Regulatory changes will usher in a marked shift towards simpler structured products, according to a panel at the Swiss Futures and Options Association's 33rd Bürgenstock meeting in Interlaken, this morning.
Attendees at the European Lawyers on current Structured Product Developments panel, heard Gregor Evenkamp, partner at Clifford Chance in Frankfurt, note, "I think the landscape for structured products will change massively. I think we will see a strong trend to easy, transparent and simpler products, but whether they will increase or decrease is difficult to say."
Evenkamp said while some structures will be substituted by other forms of products, credit-linked structures, for instance, for retail investors will face difficulties and will likely diminish. "I guess there is nothing wrong with the products themselves. It’s just that credit-linked structures and fund structures are by nature simply less transparent. I expect these types of products to reduce significantly."
In Europe, some regulators have proposed banning products that they feel are too complex for the retail in an effort to simplify the market and create a greater transparency. However, Evenkamp argued that some retail investors may use products such as credit-linked structures to hedge risks in their portfolio.
"Structured products for investors are an opportunity, product ban legislation is depriving investors from opportunity," said Enrico Friz, partner at law firm Walder Wyss in Zurich. "I hope that innovative products aren't killed by regulation."
