SPA chairman Keith Styrcula says upcoming conference is all about distribution

By Emma Trincal

New York, March 10 – The Structured Products Association’s 12th Annual Spring Conference to kick off early next week will bring together more than 250 market participants from over 100 firms to discuss important industry topics. But for Keith Styrcula, chairman of the Structured Products Association, nothing is more important right now than an industry discussion on distribution.

Regulatory issues, in particular new capital requirements, will be a big topic as well. The so-called TLAC (Total Loss-Absorption Capital) rules are reshaping the way firms issue new products. But officially, Styrcula wants the conference to be about supply and demand, with weakness seen on the demand side.

“The most important part of this business, the distribution side, is always under-represented in other conferences,” Styrcula told Prospect News in an interview.

“This is the only conference that provides a voice to distribution. And we’re going to focus on this issue even more this time than ever before because it’s critically important for 2016.”

He wants his definition of distribution to be broad as it includes bank distributors, brokers and registered investment advisers.

“By distribution I mean those who buy the product for themselves, for their own accounts or for clients,” he said.

The big three

The SPA chairman said his objective for the conference is to set the groundwork for a collective plan of action.

“We want to identify actionable items of importance to mainstreaming the structured product industry and define a game plan for resolving the issues,” he said.

“We lost three major distribution channels in one year. We lost the three private banks of Deutsche Bank, Credit Suisse and Barclays.

“These are old, solid distribution channels. Barclays was the old Lehman. Those three private banks have been either absorbed by other firms or basically shut down, like Credit Suisse.

“It’s going to take a full year for those distributors to get acclimated to their new parent companies.”

Consolidations

Raymond James Financial Inc. announced in December that it was purchasing Deutsche Bank’s U.S. private client services unit. The ex-Deutsche Bank private bankers will operate under the Alex. Brown brand following the acquisition, which is expected to close in September.

Stifel Financial Corp. completed the acquisition of Barclays' Wealth and Investment Management in December.

Credit Suisse Group in the fall decided to close its U.S. private bank business.

“The firms that took them may have the commitment, but they’re going to be distracted. Structured notes may not be their priority. Right now, the main priority for most firms is to preserve their assets under management,” he said.

“It will take at least one or two years for the absorbed private wealth entities to be up and running as they were before.

“This will have an impact short-term because you can’t really recapture 100% of your lost clients right away.”

More supply

But there is worse. The weakening of the distribution arm is happening as the issuing space is getting crowded.

“One of the biggest challenges in 2016 is that we added more issuers and we lost distributors,” he said.

“It’s not a good thing for issuance. All the Canadian banks are here. It’s not so much that new issuers are coming, but we’re seeing much more activity. Nomura is pushing. SunTrust has new plans. Natixis is aggressively going out.

“Every issuer is out there trying to do something while there aren’t enough distributors. More products are coming out, and we have fewer distributors to sell them.

“It inhibits the growth of the industry.

“It’s going to be incredibly competitive for issuers to get access to a big distribution platform.”

Agenda

These changes in the industry are unfolding when investors could really benefit from the outcome-oriented payouts of structured notes.

“We have to talk about the inflection points for structured notes as a viable mainstream investment. This is an essential time for action,” he said.

“The market conditions call for it. Ours is an investment class that performs exceptionally well in complicated and volatile markets. We think this is an opportune time to get the message out to the broader investing public.”

Styrcula said he put the panels together with one clear goal – lining up the “leading distribution executives” who represent structured notes.

The agenda will remain diversified as in previous years with 12 panels covering various topics including market outlook, legal and regulatory issues, innovation, indexing and new wrappers.

Fundraising

Some of the proceeds of the conference will be used to build the industry and promote the “investment class,” he said.

“We don’t think a conference should only be a networking and marketing event. We think it should be an opportunity for growing the pie.

“We’ll use some of the proceeds for educational initiatives, regulatory outreach, white papers and a new website to come up in the next quarter.”

Pre-conference awards

The main conference, always a single-day event, will be held on Tuesday at the New York Athletic Club. It will be preceded the day before by a pre-conference event at the same location.

In the afternoon, Tim Mortimer, managing director at Future Value Consultants, will provide a 101 training on structured product pricing.

The highlight of the pre-conference will be the First Annual SPA MarketColor Pre-Conference VIP Awards Dinner, a new initiative of S&P Dow Jones Indices and the Structured Products Association.

The awards will commemorate achievements in the distribution of structured products in the previous year.

“We’re doing this for the first time and for a reason: most of the recognition goes to the issuers. In line with our main theme, we want to acknowledge excellence in the field of distribution,” said Styrcula.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.