As memories of 2008 linger, investors have been reluctant to return to overly-complex structured products over the last few years. However, despite years of lacklustre interest in exotic structures, J.P. Morgan stayed true to its strategic vision of offering products that are driven by solutions rather than demand. Whilst many competitors in the segment, not to mention the financial services industry in general, decided to merge flow and non-flow sales and marketing teams, J.P. Morgan swam against the tide. Backed by a constant and significant stream of revenue generated by the flow business, what would not seem prudent from a headcount perspective elsewhere, J.P. Morgan deemed essential to maintaining the consistency of being a comprehensive solutions provider.“Our staffing is reflective of our commitment to offering a wide breadth of structured products, regardless of demand,” says Lemuel Lee, Executive Director and Co-Head of Equity and Commodity Derivatives, North and South Asia, adding that the team has two marketers dedicated to non-flow products sold to private banks in Asia. “We do not want to focus merely on what pays us today because we ask ourselves, as clients, do they want access to what is most popular or do they want access to all things at all times?”
And by sticking to its guns when others fled the non-flow product market, J.P. Morgan has been able to stay ahead of the curve to spot opportunities and offer relevant solutions. For example, J.P. Morgan has noticed clients increasingly want to re-enter equity markets but are hesitant due to the possibility of a mistimed entry. True to the spirit of seeking solutions to a problem while catering to the profiles of clients, J.P. Morgan began introducing index-linked structures that short various themes or offer protection to help clients transition back into the market in a conservative fashion.
Since last year, J.P. Morgan has also strategically aimed to meet with decision makers as a product specialist, with the blessing of distributors at private banks. Decision makers may be bankers, external asset managers, family offices or even clients. As Lee sees it, the initiative gives J.P. Morgan a clear advantage where non-flow structured products are concerned as there may be no better alternative to expound upon the full value of an exotic structure and its potential usage.
Having weathered the non-flow-starved storm when others sought greener pastures, J.P. Morgan planted seeds early and is beginning to reap the rewards.