Structured Products: An ideal niche for single-dealer platforms?


At Caplin we are involved in single-dealer platforms (SDPs) touching many asset classes across the OTC and exchange traded space. The biggest single asset class we see is cash FX – many banks are rolling out offerings in this area right now. But we are also seeing increasing interest from institutions who want to provide niche Structured Products offerings, and I think this is a real sweet spot for delivering innovative SDPs.

By way of background, there’s a feature in Structured Products magazine, which sadly requires a full subscription to read it (trial subscriptions don’t work): Structured Products and Single-Dealer Platforms – Why?

Most MDPs are not really geared up for highly customised products, especially the primary market where building the structures requires very specific features.

There has been talk of Derinet opening up their offering to more participants, but this will only ever be for the most standardised structures. As a result, serious players need to deliver their own offerings to their clients or continue to rely on expensive voice trading.

But I think the main reason is that, unlike standardised flow products, each provider is carving out their own niches. And this really emphasises the need for a highly integrated, innovative UX.

Delivering a really easy to use pricing and execution tool is a challenge, but we’re seeing (and are involved with) some incredibly elegant solutions that are taking advantage of the web to deliver rich, integrated front-ends, targeted at the users and products, rather than the “me-too” services that are sometimes seen in other asset classes.

This is not a new phenomenon

In fact, one of our earliest Caplin Trader customers, Crédit Agricole, were innovators in this space. In 2008 they launched their CALM portal that included EMTNs, an area in which they have some unique offerings. But what’s changed recently is a real focus on using rich UX to delivering compelling interfaces that excite users and, more importantly, deliver more flow.

I’d be interested to hear about other new Structured Products offerings and whether we’re seeing a real trend starting…

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