Structured Notes 2012 Review

STRUCTURED
NOTES
2012 Review &
2013 outlook
January 2013

01.03.13 www.bloombergbriefs.com Bloomberg Brief | Structured Notes 2

Contents Just The Facts

Looking ahead Banca ImI sells biggest
Industry executives weigh in on note The numbers what it means
what they expect in 2013. Our tables reveal the top 10 notes
Page 3 sold last year, in the U.S. and
globally. Page 7
The amount that sales by DZ Bank, the leading issuer of structured
winning strategies 3.4 times
notes last year, exceeded those of its closest rival, Deutsche Bank.
Which notes in which asset Gas-linked ETn grows
classes will do best this year? fastest
Page 4 The top 20 U.S. ETNs for growth
and one-year return. Page 8.
note holders Years since global issuance of structured notes was less than $100
9
A look at the biggest holders of note sales drop over year billion (before 2012, when the total was less than $80 billion).
U.S. and global structured notes. A month-by-month look at issu-
Page 5 ance shows a continued slide.
Page 8 Years since a U.S. bank was among the top three issuers of struc-
CLN buyers turn to russia 5 tured notes globally, outside its domestic market (Merrill Lynch last
Note issuance tied to the credit every word counts cracked the top three in 2007).
of the country or its companies What Finra is really saying when
soared by $1 billion in 2012, mak- its executives talk about struc-
ing them the fastest growing sell- tured notes. Page 9
Percentage of structured notes sold outside the U.S. in 2012 that
ers. Our map rounds up issuance
10.9 weren’t denominated in dollars, euros or Japanese yen. The sales
tied to 74 other countries. Page 6 Regulatory highlights in other currencies totaled $8.5 billion, Bloomberg data show.
Some key events that defined the
Equity-Linked notes year in regulation. Page 9
dominate
The securities made up almost Who’s up, who’s down The amount of notes in 2012, in millions of U.S. dollars, tied to the
two-thirds of 2012 U.S. volume. Which banks rose and fell in the 18 consumer price index, a gauge of inflation. Banks sold $760.7 mil-
rankings of issuers. Pages 10, 11 lion the year before.
Page 7

A GUIDE TO OUR DATA
* U.S. notes are securities issued in the U.S. that are registered with the SEC. Percentage of the 7,909 SEC-registered notes sold in the U.S. last
31
year that were issued by UBS.
** Global notes exclude U.S. securities and also “variable-principal redemption”
notes, such as reverse convertibles.

*** European notes are issued in Europe and exclude “variable-principal redemption”
Number of notes linked to Apple Inc. sold in the U.S. in 2012, total-
notes, such as reverse convertibles. 548
ing $1.74 billion.

Bloomberg Brief Structured Notes 2012 Review & 2013 Outlook

Newsletter Ted Merz Structured Notes Richard Bedard The largest distribution fee, in percent, charged in the U.S. last
Executive Editor tmerz@bloomberg.net Newsletter Editor rbedard2@bloomberg.net year, Bloomberg data show. It was for JPMorgan Chase’s $475,000
8
+1-212-617-2309 212-617-8761 offering of six-year notes linked to the bank’s ETF Efficiente 5 Index
Bloomberg News Robert Burgess on May 25.
Managing Editor bburgess@bloomberg.net
212-617-2945
Percentage of global structured note sales from the 10 biggest bank
Reporters 53.4 issuers in 2012. That’s up from 46 percent in 2011 and 44.3 percent
Alastair Marsh Kevin Dugan Jun Yang in 2010.
amarsh25@bloomberg.net kdugan4@bloomberg.net jyang180@bloomberg.net
+44-203-525-8767 212-617-2035 +852-2977-4628
Data Contributors The amount, in billions of U.S. dollars, by which sales of credit-
linked notes tied to Russia (the most popular underlying among
1.93
Alvaro Maruendarodrigo Jesse Knapton Vincent Tevere emerging market sovereigns) surpassed sales of notes linked to
amaruendaro1@bloomberg.net jknapton@bloomberg.net vtevere@bloomberg.net France (the most popular developed market nation).
609-279-3459 609-279-3164 609-279-4049

Anna Smith Kyle Bork Juozas Seimys
asmith330@bloomberg.net kbork4@bloomberg.net jseimys@bloomberg.net The number of proprietary indexes that U.S. SEC-registered notes
609-279-3423 609-279-3687 +44-20-3525-8677 8
were tied to for the first time in 2012.
Brad Koehler Rebecca Shober Jorge Fernandez
bkoehler@bloomberg.net rshober@bloomberg.net jfernandez65@bloomberg.net
609-279-5106 609-279-3545 +44-20-3216-4345
The amount of callable step-up notes, in billions of dollars, sold in
Gary Howard Sofia Fernandez 3.64
gahoward@bloomberg.net sfernandez6@bloomberg.net the U.S. last year, Bloomberg data show.
609-279-3431 609-279-3563

To subscribe via the Bloomberg terminal type BRIEF <GO> or on the web at:
www.bloombergbriefs.com
This newsletter and its contents may not be forwarded or redistributed without the prior consent of Percentage decline in sales of U.S. reverse convertibles in 2012
57
Bloomberg. Please contact our reprints and permissions group listed above for more information from a year earlier.
© 2013 Bloomberg LP. All rights reserved.

1 2 3 4 5 6 7 8 9 10 11


Outlook
What Surprised You the Most About 2012, and What Do You Expect This Year?

U.S.
Name: Bill Pang
Company: Toyota Motor Credit Corp. in Torrance, California
Title: Manager of derivatives and structured finance
“As interest rates continued to fall in 2012, I was surprised by the resiliency of the interest rate-linked structured
notes market. Although total volume was down, overall deal size was up by over 7 percent. If the fiscal cliff gets
resolved quickly and the European debt crisis stabilizes, I anticipate volumes similar to or greater than 2011. With
global macroeconomic conditions improving, we should see higher rates than those in 2012. In that environ-
ment, fixed-to-float notes should gain in popularity with continued strong demand for step-up callables.”

Name: Justin Capetola
Company: Blue Bell Private Wealth Management LLC
Title: Managing partner
“I think that despite all the headwinds in the news, like Europe, the lead-up to the presidential election, the
whole debate with the fiscal cliff, [the surprise is] that we had as strong a stock market as we had. And our
expectation for 2013 is hopefully that volatility continues to abate, and we’re back to more of a stabilizing
economy.”

Europe
Name: Thomas Pfennig
Company: Deutsche Bank AG
Title: Head of structured notes trading
“Due to continuing low yields, even negative yields in certain European countries, risk-on mode will still be valid,
and I expect the hunt for yield will continue and even grow. There will be an ongoing appetite for structures that pro-
vide a pick-up compared to plain-vanilla bonds. I expect a broader client spectrum, including conservative clients
that have been hesitating to get involved so far, to enter the ‘light’ structured notes space due to the need for yield.”

Name: Kara Lemont Sportelli
Company: BNP Paribas SA in London
Title: Head of fixed-income structuring
“In 2012, I was struck by the volume of hybrid products, mainly, combining equity, FX or interest rate coupons
with credit-linked or first-to-default baskets. This seems to have addressed an increasing demand for yield with
the comfort investors feel buying credit products, specifically linked to names in their home markets. I expect de-
mand for structured notes, hybrids and more traditional yield enhancement products to be even higher in 2013.”

Asia
Name: Stefan Masuhr
Company: Royal Bank of Scotland Group Plc
Title: Co-Head of Markets Structuring Asia-Pacific
“Products have become much simpler than before. Regulatory pressure in the offshore market is becoming
tighter and tighter, and people basically are no longer out at all for complex products. I think the biggest head-
line number you’ll see for 2013 is what I would call local markets, [of] countries like Malaysia, Korea, Thailand,
Taiwan. Local currency-denominated products for the jurisdiction they are being sold into will be the big theme.”

Name: Takamasa Miyagawa
Company: UBS Securities Japan
Title: Executive director, head of derivatives DCM/MTN
“Despite the tough market, the funding spreads which the investment banking issuers have funded on became
tighter significantly post-summer. That was quite surprising. [In 2013], I think the main thing for investment banks
is adjusting to Basel III. Everybody in the market understands that is coming, but I don’t think the whole industry
is aligned in terms of timing, methodology, how to deploy the rules. In Asia, it’s a little bit different, because not
everybody is under Basel III.”
continued on next page

1 2 3 4 5 6 7 8 9 10 11


outlook...
continued from previous page

Which Notes or Strategies Do You Think Will Do Best in Your Asset Class This Year?
Name: Vincent Berard (on rate-linked)
Company: BNP Paribas SA
Title: Head of interest rates and foreign-exchange structuring
“For the first part of the year, the same products popular last year: callable notes, either bullets or accreting
zero coupons, for institutional investors, and simple pay-offs, such as capped and floored floating-rate notes, for
retail buyers. Relatively high volatility has meant investors have been able to mostly achieve required returns.
However, with governments committing to very low rates for a long time, volatility will be most likely driven lower,
which should lead to a surge of issuance in the first two months of 2013 as investors try to capture as much of
that volatility as possible. After that they may need to sell more leveraged volatility or diversify into hybrids to
boost returns.”

Name: Jean-Luc Bernardi (on equity-linked)
Company: Citigroup Inc.
Title: Head of equity structuring for Europe, the Middle East and Africa
“Equity themes based on high-quality dividends are likely to be popular, with investors wary of seeking yield at
any cost. We have a strategy that offers exposure to companies with high dividend yields, but that are seen as safe
by the markets. In terms of notes, we see ongoing demand for low-risk, income-paying products with a degree of
principal protection. Investors are likely to prefer a higher likelihood of receiving income, for example, receiving a
coupon if an equity market is not down more than 20 percent, over attention-grabbing headline numbers.”

Name: Nordine Farsi (on credit-linked)
Company: Landesbank Baden-Wuerttemberg
Title: Head of structured credit trading
“Two factors will drive demand for credit-linked notes in 2013. First, the search for yield in an environment
characterized by unprecedentedly low government bond yields due to extremely accommodative policies from
low rates to quantitative easing. Second, debt deleveraging, which will affect the supply of new issues. In such
an environment, single name step-up CLNs with maturities of five years and longer, to take advantage of the
steepness of credit curves, will remain attractive in particular for utility and financial underlyings from Southern
Europe, excluding Greece, as I expect a coming compression of credit spreads between Europe’s ‘core’ and its
‘periphery’ Linear basket CLNs of eight to 12 selective credits from the Markit iTraxx Crossover Index will also
.
remain popular.”

Name: Adam Baker (on inflation-linked)
Company: JPMorgan Chase & Co.
Title: Head of inflation structuring
“The potential for high inflation remains a concern for many investors. However, the biggest headwind for the
inflation note market is the negative real rates at the front end of nearly all inflation curves, including in the
U.S., U.K. and euro area. These are caused by low central bank rates and inflation running close to or above
target. This means participation rates for structured notes are likely to be considerably below 100 percent.
We’re likely to see continued interest in yield-enhancement approaches to try and boost participation. This
may include referencing other asset classes in inflation-linked notes, such as down-and-in puts on equities or
synthetic credit linkages.”

Name: Christine Lefort (on currency-linked)
Company: Credit Agricole SA
Title: Global head of foreign-exchange and precious metals research, development and structuring
“Since the second half of 2012, bank credit spreads and funding levels have tightened quite a bit. When this
happens there tends to be less interest in structured notes, and I see this continuing. Also, foreign-exchange
volatility has fallen a lot, which will hinder returns on correlation products, but this could be good for single-asset
products as an investor is effectively a net buyer of volatility here, and low volatility makes most of the payoffs
cheaper. This could even offset the negative effects of lower funding spreads at banks, although overall I imagine
there will be less FX-linked notes sold. I see a return to high-yielding currencies and carry-trade strategies where
the Australian and New Zealand dollars, as well as Japan’s yen, will be most popular, and there will be a pullback
from emerging-market currencies.”

1 2 3 4 5 6 7 8 9 10 11


top 50 holders of largest stns Click on orange triangles for interactive features

We looked at who holds structured notes issued in the U.S. and global markets, according to public filings. For the U.S., we examined
about 15 of the biggest notes each year from 2010 through 2012, and for global, the 100 largest each year from 2008 through 2012. All
totals are based on notional amounts of the securities. Note: Because of data limitations, some global numbers are approximations.

U.S. Global
Name Holdings ($) Name Holdings ($)
BCBS of Ala. 17,250,000 Franklin Resources 154,177,000
CareSource 15,000,000 Goldman Sachs Asset Management 83,184,000
Hwang-DBS Investment Management 9,688,000 Julius Baer Multicooperation 78,710,000
Frost Investment Advisors 7,071,000 UBS Global Asset Management 78,123,000
Berkley Ins. 6,000,000 Fideuram Gestions SA 33,191,000
Waddell & Reed Financial 5,666,000 FMR LLC 29,232,000
Alfa Life Insurance 5,000,000 Iwatsuka Confectionery Co. 25,988,000
Toa Reinsurance Co. of America 5,000,000 BNP Asset Management Paris 23,234,000
Berkley Regional Insurance 4,000,000 OppenheimerFunds Inc. 22,681,000
Liberty Bankers Life Insurance 3,500,000 Henderson Investors Ltd. 22,570,000
Kentucky Farm Bureau Insurance 3,000,000 Aberdeen 15,541,000
Penn Mutual Life Insurance 2,269,000 Tokio Marine Asset Mgmt Co. 14,351,000
Waverton Investment Funds 2,128,000 Dexia Asset Management Lux 13,245,000
Care West Insurance 2,000,000 Espirito Santo Gestion SA 13,243,000
FFVA Mutual Insurance 2,000,000 Skandia Global Funds 11,061,000
VALIC Co. 2,000,000 Putnam Investment Management 10,441,000
Pioneer Investment Management 1,750,000 Swisscanto Fondsleitung 9,735,000
American Eqty. Investment Life 1,500,000 Hwang-DBS Investment Management 9,665,000
Insurance Company of the West 1,500,000 E. Ohman J:or 9,270,000
Landesbank Berlin Investment 1,393,500 Legal & General 8,943,000
Atlantic Charter Insurance Comp. 1,100,000 Goldman Sachs Group 8,866,000
Western General Insurance Co. 1,030,000 Societe Generale 8,605,000
Mackenzie Financial 1,005,000 Schoellerbank Invest 8,075,000
Grinnell Mutual Reinsurance Co. 1,000,000 Old Mutual 7,077,000
Harco National Insurance Co. 1,000,000 Interfund Advisory Co. 6,771,000
Luther King Capital Management 1,000,000 Robeco Fund Management 6,752,000
Orbitex Management Inc. 1,000,000 Eurizon Investment Sicav 6,606,000
Texas Farm Bureau Mutual Insur. 1,000,000 Nitto Kogyo Corp. 6,497,000
Wilshire Insurance Co. 1,000,000 Invesco Ltd. 6,142,000
Icon Advisers Inc. 950,000 Altshuler Shaham Mutual Funds 5,560,000
British American Insurance Co. 850,000 Investec Asset Management 5,488,000
Health Plan of Mich. 750,000 SEI Investments Management 5,011,000
Old United Casualty Co. 725,000 Bankhaus Schelhammer & Schattera 4,635,000
Affirmative Insurance Co. 625,000 Alliance Trust Asset Management 4,500,000
Thompson Investment Management 601,000 Artemis Investment Mgmt 4,000,000
American European Ins. Co. 600,000 Santander Asset Management Lux 3,961,000
South Dakota State Med. Holding 600,000 Fukuda Denshi Co. 3,897,000
Timber Products Manufacturers 505,000 Legg Mason Global Funds 3,868,000
Amguard Insurance Co. 500,000 Universal Investment 3,641,800
Ari Casualty Co. 500,000 Santander Asset Mgmt SA 3,580,000
Cooperativa de Seguros Multiples 500,000 T. Rowe Price Associates 3,405,000
Developers Surety and Indemnity 500,000 KBC Bank Luxembourg 3,305,000
Eagle Life Insurance Co. 500,000 UBS 3,060,000
Eastguard Insurance Co. 500,000 Deka International 3,045,000
Educators Mutual Insurance Asn. 500,000 Jefferies Asset Management 2,923,000
Farm Bureau Life Ins. of Missouri 500,000 BlackRock 2,833,700
Farm Bureau Town & Country Ins. of Missouri 500,000 Siemens Kapitalanlagegesellschaf 2,814,100
John Deere Ins. Co. 500,000 Perfect Mutual Funds 2,650,000
Mlba Mut. Ins. Co. 500,000 Sella Gestioni Sgr 2,648,600
North Coast Life Insurance Co. 500,000 Skandia Investment Management 2,645,000
Source: Bloomberg LP Source: Bloomberg LP

1 2 3 4 5 6 7 8 9 10 11


Credit-linked notes
CLNs Tied to Russia Surge in Popularity, Rising By $1 Billion
The map shows the yearly change, in millions of U.S. dollars, in issuance of credit-linked notes tied to sovereign or company debt in 75
countries (yellow indicates no data). Russia was the “hottest” country, with $1 billion more of sales of notes linked to its debt. Brazil was
the “coolest,” dropping by $1.6 billion from 2011.

Biggest Gainers Biggest Losers
Country 2012 issuance (Mln) change (mln) country 2012 issuance (mln) change (mln)

Russia 2,640.2 1,003.2 Brazil 1,825.4 -1,604.8

United Kingdom 1,314.0 805.1 Spain 485.6 -1,273.7

France 2,029.4 781.6 China 415.8 -798.1

Netherlands 853.4 703.7 Germany 6,928.3 -792.3

Korea 1,227.4 659.3 Indonesia 343.5 -718.6

Switzerland 856.0 639.9 Japan 1,874.2 -500.9

Luxembourg 554.0 410.0 Mexico 26.5 -411.7

Denmark 378.7 377.9 Colombia 234.1 -279.8

Nigeria 427.0 334.8 United States 1,290.0 -206.7

Austria 445.6 208.1 South Africa 62.4 -201.0

1 2 3 4 5 6 7 8 9 10 11


asset class breakdown
Equity-Linked Notes Dominate in U.S., While Credit-Tied Surges Globally
2012 U.S. 2011 U.S.
Other, 3.3% Reverse
Convertible, 12.0%
Hybrid, 2.6%
Rates/Equity, 2.5% Rates, 18.1%
Reverse
Convertible, 6.0%

Commodity, 6.7% Commodity, 9.3%
Equity, 64.2% FX, 2.8%

Rates, 14.6% Equity, 50.7%

Other, 4.7%

FX, 2.5%


Equity-tied notes accounted for almost two-thirds of overall issuance, There were 600 rate-linked offerings in 2011, accounting for $8.27 billion
while reverse convertibles sank to 6 percent from 12 percent in 2011. of sales.

2012 Global 2011 Global

Credit, 37.7%
Rates, 38.5% Inflation, 7.7%

Other, 4.3%
Credit, 54.7% Rates, 47.4%
Other, 7.2%
Inflation, 2.5%


Outside the U.S., banks sold $42.3 billion of credit-tied notes, more than Rate-linked securities were almost half the sales total in 2011, or $50.5
half of the overall. Inflation-tied dwindled to $1.97 billion from $8.2 billion. billion of $106.7 billion.

Top 10 U.S. Notes Top 10 Global Notes (outside U.S.)
Issuer description Amt. (mln $) Issuer Description Amt. (mln $)
UBS 1 yr., tied to Russell 1000 Growth Index 946.2 Banca IMI 5 yr., fixed-to-floating rate 984.7
Deutsche Bank 18 mo., tied to Euro Stoxx 50 Index 429.6 Elm BV 7.5 yr., credit-linked 785.6
RBC 3 yr., fixed-to-floating rate 200 UniCredit 5 yr., fixed-to-floating rate 747.1
HSBC 1 yr., tied to the MSCI Net World Index 171.8 VTB Capital 7 yr., credit-linked to loan 676.9
Barclays 1 yr., tied to gold 143.2 Iris SPV 9.5 yr., “partly paid notes” 648
Bank of America 14 mo., tied to the S&P 500 Index 130.5 BG Energy Capital 60 yr., fixed-to-floating rate 500
General Electric 3 yr., fixed-to-floating rate 125 Santander Intl. Debt 1 yr., floating rate 483.5
Bank of America 2 yr., tied to the S&P 500 123.9 UniCredit 6 yr., fixed then linked to basket 407.1
Bank of America 1-yr., tied to Ford Motor Co. 121.1 Banco Popolare 15 yr., fixed-to-floating rate 279.7
Bank of America 13-mo., tied to the S&P 500 118.5 Caisse D'Amort. Dette Sociale 13.5 yr., floating rate 276.7

1 2 3 4 5 6 7 8 9 10 11


ETNs
Gas-Tied Note Is Fastest-Growing of Year in U.S.
A Barclays ETN linked to gas, which made its debut in April 2011, grew 20 times larger over the course of last year, leading all securities
in the U.S. For one-year return, three of the five best-performing notes were short bets on volatility tracking the VIX Index.

Growth in Assets Return
Ticker and Issuer 1-yr. change (%) Ticker and Issuer 1 yr. return (%)
DCNG, Barclays (Gas) 1,951 XIV, Credit Suisse (Short on VIX) 145.6
UGLD, Credit Suisse (Leveraged on gold) 762 ITLT, Deutsche Bank (Leveraged on Italian Treasury bonds) 112.8
USLV, Credit Suisse (Leveraged on silver) 532 ZIV, Credit Suisse (Short on VIX) 87.0
JGBS, Deutsche Bank (Short on Japanese government bonds) 360 BDCL, UBS (Leveraged on Business Development Company Index) 66.7
GSC, Goldman Sachs (Basket of commodities) 250 IVOP, Barclays (Short on VIX) 53.2
JGBD, Deutsche Bank (Leveraged short on Japanese gov. bonds) 248 BXUC, Barclays (Leveraged on S&P 500) 37.3
TNDQ, RBS (Nasdaq, Treasuries) 234 SFLA, Barclays (Leveraged on S&P 500) 36.2
DJCI, UBS (Basket of commodities) 219 RTLA, Barclays (Leveraged on Russell 2000) 33.8
STPP, Barclays (Treasuries) 207 BXUB, Barclays (Leveraged on S&P 500) 32.3
BDCL, UBS (Leveraged on Business Development Company Index) 188 BDCS, UBS (Business Development Company Index) 29.7
GCE, Goldman Sachs (Claymore CEF) 165 ITLY, Deutsche Bank (Italian Treasury bonds) 29.6
DTYS, Barclays (Short on Treasuries) 161 JJT, Barclays (Tin) 23.5
DOD, Deutsche Bank (“Dogs of the Dow”) 154 INP, Barclays (MSCI India) 23.3
JO, Barclays (Coffee) 141 WMW, Deutsche Bank (Morningstar Wide Moat Focus) 22.6
BDCS, UBS (Business Development Company Index) 133 LSKY, UBS (Leveraged on ISE Cloud Computing) 22.0
MLPI, UBS (Alerian MLP Infrastructure Index) 130 USV, UBS (Silver) 21.4
TBAR, RBS (Gold, Treasuries) 124 DIRT, Barclays (Agriculture) 20.1
ZIV, Credit Suisse (Short on VIX) 123 BUNT, Deutsche Bank (Leveraged on German bunds) 19.3
DSLV, Credit Suisse (Leveraged short on silver) 120 JJG, Barclays (Grains) 18.9
LBND, Deutsche Bank (Leveraged on Treasuries) 118 WEET, Barclays (Grains) 18.4

Issuance by month
Structured note issuance, both outside and inside the U.S., dropped this year. For example, during the first quarter, global volume fell to
$25 billion from $29.7 billion a year earlier, and in the U.S. over the same three months, sales declined to $11.3 billion from $14.8 billion.
The second-quarter global gap was the largest: issuance of $18.4 billion this year was a little more than half of 2011’s $34.1 billion.

U.S. Sales Drop Off After March Global Sales Average Less Than $7 Billion Monthly
5.0 900 12 450
Sales
4.5 800 Sales 400
4.54 Offerings 10
4.0 10.23 Offerings
4.15 700 350
3.5
3.59 3.57 600 8 300
Number of Notes
Number of Notes

3.0 3.33 3.44 3.30 7.82
Billions ($)
Billions ($)

500 7.17 250
2.92 2.85 6 7.03
2.5 2.79 6.68 6.62 6.50
400 6.34 200
2.0 2.36 5.41 5.31 5.47
2.19
300 4 150
1.5
1.0 200 3.10 100
2
0.5 100 50

0.0 0 0 0
1/12 2/12 3/12 4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12 1/12 2/12 3/12 4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12

U.S. sales climbed to $4.54 billion in March, led by HSBC’s $625.8 million The number of global offerings declined each month after reaching 398 in
of issuance. There were 832 offerings that month. April. Sales exceeded $7 billion for only four months.

1 2 3 4 5 6 7 8 9 10 11


Regulation
What Do Regulators Talk About When They Talk About Structured Notes?
Susan F. Axelrod, Finra’s head of member regulation sales practice, spoke at a forum on Sept. 27 on a familiar topic: product complexity.
To find out what was really on her mind, we fed a copy of her speech through software that created a “cloud” based on word frequency.

timeline Click on orange triangles for interactive features
1
The Year in Regulation: Highlights
0.9
Jan. 5: Finra puts out notice
0.8
providing guidance on June 11: Finra reports Sept. 27: Finra's Richard
0.7
complex products. $450,000 fine for BofA. Ketchum warns on sales
0.6
abuses.
0.5
July 3: European
Commission Dec. 7: Finra's board rules
0.4
April 13: SEC, in letter to July 10: Finra
publishes draft that brokers who switch
0.3
issuers, seeks disclosure on issues investor
proposals for firms should reveal
0.2 how they value notes. alert on ETNs.
KIDs. incentives.
0.1

0

1/12 2/12 3/12 4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12

1 2 3 4 5 6 7 8 9 10 11


U.S. Rankings by asset Class
All Asset Classes Interest Rate-Linked
2012 year-to-date 2012 year-to-date
Sec-registered Sec-registered
structured Note issuers* 2011 market volume structured Note issuers* 2011 market volume
Rank Rank
Rank share usd (MLN) Rank share usd (MLN)
Bank of America ⬆ 1 2 13.4% 5,236.5 Goldman Sachs ⬆ 1 2 19.9% 1,134.1
Goldman Sachs ⬆ 2 4 12.3% 4,787.7 Bank of America ⬆ 2 4 13.2% 750.3
Barclays ⬇ 3 1 10.9% 4,244.6
Barclays 3 3 11.8% 672.1
JPMorgan ⬆ 4 5 10.2% 3,995.9
General Electric ⬆ 4 10 9.2% 525.0
HSBC ⬆ 5 8 9.2% 3,606.1
UBS ⬆ 6 10 8.4% 3,289.2 RBC ⬆ 5 7 8.7% 495.0

RBC ⬇ 7 6 7.6% 2,971.5 Morgan Stanley ⬇ 6 1 8.1% 460.6
Morgan Stanley ⬇ 8 3 7.1% 2,772.5 Wells Fargo ⬆ 7 8 7.5% 425.2
Deutsche Bank ⬇ 9 7 5.8% 2,260.5 JPMorgan ⬇ 8 5 5.3% 300.6
Credit Suisse ⬆ 10 13 5.0% 1,944.7 Toyota ⬆ 9 13 4.7% 270.0
Citigroup ⬇ 11 9 2.4% 947.0
Citigroup ⬇ 10 6 4.2% 241.0
Wells Fargo ⬆ 12 14 2.0% 799.7
HSBC 11 11 1.5% 86.7
SEK ⬇ 13 11 1.5% 587.6
General Electric ⬆ 14 17 1.3% 525.0 Lloyds ⬆ 12 – 1.5% 84.0
BMO 15 15 0.8% 310.4 SunTrust ⬆ 13 15 1.2% 66.6
Toyota ⬆ 16 18 0.7% 270.0 Westpac ⬆ 14 – 1.2% 66.5
Scotiabank ⬆ 17 21 0.6% 226.9 UBS ⬇ 15 9 1.1% 62.0
Lloyds ⬆ 18 – 0.3% 100.0
Scotiabank ⬆ 16 17 0.6% 34.0
SunTrust ⬆ 19 20 0.2% 66.6
BMO ⬆ 17 18 0.3% 18.5
Westpac ⬆ 20 – 0.2% 66.5
RBS ⬇ 21 16 0.0% 3.7 Deutsche Bank ⬇ 18 16 0.0% 2.7

TOTAL (Jan. 1 to Dec. 31, 2012) 100.0% 39,012.5 TOTAL (Jan. 1 to Dec. 31, 2012) 100.0% 5,695.0

Equity-Linked Commodity-Linked
Rank Rank
Bank of America 1 1 14.9% 3,740.3 Barclays ⬆ 1 5 25.4% 665.3
Goldman Sachs ⬆ 2 3 11.9% 2,985.3 Bank of America 2 2 19.8% 518.6
HSBC ⬆ 3 5 10.7% 2,674.9
Deutsche Bank 3 3 10.9% 284.8
JPMorgan 4 4 10.1% 2,532.7
SEK ⬇ 4 1 9.9% 260.5
UBS ⬆ 5 10 9.9% 2,483.3
HSBC ⬆ 5 11 8.6% 226.2
Barclays ⬇ 6 2 8.8% 2,215.2
Morgan Stanley ⬇ 7 6 7.8% 1,951.4 Goldman Sachs ⬆ 6 7 7.4% 193.7

RBC ⬇ 8 7 7.1% 1,781.3 UBS ⬆ 7 13 7.1% 186.2

Deutsche Bank ⬇ 9 8 6.1% 1,525.0 JPMorgan ⬇ 8 6 4.4% 114.7
Credit Suisse ⬆ 10 13 5.9% 1,487.0 Morgan Stanley ⬇ 9 8 4.0% 104.7
Citigroup ⬆ 11 12 2.4% 604.6
RBC ⬆ 10 14 0.9% 22.6
Wells Fargo ⬆ 12 14 1.4% 341.8
Credit Suisse ⬆ 11 12 0.6% 16.7
SEK ⬇ 13 9 1.3% 327.1
Citigroup ⬇ 12 9 0.5% 12.8
BMO ⬆ 14 15 0.9% 227.1
Wells Fargo ⬇ 13 10 0.5% 12.2
Scotiabank ⬆ 15 – 0.7% 177.1
RBS 16 16 0.0% 3.7 BMO ⬆ 14 15 0.0% 0.5

TOTAL (Jan. 1 to Dec. 31, 2012) 100.0% 25,057.9 TOTAL (Jan. 1 to Dec. 31, 2012) 100.0% 2,619.5
Source: Bloomberg LP

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European Rankings by asset Class
All Asset Classes Interest Rate-Linked
Rank Rank
DZ Bank 1 1 25.5% 16,621.71 DZ Bank 1 1 27.6% 6,726.12
Deutsche Bank AG ⬆ 2 3 7.5% 4,908.32 Deutsche Bank AG 2 2 5.6% 1,372.70
UBS AG ⬆ 3 7 4.8% 3,104.34 UniCredit SpA ⬆ 3 28 5.2% 1,273.87
UniCredit SpA ⬆ 4 8 4.3% 2,805.93 Intesa Sanpaolo SpA ⬆ 4 10 4.7% 1,150.01
LBBW ⬇ 5 2 4.3% 2,797.29 BNP Paribas SA ⬆ 5 31 3.4% 834.14
Societe Generale SA 6 6 4.2% 2,735.75 Societe Generale SA ⬆ 6 8 3.4% 833.58
Barclays PLC ⬇ 7 4 3.9% 2,514.06 HSH Finanzfonds AoeR ⬆ 7 39 2.8% 686.97
ING Groep NV ⬆ 8 10 3.1% 2,017.02 Caisse d'Amort. de la Dette Soc. ⬆ 8 – 2.8% 682.32
Standard Chartered PLC ⬆ 9 17 2.7% 1,762.49 Iris SPV PLC ⬆ 9 – 2.7% 647.99
Credit Suisse Group AG ⬆ 10 22 2.5% 1,616.38 ING Groep NV ⬆ 10 12 2.6% 642.55
BNP Paribas SA ⬆ 11 16 2% 1,295.87 Banco Popolare SC ⬆ 11 23 2.4% 593.88
Intesa Sanpaolo SpA 12 12 1.8% 1,178.47 Banco Santander SA ⬆ 12 71 2.4% 575.04
Erste Group Bank AG ⬆ 13 38 1.8% 1,168.68 WGZ Beteiligungs GmbH ⬆ 13 20 2.1% 522.09
Stichting ELM ⬆ 14 21 1.8% 1,158.05 Reseau Ferre de France ⬆ 14 35 2.1% 520.97
Nordea Bank AB ⬆ 15 30 1.6% 1,046.95 Societe Nat. des Chemins de Fer ⬆ 15 – 2.1% 514.22
Credit Agricole Groupe ⬆ 16 19 1.6% 1,046.10 Commerzbank AG ⬇ 16 5 1.8% 437.56
Commerzbank AG ⬇ 17 11 1.4% 939.09 UBS AG ⬆ 17 17 1.6% 383.59
HSBC Holdings PLC ⬆ 18 26 1.3% 848.87 Groupe BPCE ⬇ 18 14 1.2% 296.26
HSH Finanzfonds AoeR ⬆ 19 39 1.3% 846.09 Erste Group Bank AG ⬇ 19 38 1.1% 266.92
VTB Bank OJSC ⬆ 20 51 1.3% 823.11 BayernLB Holdings AG ⬇ 20 18 1.1% 263.16
TOTAL (Jan. 1 to Dec. 31, 2012) ⬇ 117 124 100% 65,109.94 TOTAL (Jan. 1 to Dec. 31, 2012) 80 86 100% 24,401.13

Credit-Linked Inflation-Linked
Rank Rank
DZ Bank 1 1 29.1% 9,895.59 Societe Generale SA ⬆ 1 5 13.9% 253.27
LBBW 2 2 7.8% 2,664.81 UniCredit SpA ⬆ 2 18 11.2% 204.23
UBS AG ⬆ 3 5 7.6% 2,585.99 Raiffeisen Landesbanken Hold. ⬆ 3 16 7.9% 144.47
Barclays PLC ⬇ 4 3 5.9% 2,001.34 Credit Agricole Groupe ⬆ 4 24 7.4% 134.48
Deutsche Bank AG ⬇ 5 4 5.8% 1,956.36 Deutsche Bank AG ⬆ 5 21 7.3% 133.72
Standard Chartered PLC ⬆ 6 8 4.8% 1,628.88 LBBW ⬇ 6 2 7.2% 132.49
Societe Generale SA ⬆ 7 12 4.2% 1,425.59 Enel SpA ⬆ 7 – 7.2% 132.34
Credit Suisse Group AG ⬆ 8 11 4% 1,356.45 HSH Finanzfonds AoeR ⬆ 8 10 5.8% 105.52
ING Groep NV 9 9 3.9% 1,335.00 Credit Suisse Group AG 9 9 3.6% 65.53
UniCredit SpA ⬇ 10 7 3.6% 1,223.07 Raiffeisenlandesbank Oberoes. ⬆ 10 15 3.5% 64.52
Nordea Bank AB ⬆ 11 14 3.1% 1,046.95 Mediobanca SpA ⬆ 11 30 3.5% 64.33
Erste Group Bank AG ⬆ 12 22 2.7% 901.76 ABN AMRO Group NV ⬆ 12 45 2.9% 52.99
VTB Bank OJSC ⬆ 13 24 2.4% 823.11 BNP Paribas SA ⬆ 13 36 2.8% 51.22
Stichting ELM ⬆ 14 20 2.3% 790.15 UK Financial Investments Ltd ⬇ 14 4 2.4% 43.54
HSBC Holdings PLC ⬆ 15 17 2% 685.39 Nordea Bank AB ⬆ 15 20 2.3% 41.26
JPMorgan Chase & Co ⬇ 16 6 1.7% 592.82 Sparkassen- und Giroverband ⬇ 16 7 1.8% 32.56
Commerzbank AG ⬇ 17 16 1.5% 500.17 KBC Groep NV ⬆ 17 25 1.7% 31.49
Skandinaviska Enskilda Banken ⬆ 18 21 1.1% 387.3 ING Groep NV ⬆ 18 19 1.5% 26.84
BNP Paribas SA ⬇ 19 10 1.1% 370.36 Barclays PLC ⬇ 19 6 1.3% 24.62
Credit Agricole Groupe ⬇ 20 18 0.9% 295.45 Banco Santander SA ⬆ 20 23 1.3% 23.9
TOTAL (Jan. 1 to Dec. 31, 2012) 54 52 100% 33,984.13 TOTAL (Jan. 1 to Dec. 31, 2012) 32 45 100% 1,828.59
Source: Bloomberg LP

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