2% Other 2% UBS 2% Bank of America Merrill Lynch 3% Goldman Sachs 6% Natixis 3% Credit Suisse 3% BMO Financial 4% BBVA 4% BNP Paribas 4% Wells Fargo 4% HSBC 4% Barclays 8% Citi 8%

9 SRP Americas Awards Report After Sales Service Key Success Factors Provide secondary market services this source of liquidity encourages distributors to issue structured products and therefore supports the industry Demonstrate the ability to unwind small tickets while banks can typically support writing small deal sizes, liquidity for these deals is also required post trade Help unwind commitments especially when pricing is not good Societe Generale 10% Barclays 9% JP Morgan 20% CIBC 1% Scotia 1% Provide reliable and regularly updated secondary market prices Issue valuation and risk management reports this helps distributors decide what products and underlyings they may wish to use, and also allows them to explain product performance to their customers Demonstrate efficiency in terms of product registration and passporting Monex 1% Other 1% RBC (Royal Bank of Canada 1% Santander 1% UBS 2% Bank of America Merrill Lynch 3% Deutsche Bank 3% Natixis 3% Credit Suisse 3% BBVA 3% Wells Fargo 4% BMO Financial 4% BNP Paribas 4% HSBC 4% Morgan Stanley 8% Citi 8% Goldman Sachs 5%

10 8 SRP Americas Awards Report Overall Service Scores This section combines the overall scores achieved by banks in the categories analysed above The graph below shows each bank s score also shown is the league table with comparison to previous surveys Investment Bank Price Competitiveness Understanding Client Needs Innovation & Structuring Capability After Sales Service Bank of America Merrill Lynch Barclays BBVA BMO Financial BNP Paribas CIBC Citi Credit Suisse Deutsche Bank Goldman Sachs HSBC JP Morgan Monex Morgan Stanley Natixis RBC (Royal Bank of Canada) Santander Scotia Societe Generale UBS Wells Fargo Industry Average Bank Bank of America Merrill Lynch Credit Suisse Societe Generale BNP Paribas Morgan Stanley Citi JP Morgan UBS n/a 21 8 BMO Financial Wells Fargo BBVA n/a Goldman Sachs Barclays HSBC Natixis n/a 3 15 Deutsche Bank CIBC Monex n/a 1 18 RBC (Royal Bank of Canada) Santander n/a Scotia n/a 18 21

11 SRP Americas Awards Report Americas Summary The SRP Americas Awards Survey 2015 incorporates the results of a survey of 224 respondents who were asked for their views on product creators, preferred structures and underlyings and market views. The survey was conducted between April and March The Americas Overview includes graphic representations of SRP data on the trends in issuance numbers and sales volumes in this market over the past five years. This is followed by an article that is based on comments made in the survey by the respondents. Introduction Management Summary Americas Summary Bank Analysis Service Provider Analysis Awards Results Appendix

12 10 SRP Americas Awards Report Americas Overview Americas structured products issuance and volumes (including leverage, flow and private banking) 85,000 80,000 75,000 70,000 65,000 60,000 Americas structured products issuance and volumes (excluding leverage, flow, private banking) 70,000 68,000 66,000 64,000 62,000 60,000 58,000 56,000 Americas structured products issuance and volumes (excluding private banking) 72,000 70,000 68,000 66,000 64,000 62,000 60,000 58,000 56, Total Volumes (USDm) Total Volumes (USDm) Total Issues Total Issues Total Volumes (USDm) Total Issues 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, ,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, ,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0

13 SRP Americas Awards Report Having a nice day may not be enough Structuring is a strength in the Americas, according to an audience of distributors giving their views in SRP s Americas Awards Survey, with more than 60% of those responding voicing their approval, and half of those stating that they were extremely satisfied with the products they have been offered over the last year. Furthermore, there have been very few or no incidents of making errors in order totals and documentation, which is, of course, reassuring those fat fingers are under control. The fact that this is worthy of note makes it clear how far the providers have moved away from bad or even casual practices. Top issuers share a similar trait - strong partnership, said one distributor. They often naturally price aggressively, but they are differentiated by their main sales contact. They understand client needs, do not try to pitch products, and have strong market/derivatives knowledge. Understanding distributor needs and being proactive when it comes to new ideas or even listening to opinions and thoughts, and then incorporating these themes and preferences into a monthly product run is perhaps more valuable than you might have thought. Those less content with these advances in quality were moved to damning criticism, particularly of those banks that had undergone changes that meant they were no longer able to structure (presumably profitable) deals as they used to, with a particular lowlight being those banks that have had issues settling maturities or coupon payments. The specific criticism was levelled at more than one bank active in the US. It would not be the same if fingers were not pointed at regulations and regulators, although this time the anecdotal praise was aimed squarely at banks that proved to have the capacity to manoeuvre in the [current] regulatory environment. More approval was levelled at banks making an effort to offer better service and those who have stepped up both their time and quality of response. One response noted that the performance of one provider is above average when they care about our company. Further gloss, from another respondent, stated, Above average manufacturers do everything well (aftersales service, secondary market-making, etc). And if you would like a more fulsome definition, one respondent suggested the following: companies that can provide the best terms and companies that have the most flexibility in tweaking offerings terms/structuring outside the box are above average. Good and regular reporting on how relevant strategies are faring was also mentioned. If you want to know how to score a below average rating then you need to make sure that you do not bring new ideas and do not understand the various restrictions different distributors are subject to or their client base. Ensuring you fall off the list of preferred providers can also be achieved by failing to be prompt in customer service or by being less pleasant to deal with overall. Although not quite a damning description of one particular provider, it probably shows that saying have a nice day may not be enough. The right blend If you want to make it all the way to top as a manufacturer, the ingredients for the right blend include a good offering of notes no points for guessing that one excellent aftersales service and a high quality team of individuals. But make sure that you are liked for your pricing, some issuers are not competitive because of their treasury. And if you get it just right, you will provide the best quality in intellectual capital, underlying credit rating and service [and you will] provide exceptional service from pre-sale to after-sale. The above average rankings understand our business and are proactive in bringing us new ideas and/or incorporating our opinions/needs into their monthly structuring and also provide excellent customer service. New sales teams in the US are not necessarily a disadvantage, with one bank that has introduced new staff said to be providing radically improved service and competitiveness although one has struggled to win bids and not executed on the bids they did win. One bank was noted as leading the market through education focusing on retail brokers needs by taking the time to explain the mechanics of the product, which leads to increased long term sales. The amount of service provided by that bank is unmatched and the personal attention makes it a pleasure to work with them. Customer service The survey returned an impressive list of improvements requested from the sellside, unless you are a manufacturer. Starting with after sales monitoring of the underlying basket, some corporate action, it was also noted that pricing fees and bid requests are messy, and there are issues on the documentation side, while there is a need for better marketing materials and better secondary inventories. While structured products developers all around the world are crying out for swift and effective single and multi-dealer trading platforms, there remains a desire for a price calculator for Introduction Management Summary Americas Summary Bank Analysis Service Provider Analysis Awards Results Appendix

14 12 SRP Americas Awards Report 2015 the pricing of plain vanilla products, although there is also an acknowledgement that, alongside the need for instant pricing systems, coupon/performance history reports are becoming more available. The universal clamour for more education from many does not mean that a vast swathe of distributors do not know what they want more of, which includes more idea generation both on new primary trades and secondary unwind opportunities. Manufacturers are also asked to make more products with many more underlyings, not just those that register with the regulator and make more available structures that will allow different or opposing risks to be taken. At the sharper end of requests was, somebody - like what happens with certificates of deposit - should be the structurer but use a municipality s balance sheet so that coupons would qualify for muni bond treatment for high net worth investors. Index providers were once again picked on for the high level of their annual fees, and asked to provide more indexes based on the Mexican market, but also better education. They could be more willing to create new indices, offer easier access to public disclosure documents (eg. fact sheets, methodology, prospectus), and need to be responsive to questions about index methodology where there are actual or perceived ambiguities. Trends From the responses to the survey, it would seem clear that we are going to get a rate rise in the US, which should at least help with one of the major concerns of structurers who continue to struggle with product creation while interest rates (and volatility) are so low. The market will drastically improve once the central banks remove themselves from their overreaching current position, offered one respondent. Other challenges include rising equity markets and trying to meet or better the returns of products created between that will mature this year. There is also a requirement for meeting the desire for income products, as well as developing new dynamic or market tracking indices [and] keeping clients/ advisors engaged with new ideas and solutions to evolving client needs. One respondent noted, Our registered reps work for a bank and there is still a lot of competition with annuities, where a good amount of their business is booked. Forecasts Currency is the asset class to watch, as far as respondents to the survey are concerned, with expectations that this market will increase by 20% in retail. Retail structured products linked to equities, interest rates and hybrids are expected to all increase by 15%, with a mere 5% growth in commodity-linked products anticipated. There is a universal expectation that FX, rates, equities and hybrids will rise by 15% for institutions, with the use of commodities to fall by 6%. The expectation for private banking is that hybrid- and equity-linked structured products will rise in popularity by more than 10%, with FX and interest rates expected to increase by 5%-10%. To support this growth, respondents reckoned that 75% of the proceeds of structured products maturing over the next 12 months will be reinvested in the market. And the products that will dominate over the same period are expected to be insurance-linked investments or variable annuities, those based on proprietary or custom indices, as well as volatility-based derivatives. Only one respondent is prepared to base his investment predictions around offshore Chinese renminbi-based products. Of those organisations expected to support the market, there was a request for the setting up of a structured products association in Mexico, and a request for more compliance education and idea sharing as well as monthly or quarterly newsletters from the US SPA. A sole respondent went one step further into the void when asked what more the US SPA could do to help the market: A lot, was his response.

15 SRP Americas Awards Report Americas Trends and Predictions 1. Which payoff will grow? 8% 6% 1% 9% 8% 3% 4% 8% 6% 2. How will regulation affect SPs in your market? Negatively Neutral/no effect Positively 21% 20% 27% 5% Accrual Callable Digital Dual Currency Knockout Protected Tracker Range Reverse Convertible Shark Fin Worst of Option Other 75% Introduction Management Summary Americas Summary Bank Analysis Service Provider Analysis Awards Results Appendix

16 14 SRP Americas Awards Report Which asset class will grow? 1% 3% 3% 23% 4% 12% 38% Commodities Credit Equity - Index Basket Equity - Share Basket Equity - Single Index Equity - Single Share Hybrid Interest Rate 16% 4. How will the regulatory environment change your clients portfolio allocation to SPs? Neutral/no effect 27% Overweight Underweight 62% 11%

17 SRP Americas Awards Report Qualitative Responses by Asset Class 1. Commodities 2. Equities Barclays BMO Financial BNP Paribas Citi Credit Suisse Deutsche Bank Goldman Sachs JP Morgan Morgan Stanley Natixis Societe Generale Bank of America Merrill Lynch Barclays BBVA BMO Financial BNP Paribas BTG Pactual CIBC Citi Credit Suisse Deutsche Bank Goldman Sachs HSBC Itau JP Morgan Monex Morgan Stanley National Bank of Canada Natixis Other RBC (Royal Bank of Canada) Santander Scotia Societe Generale UBS United Community Bank Wells Fargo Commodities 0% 5% 10% 15% 20% 25% 30% 35% 40% Overall score based on four qualitative criteria Volume 0% 5% 10% 15% 20% 25% 30% 35% 40% Introduction Management Summary Americas Summary Bank Analysis Service Provider Analysis Awards Results Appendix Overall score based on four qualitative criteria Volume

18 16 SRP Americas Awards Report Hybrid Bank of America Merrill Lynch Barclays BMO Financial BNP Paribas Citi Deutsche Bank Goldman Sachs JP Morgan Morgan Stanley Natixis Societe Generale Hybrid 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Overall score based on four qualitative criteria Volume 4. Interest Rates Barclays BBVA BMO Financial Citi Credit Suisse Deutsche Bank Goldman Sachs HSBC JP Morgan Monex Morgan Stanley Natixis RBC (Royal Bank of Canada) Scotia Societe Generale Wells Fargo 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Overall score based on four qualitative criteria Volume

19 SRP Americas Awards Report FX Barclays BBVA CIBC Citi Credit Suisse Deutsche Bank Goldman Sachs HSBC JP Morgan Monex Morgan Stanley Natixis Santander Societe Generale Union Bank 0% 5% 10% 15% 20% 25% 30% Overall score based on four qualitative criteria Volume Introduction Management Summary Americas Summary Bank Analysis Service Provider Analysis Awards Results Appendix

20 18 SRP Americas Awards Report Bank Analysis 4.1 Barclays Strengths and Weaknesses After Sales Service Innovation & Structuring Capability Understanding Client Needs Price Competitiveness Barclays is headquartered in the UK but maintains its structured products hub in midtown New York City. The bank is recognized as being the inventor of the Exchange Traded Note. It currently sponsors several dozen ipath branded ETNs, the first of which debuted in Barclays offers US structured products through a variety of distribution channels, including RIAs and its Barclays Wealth Americas private bank. In Canada, Barclays has partnered with a handful of local banks for product distribution, predominantly to retail investors. The bank s smaller Latin American market includes predominantly private banking clients in Chile, Colombia and Mexico. Barclays scored highly in the US, with respondents of the SRP Americas Awards Survey suggesting that most of the UK bank s Americas activity is centered on the US according to the estimated market shares reported, with about 2% of activity seen in Canada. In 2014, in the US, Barclays sold more than $4.8bn across 860 products, making the UK bank fourth most prolific and earning it a 10% market share. In Latin America Barclays sold $14m across four products. As far as strengths and weaknesses, as measured by the survey, where respondents presented their views of product provider effectiveness in after sales service, innovation and structuring capability, understanding client needs and competitiveness, the bank scored below average in each category. Over 2014, relative to the averages from the survey votes, it was deemed Industry Average Barclays to be best in price competitiveness, but fell a long way behind the average in innovation and structuring capability. Buyside respondents have attributed this below average score to the UK bank undergoing negative changes, including not being able to structure deals that were done previously. Additionally Barclays has had issues settling maturities or coupon payments over the past year. In specific countries, as far as innovation and structuring capability, Barclays was ahead of the industry average in Canada, but behind in the US. For price competitiveness the UK bank was prominent in the US, where survey respondents scored it slightly above the average, while in Canada performance is seen to fall behind the industry average. In both Canada and the US understanding client needs and after sales service performance was seen to be below industry average. Distributors commented that a similar trait that top issuers share is strong partnership; they often naturally price aggressively but they are differentiated by their main sales contact. Despite the lower than average score in understanding client needs, one respondent said that Barclays understands client needs and does not try to pitch products, but have strong market and derivatives knowledge.

21 SRP Americas Awards Report JP Morgan Strengths and Weaknesses After Sales Service Innovation & Structuring Capability Understanding Client Needs Price Competitiveness New York-based JP Morgan was an early pioneer of structured products and cleared a path for other investment banks to follow suit. Cross-asset class products and services are offered and the bank manufactures both structured notes and structured CDs. In the US, the bulk of cross asset structured products are sold to retail investors through multiple wirehouses, regional broker-dealers, RIAs and private banks. According to SRP data, JP Morgan was the top seller of US structured products by sales volume. In 2014 the bank sold more than $8.2bn across more than 1,800 products. The US bank was also the top seller of US structured products in 2011, 2012 and JP Morgan was well represented in the USA in the voting by respondents to the SRP Americas Awards Survey, with the bank reckoned to have a near 75% stake in the market. The US bank also received votes for its presence in Canada, as well as, although to a lesser extent, Brazil and Chile. Overall JP Morgan received flattering results when distributors were asked to rank the quality of the bank s structured products service across after sales service, innovation and structuring, understanding client needs and price competitiveness. The perception of the buyside in the Americas is that the US bank is above average in all four service categories, with the highest score being attained for understanding client needs. Broken down by country the picture changes slightly, with Industry Average JP Morgan distributors in Canada most appreciative of the bank s price competitiveness, scoring it far above average, while performance in this category seen to be around the industry average in Chile and the US. The same cannot be said for innovation and structuring capability, as the Canadian buyside ranks this category far below average while in Chile and the US this category is ahead of the curve. Canadian distributors remain critical when it comes to understanding client needs and after sales service, ranking both categories below average, while in Chile and the US the bank is seen to be performing above industry average. Respondents highlighted that the US bank leads the market through education focusing on retail broker s needs by taking the time to explain the mechanics of the products, which leads to increased long term sales. Responsiveness to questions and openness to structuring custom notes were also highlighted as reasons for above average ratings.

22 20 SRP Americas Awards Report Morgan Stanley Strengths and Weaknesses After Sales Service Innovation & Structuring Capability Understanding Client Needs Price Competitiveness Industry Average Morgan Stanley has its global headquarters in New York City with its Global Wealth Management based in Purchase, NY. The bank s structured products business makes both knowledge and infrastructure available for clients and it has extensive experience in servicing institutional investors. Morgan Stanley s service spans all asset classes: equities, interest rates, credit, FX, commodities, real estate and hedge funds with the ability to engineer sophisticated products, supported by a secondary trading platform. Over recent years, the use of structured products has grown and the range of products has increased significantly. The bank has a large US-based structured products business, a small presence in Mexico but it is not currently a participant in the Canadian structured products market. According to SRP data Morgan Stanley sold more than $2.8bn across 523 products in the US, making it the ninth most prolific issuer and earning it a 6% market share in The two best features of Morgan Stanley structured products in the Americas in 2014 are its pricing competitiveness and innovation and structuring capability, according to the SRP Americas Awards Survey. While scoring above average for structuring and innovation, understanding of client needs and competitiveness in pricing, the US bank was less successful in the after sales service category, where distributors in the Americas suggested that it performs below average. While the US stands aside as a market in which distributors Morgan Stanley see Morgan Stanley as providing far better than average price competitiveness, the bank scores below average for Mexico and Chile. The perception of the bank is far rosier in relation to its price competitiveness, when survey respondents in the US and Mexico score it far above the industry average, while in Chile it is at the average. Attributes that account for an above average rating include an ability to provide a quick and quality response, according to buyside respondents of the survey. Morgan Stanley is ahead of the pack because of its ability to be in tune to what distributors are looking for and provide the best terms with structured products and the ability to tweak offerings terms and structuring outside the box, according to respondents.

23 SRP Americas Awards Report Top Canada Manufacturer CIBC Strengths and Weaknesses After Sales Service Innovation & Structuring Capability Understanding Client Needs Price Competitiveness Industry Average Canadian Imperial Bank of Commerce (CIBC) is headquartered in Toronto, Canada, where its Americas structured products hub resides. It also maintains an office in New York City. The bank established its structured products business in The predominance of its structured products business is pan- Canadian, with a lesser presence in the US market. CIBC s financial solutions group is the unit through which the bank distributes cross-asset solutions which include structured products. CIBC offers structured products to both retail and institutional clients. Products are distributed through CIBC Wood Gundy (acquired in 1988), the wholly-owned retail broker-dealer division of CIBC World Markets, the corporate and investment banking arm. Additional distribution is through other nonaffiliated, and often smaller, broker-dealers. In Canada, CIBC s structured products platform includes both GICs and structured notes; in the US structured notes. In 2014 in Canada, CIBC sold 746 products and was the sixth most prolific issuer in the Canadian market, according to SRP data. About 52% of those products were GICs, 48% were structured notes. The products sold among several asset classes that included: equity, fund and hybrids. After a long absence in the US market the bank began issuing again in In 2014 in the US market the Canadian bank sold $8.8m across four product. CIBC scored below average in the perception of its strengths CIBC and weaknesses in all four of the categories judged in the SRP Americas Awards Survey. Just below average for innovation and structuring capability, the Canadian bank scored worst for its price competitiveness. Its after sales service and understanding of client needs were also a fair bit below the industry average by survey respondents. Survey respondents attributed most of the market share of the Canadian bank in its home country. The buyside highlighted that above average votes for service categories stem from a positive relationship between the structured products desks and wholesalers.

24 22 SRP Americas Awards Report Top Latin America Manufacturer BBVA Strengths and Weaknesses After Sales Service Innovation & Structuring Capability Understanding Client Needs Price Competitiveness Industry Average Banco Bilbao Vizcaya Argentina, (BBVA) is headquartered in Madrid, Spain; the main Americas hub is based in Mexico City. The bank is active in manufacturing structured products for the following asset classes: equities and interest rates. BBVA has a large presence in Mexico s structured products business, a small presence in Chile but is not currently a participant in the US and Canadian structured products markets. According to SRP data the Spanish bank s Latin American structured product sales were over $3.1bn across 580 products, making it the third most prolific issuer and earning the bank a 19% share of the Latin American market in Innovation and structuring capability was a strength for BBVA Bancomer in 2014, according to the SRP Americas Awards Survey, with respondents perceiving that what the bank had to offer was better than most of its peers in the Americas. However, the survey results reveal that the bank was far off pace in understanding client needs. BBVA also scored below industry average in after sales service and price competitiveness, although not to as large a degree as understanding client needs. Distributors who ranked the bank highly in service categories highlighted the bank s capacity to maneuver in the complex and ever changing regulatory environment. Buysiders believe the bank cares about them and their BBVA clients needs and have made an effort to offer better service, particularly in the timeliness and quality of response to inquiries and requests.

25 SRP Americas Awards Report Best Distributor USA Credit Suisse Strengths and Weaknesses After Sales Service Innovation & Structuring Capability Understanding Client Needs Price Competitiveness Industry Average Credit Suisse, and its former derivatives entity CS Financial Products, have been manufacturing structured products since the 1990s. The bank is headquartered in Zurich, Switzerland; the hub is based in New York City and the business is organized on a cross-asset class basis. Credit Suisse s Private Banking operation in the US includes offering structured notes to clients via an open architecture platform within equities, commodities, interest rates and FX. According to SRP data the Swiss bank s US structured products sales were $5bn across 700 products, giving the bank an 11% share of the US market. Credit Suisse excelled in all service categories in 2014, according to the SRP Americas Awards Survey, scoring above industry average in after sales service, innovation and structuring capability, understanding client needs and price competitiveness, with the final category deemed to be the Swiss bank s greatest strength. Respondents noted that Credit Suisse received above average ratings for after sales service in particular for supremely attentive service and an above industry average transparent and consistent sales process. Additionally the buyside in the US said that Credit Suisse ranks above average for service because of their ability to provide the best terms for structured products and because of flexibility in tweaking offering terms according to individual needs and structuring products outside the box. Credit Suisse Distributors who rated Credit Suisse below average in service had issues settling maturities or coupon payments over the past year.

26 24 SRP Americas Awards Report 2015 Introduction Management Summary Americas Summary Bank Analysis Service Provider Awards Results Appendix Analysis 5.0 Service Provider Analysis 5.1 Best Index Provider S&P Dow Jones Indices S&P Dow Jones Indices (S&P DJI) is the leading index provider in the Americas according to respondents of the SRP Americas Awards Survey. Respondents consider S&P DJI to be the best index provider overall, the most innovative index provider and the most responsive to client needs, with votes for the US index provider far outpacing votes for any other: 46% of respondents judged S&P DJI to be the best overall index provider, while 39% agreed that S&P DJI excelled in being innovative and 42% agreed that they excelled in being responsive to client needs, according to the survey. S&P DJI provides a full range of indices across all asset classes, providing investors innovative solutions to attain income and performance in the current low interest rate economic environment. Survey respondents provided various comments on what index providers can do for them, ranging from reducing annual fees, be more willing to create new indices including providing more Mexican indices, provide education about various products offered, and provide easier access to public disclosure documents such as fact sheets, methodology and prospectuses. Additionally index providers were asked to be responsive to questions about index methodology where there are actual or perceived ambiguities. When asked how much licensing fees influence their choice of an index for structured products, respondents of the survey were fairly evenly divided: 38% of surveyed distributors said that licensing fees influence their choice of an index for structured products a little; 35% said licensing fees have no influence on their choice of index; while 27% said that licensing fees have a lot of influence on their choice of index for structured products. When asked which indexing themes respondents expect to grow over the next 12 months, the majority of the buyside mentioned smart beta. Other indexing themes expected to grow include volatility control efficient frontier models, interest rate hedging solutions through exchange-traded funds, equity volatility and innovative commodity indexes, and asymmetric delta indexes.

27 SRP Americas Awards Report Best Law Firm Morrison & Foerster Morrison & Foerster (MoFo) has again been recognized as the top law firm for its leadership and ingenuity in the structured products industry in the Americas, for the fourth straight year. The firm is recognized for its importance in the structured products industry, both for its creativity in designing new products on behalf of clients as well as its commitment to educating and enlightening the industry and its participants. MoFo works with most major issuers and underwriters in connection with different types of offerings, resulting in detailed knowledge of a wide variety of platforms and products used in today s market. The law firm consistently demonstrates an understanding of current legal issues in various publications including the Structured Thoughts newsletter, FrankNDodd, BureauTrak, The BD/IA Regulator, Tax Talk, and KnowFATCA. com, providing updates on developments from the Securities & Exchange Commission and the Financial Industry Regulatory Authority. MoFo also holds regular seminars and conferences to educate clients about developments in structured product regulation and taxation, among other issues. Respondents have stressed that MoFo s experience, market knowledge, work product, turn around and pricing are superior, especially in overall retail notes coverage. Additionally MoFo provides a very responsive, business solutions oriented service at a cost-effective rate. When asked what more law firms can do for them, respondents stated that more quantitative support could be provided, along with better direction regarding quantitative regulatory reporting. MoFo provides a broad range of services in practices including litigation, financial services, intellectual property and technology, and transactional work, such as corporate, capital markets and real estate finance representations. The law firm has experience in establishing, modifying and maintaining structured products programs, securities law compliance, banking law compliance, executive transactions, tax analysis and disclosure and assistance in structuring products. MoFo was founded in 1883 by Alexander Morrison in San Francisco. In 1980 the firm opened its first international office in London, and three years later an office in Hong Kong was opened. Today the firm has a global network of 17 offices located in financial centers in the United States, Asia and Europe. Service Provider Introduction Management Summary Americas Summary Bank Analysis Analysis Awards Results Appendix

28 26 SRP Americas Awards Report 2015 Introduction Management Summary Americas Summary Bank Analysis Service Provider Awards Results Appendix Analysis 5.3 Best Technology Provider Bloomberg Bloomberg has been recognized as the leading technology provider for leadership in innovation, pricing, e-commerce and client interface. The Bloomberg Professional service is used by more than 320,000 subscribers, supporting all aspects of the pre- and post-trade workflow for derivatives, including idea generation, structuring, pricing, risk management, regulation, reporting and operations. The internationalization of the structured products market is seeing investors place significant value in transparency and having the right information and tools to spur investment decisions. Underlying this trend is a broad investor need for greater efficiency and progressive solutions that can drive market development. Bloomberg s technology is playing a critical role in the shift towards electronic trading. The power of data and analytics has been transformative for the currency market, increasing liquidity and price transparency that in turn bolsters investor confidence and enhances market participation. In 2014, Bloomberg launched its Derivatives Library, DLIB<GO>, a platform to structure, price and risk manage derivatives, structured product and dynamic strategies. In addition, Bloomberg released a simplified scripting language for product creation which is universal across all asset classes, ensuring coverage for derivatives and structured products and allowing for creation of formula-based strategies. For electronic trading, Bloomberg is engaging with the sell-side to leverage its DLIB Model API to allow the creating of a multi-asset electronic trading platform, integrating sell-side quant models to produce trading prices. All functionalities, such as life cycle information with full audit trail, document generation, back-testing, pricing, various probabilities, cashflow analytics, greeks, risk, calibration of quant models, scenario analysis, stress testing, Excel and API are automatically supported, allowing customers to distribute them on the Bloomberg network. The company has also produced AIM, or Asset and Investment Manager, a portfolio management, trading and operations platform is one of a number of offerings that is designed specifically for the buyside, supporting a range of firms front-, middle- and back-office needs. Used by 700 buy-side firms globally, AIM provides institutional investors with decisionsupport and portfolio management tools such as pre-trade analytics, post-trade matching and end-of-day compliance, settlement, reconciliation, performance measurement, data aggregation, and reporting capabilities. Its cross-asset functionality, covering equities, fixed income, foreign exchange (FX), listed equity options, futures, and over-the-counter (OTC) derivatives, gives it a broad appeal to the global investment management community, while its ability to route to 2,300 venues, including dark pools, makes it the integrated frontoffice platform of choice on the buy side. Confirmations are provided through Bloomberg s voice confirmation (VCON) service, and through Swift and Omgeo.

29 SRP Americas Awards Report Best Proprietary Index Provider JP Morgan SRP Data shows that there were 350 structured products issued in 2014 which were linked to proprietary indexes, accounting for $1.3bn in sales for the year. Of that total, 250 structured products were linked to JP Morgan s proprietary indexes, for a total sales volume of $955m. When asked whether they believe structured products with proprietary index underlyings will grow over the next 12 months, 80% of respondents of the SRP Americas Awards Survey said yes, while the remaining 20% believe that propriety indexes will not grow as an underlying for structured products in the Americas. The rise of notes linked to proprietary indexes rules-based formulae that banks have developed in-house to give investors exposure to a certain market or investment style in a targeted manner is on the US Securities & Exchange Commission (SEC) radar. Many US banks active in the country s retail structured products business already have proprietary index businesses, and will be scrutinized by the US regulator s complex financial instruments unit on disclosure and suitability. In particular, the SEC is concerned that extremely complex structured notes including those using algorithmic formulas or proprietary indices to underlie products must provide full and accurate disclosure, and that their sales be entirely suitable to the specific retail investors buying them. The SEC said in a September 2014 paper that it will continue its focus on the use of complex or proprietary indexes in structured notes. Regulation of indices has been well received by independent index providers as a helpful and necessary step to address the conflict of interest behind misconduct and manipulations in indexing. In a public hearing on the reform of the benchmark legislation at the European Parliament Committee on Economic and Monetary Affairs (ECON), Stoxx s chief executive, Harmut Graff said that the root of the problem lies on market participants that are rate submitters and at the same time are benefiting economically from indices by trading index-linked products. A second conflict of interest is also said to take place when asset manager or product providers link their passive products to self-created indices. JP Morgan has been at the forefront of proprietary index developments and launched earlier this year the first asset allocation strategy based on smart beta. The Efficiente Smart Beta Index applies the same methodology as the bank s other Efficiente indices and is primarily based on momentum with a risk control allocation strategy on smart beta underlyings. Efficiente is an asset allocation strategy driven by momentum, which is a smart beta, and was originally used by JP Morgan on cross-asset benchmark underlyings, mainly the S&P 500, Eurostoxx 50 and Nikkei 225. Efficiente has been used in over 700 structured products marketed in the US market by JP Morgan, with a touch above US$3bn of structured retail note and CD (certificate of deposit) issuance in the US market linked to the main varieties of the ETF Efficiente strategies since the first family index launch at the end of Service Provider Introduction Management Summary Americas Summary Bank Analysis Analysis Awards Results Appendix

30 28 SRP Americas Awards Report Award Results 6.1 Best House and Distributor Overall Winners Best House Americas JP Morgan Best House Latin America BBVA Best House Canada CIBC Best House Mexico BBVA Best House USA JP Morgan Best House Commodities Deutsche Bank Best House Currencies BBVA Best House Equities JP Morgan Best House Hybrids JP Morgan Best House Interest Rates JP Morgan Best Distributor USA Credit Suisse Best Distributor Canada Desjardins Group Best Distributor Mexico Banco Monex Best Distributor Brazil Citi Brazil Best Distributor Chile Banchile 6.2 Best Sales and Performance by Country USA Best Sales JP Morgan Best Performance BNP Paribas Canada Best Sales Desjardins Group Best Performance Desjardins Group Mexico Best Sales Banco Monex Best Performance Banco Monex Brazil Best Sales Citi Brazil Best Performance Citi Brazil Chile Best Sales BBVA Chile Best Performance Banchile

31 SRP Americas Awards Report Service Provider Winners, Runners-up and Shortlists Lifetime Achievement Eric Glicksman Best Educational Initiative The Laurie Fulton Award Desjardins Group Shortlisted Citi Itau Best ETF Provider Blackrock Shortlisted Guggenheim JP Morgan Best ETF Market Maker Jane Street Capital Shortlisted Deutsche Bank Securities Goldman Sachs Best Proprietary Index Provider JP Morgan Shortlisted Barclays UBS Best Exchange New York Stock Exchange Shortlisted Chicago Board Options Exchange CME Group Best Clearing Firm RBC Correspondent Services Shortlisted JP Morgan Clearing Pershing Best Independent Distributor Advisors Asset Management Shortlisted Incapital Raymond James Financial Best Single-Issuer Platform UBS Equity Investor Shortlisted JP Morgan - Nexus BNP Paribas Smart Derivatives Best Hedge Fund Eton Park Shortlisted Blackrock Standard Life Investments Best Broker Dealer UBS Wealth Management Americas Shortlisted Bank of America Merrill Lynch Morgan Stanley Wealth Management Best Technology Provider Bloomberg Shortlisted BNP Paribas Murex Numerix Thomson Reuters Best Law Firm Morrison & Foerster Shortlisted Cadwalader, Wickersham & Taft Sidley Austin Best Index Provider S&P Dow Jones Indices Shortlisted Russell Investments VelocityShares Best Fund Solution Citi Best Private Banking Solution Itau Shortlisted BNP Paribas Citi Best Insurance Solution JP Morgan

32 30 SRP Americas Awards Report Appendix Respondents by Country Brazil 1% Canada 8% Mexico 10% Chile 1% Uruguay 0% USA 80% Country Number of Respondents USA 180 Mexico 22 Canda 17 Brazil 2 Chile 2 Uruguay 1 Grand Total 224

33 SRP Americas Awards Report Brazil Market Share Canada Market Share Chile Market Share UBS 33% Morgan Stanley 1% Citi 1% UBS 6% BNP Paribas 33% HSBC 9% JP Morgan 43% JP Morgan 33% Societe Generale 1% BMO Financial 1% JP Morgan 83% CIBC 1% Barclays 6% Deutsche Bank 3% UBS 13 % Bank of America Merrill Lynch 31%

34 32 SRP Americas Awards Report 2015 Mexico Market Share USA Market Share Santander 1% Monex 1% Scotia1% Barclays 9% Other 1% BBVA 3% Deutsche Bank 1% Citi 1% HSBC 1% BNP Paribas 1% Goldman Sachs 4% Societe Generale 14% JP Morgan 14% Morgan Stanley 27%

35 Asia-Pacific Structured Products & Derivatives Conference Hong Kong 22 September 2015 For more information please visit StructuredRetailProducts.com/events-details/asia-pacific To discuss a tailored sponsorship solution, please call Kris Deslagmeulder or Kris@StructuredRetailProducts.com

36 SOCIETE GENERALE, NOW INCLUDING NEWEDGE: FULLY-INTEGRATED, FRONT-TO-BACK GLOBAL MARKETS SOLUTIONS SOCIETE GENERALE S TOP TIER RESEARCH, INVESTMENT, RISK MANAGEMENT & FINANCING CAPABILITIES. NEWEDGE S BENCHMARK PRIME SERVICES CROSS-ASSET. LISTED OR OTC. AGENCY OR PRINCIPAL ACCESS TO 125+ MARKETS AND EXECUTION VENUES SELECT HOW YOU CONNECT Risk Magazine s Derivatives & Equity Derivatives House of the Year 2015 Structured Products Americas Technology Provider of the Year Bank 2015 Best House in Europe Best House in Equities Best House in Other Asset Classes 2014 Winner: Best Bank Overall Best Bank for Longevity Risk Best Bank for Credit Risk SGCIB.COM Societe Generale Corporate & Investment Banking (SG CIB) is a marketing name for corporate and investment banking businesses of Societe Generale and its subsidiaries worldwide. Execution services in the United States are offered through SG Americas Securities, LLC (SGAS), a U.S. registered broker dealer, futures commission merchant (FCM) and swap dealer. SGAS is member of NYSE, FINRA, NFA and SIPC. Lending, derivatives and other commercial banking activities are performed by Societe Generale (SG) and its banking affiliates. Prime services is offered in the U.S. through SG s Global Markets division. Services provided outside the United States may be provided by SG affiliates. This material has been prepared solely for information purposes, and does not constitute an offer, a solicitation of an offer or invitation, or any advice or recommendation, from SG or any of its affiliates to buy or sell any security or financial instrument or product, or participate in any trading strategy, activity or arrangement. Not all securities or financial instruments or products offered by SG are available in all jurisdictions. This communication is not intended for or directed at retail clients/investors in or outside the United States. It is for institutional and/or qualified investors only. Please contact your local SG office for any further information Societe Generale and its affiliates. All rights reserved.