Interview: Natixis’ progress in the equity derivatives market
Selim Mehrez, Global Head of Equity Derivatives, and Éric Le Brusq, Global Head of Equity Derivatives Sales and Financial Engineering, outlined their strategy and gave a preliminary rundown of Natixis’ progress in the equity derivatives market.
Tell us about Natixis’ development in the equity derivatives market. How do you explain its positive results?
S.M.: “In 2014, Natixis notched up some impressive performances in the equity derivatives domain which were all the more remarkable given the fact that the market was flagging. The Bank is continuing in the same vein in 2015. In the space of a year, we have grown our market share significantly, mainly in France, but also in other European countries and even in Asia. Our palette of investors has broadened and we have onboarded clients that we had never previously approached. Today, Natixis is a challenger in the running with other banks, one that sets itself apart from peers by the relevance of its solutions. As proof, we were singled out for an award by the Structured Retail Product(1) magazine in early 2015.
These results crown the new strategy that we have been implementing over the past 18 months and which we are continuing to deploy. We abandoned our prop-trading business to concentrate exclusively on a client-centric approach. Accordingly, we have once again given the sales business a key role in the strategy and made financial engineering the cornerstone of our initiative. Our sales team and engineers work to furnish innovative and tailor-made solution to clients. They also communicate constantly with trading teams for a better tuning of our products.”
What resources have you put in place to implement your new sales strategy?
E. Le B.: “After thorough analysis, we completely overhauled our processes in order to make them streamlined. This was a crucial step in that it gave our sales team more time to spend on their clients and enabled Natixis to deliver a quality service.
We restructured our range of products on six planks (see box) to make them clearer and to meet the different needs of our clients by distinguishing two types of business, namely high value-added solutions, which we concentrate on, and flow processing.
We also rebuilt the teams, focusing on internal promotion, and deployed the necessary resources to help employees adopt the new strategy. We use marketing tools and dedicated training programmes to enhance sales teams’ knowledge so they can fully meet their clients’ expectations.”
What sort of constraints are your clients facing and how do you tackle them?
E. Le B.: “Our clients are predominantly confronted with an increasingly complex regulatory environment. They also have to manage the low interest rate context.
Our challenge is to do our utmost to turn these constraints into opportunities. Admittedly, the task is a difficult one but this is what our sales people and engineers must do.
We have therefore structured our products to provide our clients with alternative solutions.”
How does e-business fit in with your strategy?
E. Le B.: “E-business plays an important role in our business lines. It speeds up client service and frees up time to sell high value-added solutions.
For example, we are poised to implement a digital version of the Maps pricing tool, which will go by the name of e-Maps. The e-tool will transfer the pricing transaction activity to the client so that they can click-and-trade themselves. Comprehensive STP(2) infrastructure will then deliver the confirmation, term sheet and all the necessary documentation required by the client.”
(1) Best Insurance Solution in EMEA for 2015 – Source: Structured Retail Product 2015, European Structured Product Awards.
(2) Straight Through Processing
Equity derivatives in brief
An equity derivative is a financial instrument the price of which fluctuates depending on the price of its “underlying” asset, which in this case are shares. One of its chief uses is to help investors partly hedge themselves against share price risks by adjusting the profit target with the level of risk deemed to be acceptable.
Corporate & Investment Banking Equity Derivatives teams design investment solutions on equities, indices, funds and hybrids, embracing the full spectrum of risk-return profiles, including capital protection and leverage, to address clients’ specific needs. They include insurers, pension funds, private banks, distribution platforms and wealth managers.