Friday, November 27, 2009

Providers group to form official UK structured products body

Posted on Risk.net by Sylvia Morrell:

A total of eight structured products providers have signed up to create the UK Structured Products Association (UK SPA), a formal trade association for the industry. The group counts six major providers among its members: Royal Bank of Scotland, Citi, Santander, Credit Suisse, Morgan Stanley, Skandia, Legal & General and Prudential.

The confirmation of the line-up comes after weeks of speculation over which institutions would be included, and months of behind-the-scenes negotiations among providers.

"The creation of the UK SPA is a unified response from the members who believe that whilst structured products form an increasingly integral part of financial planning for investors, they are sometimes misunderstood and misrepresented, and that any lack of understanding can and should be addressed," says the SPA. It underlines that its role is not to promote individual firms or products, and says it will provide independent comment to media organisations. Spokespeople will be anonymous.

Third-party plan managers have their own advisory committee within the body, which includes Gilliat Financial Solutions, Jubilee Financial Products, Meteor Asset Management and Walker Crips Structured Investments.

Additionally, the organisation is working with the Association of Independent Financial Advisers (AIFA), which endorsed the new body today. "AIFA supports the launch of this initiative, which will help ensure all participants in this market are continually better informed," says Robert Sinclair, AIFA director.

The inclusion of third-party providers and the AIFA has invalidated initial accusations from some industry participants that the organisation was too exclusive because it would only include banks and insurers. "In this set-up we feel we have most of the significant parties who have some interest in structured products represented in some way," says its spokesperson.

The new association will also be working in co-operation with the European Structured Investment Products Association (Eusipa), says a spokesperson for the SPA, but it will not be joining as a full member of Eusipa for the time being.

The news comes a day after the US Structured Products Association announced it would be opening a London branch, after reaching 1,000 UK members.

"Post-Lehman, we received a significant spike in interest in building out our UK chapter from independent financial advisers, distributors and personnel at the issuing firms," says Keith Styrcula, the New York-based chairman of the US Structured Products Association (also known as the SPA). "Over the last six months, we discussed having a physical presence in London, and several key people in the UK agreed. We decided we could open an office only if we had critical mass of 1,000 members in the UK, a goal we reached last month."

Styrcula adds that he is looking forward to working with the new association in the same way it works with other trade organisations in the US.

The body was the subject of debate at yesterday's Structured Products Europe Conference.

Speaking at the event in London, Colin Dickie, a director of Barclays Capital Investor Solutions said he was "sceptical" about the rumoured association. "The ability to form ourselves into an organisation that is able to fight our corner and have the time to do our day jobs, I am sceptical about," said Dickie. "It's a fragmented market and I need to be convinced it's something we can devote time to," he later added. However, Dickie also said he was open-minded.

Other delegates said a trade association was a positive development that would help the industry tackle negative perceptions about structured products in the financial press.

No comments: