Insurance companies and the Italian stock exchange have seen a huge increase in the amount of structured products they are selling after the regulator imposed restrictions on what products banks can sell in the wake of the Parmalat scandal. Bankers had originally feared that the Bank of Italy regulation introduced last December would cripple sales of investment products. The regulation prevents certain instruments, such as basket-linked structures, from being sold by banks but does not cover insurance or the stock exchange.
"There has not been a significant decrease in volumes of structured products sold in Italy," said Guido Rizzato, product marketer at Citigroup in Milan. This is because many firms have transferred their business from retail banks to insurance companies, which are not affected by the regulation change and are now rapidly expanding the range of investment products they offer.
The growth of a market for equity-linked exchange traded certificates has provided another important distribution channel, said Rizzato. SeDeX, the brand-name for securitized derivatives trading on Borsa Italiana, has seen a jump to 371 investment certificates listed in May, from 223 in December. These investment certificates include structures using exotic options as well as plain-vanilla types and it has become a source of products for investors who are not concerned with capital protection.
