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Capital Markets

Structured products: Double your guess for retail market’s size

The European retail structured products market could be more than twice the size previously thought, according to Greenwich Associates.

A survey by the financial services consultancy of 115 third-party distributors including private banks, savings banks, insurance companies and fund managers from across Europe reported a total annual notional volume in non-delta one retail structured products of €135 billion for the 12 months before the research.

"Extrapolating these results to the entire market suggests that total annual volume for European retail structured products could exceed that reported volume more than two-fold," says Greenwich Associates consultant Andrew Awad.

Third party

The consultancy estimates that European retail investors could be purchasing more than €270 billion in structured products from third-party distributors every year.

The survey found that income protection was the most common reason for interest in structured products, followed by income enhancement and access to otherwise difficult-to-obtain underlyings. Equity underlyings currently account for about 70% of reported volume, followed by fixed income at 22%. Foreign exchange constitutes 3% and commodities about 2%.

The largest markets for structured products in Europe are Switzerland, which accounts for 21% of the total volume, followed by Italy (17%), Benelux (15%), and Germany/Austria (14%).

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