FVC has now added full fixed income capability to its stress testing service StructuredEdgeI. Our stress testing service is the most widely used in the market to analyse structured products and manage issuance pipelines. The retail and private banking structured products markets are dominated by equity-linked structured products. This is to be expected as equities are usually considered the natural vehicle for long term investment, and it is possible to structure products with or without capital protection.
The importance of fixed income products
However, fixed income structured products remain important for certain sectors of the market, looking to enhance income opportunities without taking equity risk. The typical end clients are private banks and discretionary fund managers.
Fixed income structured products have been given less guidance in the market, for example the PRIIPs regulation had less detail around fixed income products. In addition, the UK Structured Products Association has published helpful best practice guidelines for equity-linked structured products but has not to date covered fixed income products.
New methodologies developed
FVC has developed a full methodology to treat fixed income products, borrowing from precedents set by the PRIIPs methodology and the UKSPA guidelines. Our system has a range of fixed income product types that clients can use, with data maintained for many currencies.
We expect interest in the fixed income structured product market to increase, and we will continue our development extending our capabilities for this important asset class for valuations, stress testing and PRIIPs calculations. For more details about our fixed income capabilities or stress testing system, please contact us.