Editor’s letter

Editorial

If recent announcements are anything to go by, structured products are making increasingly important contributions to the bottom lines of investment banks. Earlier this month, for example, HSBC said its pre-tax profits increased by more than a third year on year to a record $19.4 billion, but revenue from sales of structured products increased by nearly 70% compared with 2003.

Meanwhile, the Royal Bank of Canada announced plans to expand its structured products business in its 2004 results statement. And the American Stock Exchange (Amex) lauded its structured products businesses in its 2004 results statement. Amex listed 115 new structured products for a total of 325 structured products trading at the end of 2004 and also welcomed two new structured products issuers: Amherst Securities Group and Merrill Lynch Depositor.

So everything looks rosy. Or does it? As always, there are a few problems on the horizon. As we report on page 38, Italian regulators appear to be adding to a general distrust of structured products in the country by labouring over which regulator, Consob or the Banca d’Italia, should have ultimate control over the industry.

But some institutions seem to get on famously with their regulators. Jean-Hubert Blanchet, La Poste’s head of structured products, says that the Autorité des Marchés Financiers (AMF) is doing a sterling job: “There is good level of protection for investors; one of the fairest in Europe,” he says. This is despite the fact that the AMF is currently considering prosecuting the French post office for alleged mis-selling.

I hope you enjoy our ‘Focus on France’, the first in a series of special reports dedicated to different regions. Next month we will report on the North American market. Again, regulation appears to be a hot topic. Last month, for example, Canadian securities regulators gave Toronto-based Portus Alternative Asset Management a temporary restraining order, preventing the firm from gathering assets. Could the order be related to the firm’s issuance of structured products, and are there any other regulatory suspicions about the development of the structured products market in Canada or the US? Find out in April.