SPA-2008 - Distributors: SPs Market 'Vibrant, Innovative' (Prospect News)

Structured products distributors see ETNs and Structured Products ‘vibrant’ despite competition, look for more innovation

By Aaron Hochman-Zimmerman
Prospect News Special Coverage
Structured Products Association SPA-2008 Conference

New York, April 9, 2008 – Structured products issues have seen competition from other types of securities as well as within structured products itself, a panel said at the 2008 Structured Products Association Summit on Wednesday, April 9.

Exchange-traded notes (ETNs) have come under fire for what are seen by some as unfair tax advantages, but Mike Forstl of Nuveen Investments said he feels internally “fully supported” to encourage the sale of ETNs.

“The ETN market is something we do see as a growing vibrant area of focus,” said Som Seif of Claymore Investments in Canada.

Currently, Canada and particularly Europe have allowed more innovative products to develop. “I would like to see some of that stuff in North America,” he said specifically about the European products.

Despite rising innovation, the market is still generally driven by the more traditional reverse convertible, said Guy Gregoire of Pershing LLC.

Also, many distributors of structured products work in open architecture or near-open architecture environments in which “there is no proprietary product,” said Gregoire. The system allows the freedom to select the product which will fill a gap in an investor’s portfolio, rather than favoring one over the other, he said.

The flexibility of structured products is, at times, undercut by wholesalers’ reluctance to change, Seif said.

The future of structured products is tied tightly to education and strong relationships between wholesalers and distributors, he added.