N M Rothschild & Sons has structured a FTSE-linked deposit account for its own private banking clients and for distribution by financial advisors. The account is a follow-up to a previous short-dated FTSE100 product and is being offered as either a one-year or six-month account with capital protection fixed at 100% or 95%, which allows for financial advisor fees.
A dealer at the firm in Guernsey said it hedged the account using a call spread on the FTSE100, declining to give pricing details or name the counterparty. If the scale of its equity investment products business continues to increase, Rothschild may turn to the over-the-counter options market, he noted, declining to specify what size of increase it would need to see. Most of the firm's current OTC derivatives activity is focused on fx and interest-rate hedging for clients, he noted.