Was there a drop in listings during this period?
I’m pleased to say this was not the case. Our issuers and market makers stayed active during these turbulent days and expanded their product range. We were happy to welcome Credit Suisse Asset Management as a new ETF issuer in mid-March. Also completed was the announced acquisition of the Commerzbank ETFs by Société Générale, after all 750 products that changed market maker in this challenging month. In March, 21 new ETFs were listed, and 38 in total for the first three months of the year.
How has the market for structured products developed?
The past has shown that in turbulent times investors focus on index underlyings. This was no different this time, the figures are really impressive. In March, for example, over a third of the total of 135'141 transactions were concluded in products with the SMI or Dax as underlyings; the same applies for leveraged products such as warrants, mini-futures, knock-out warrants and constant leverage certificates – in all categories the most traded underlyings were index-based.
What was the impact on the trading side?
Due to the major market fluctuations, a few liquidity providers struggled to fulfil their market maker duties quickly enough. We recorded 250 mistrades in March, compared with 82 in February. As a result, our market control unit decided to extend stop trading in structured products from 30 seconds to 5 minutes. This gives the liquidity provider more time to set a fair price. For ETFs and equities, stop trading is also 5 minutes. This quickly led to the desired deceleration and improved pricing by the liquidity providers. With a trading volume of around CHF 9 bn after just over three months, we assume that trading volume can be expected to grow in 2020 as a whole as well, after the increase of around 18% we’ve already seen in 2019, to CHF 17.7 bn.
How has the high volatility affected the number of structured product listings?
We’ve seen a new record of 10'173 new listings, of which 8'979 were leveraged products. On the one hand, this shows that in the previous months mainly investment products were issued, while on the other hand there was demand for leverage products – which is absolutely understandable in view of the strong fluctuations on the equity markets. Once again, around 30% of new issues of leverage products related to index underlyings, which is also a new record.
Does this mean that CONNEXOR was also actively used?
Indeed! In March, over 230'000 new products were issued through our reference data tool for structured products. The previous record month – October 2018 with 135'000 issues – was thus significantly exceeded. The total of all new issues via CONNEXOR in the first quarter amounts to over 445'000, including the 19'544 for the stock exchange. Here too, we are on the way to a record year, as we had around 1.1 million new products in the whole of 2019.