A digital supermarket for structured products

Ten years ago, creating a structured product was a full-day activity. Today, it’s a matter of seconds. In few areas has the impact of digitalisation been as powerful as in finance. It’s a silent revolution, fuelled by an army of innovative people from diverse professional backgrounds – some of whom can be found on Julius Baer’s trading floor.

In 2009, a new era began on Julius Baer’s trading floor in Zurich-Altstetten. The launch of the Markets Toolbox followed a clear vision: everyone should be able to create a structured product on the fly – without in-depth legal or technical knowledge. When the Markets Toolbox was introduced, only a single structure was available. Over the years, more products, asset classes, underlyings, as well as order types were added. And with the platform’s global rollout, local flavours were introduced to meet clients’ needs.

Mass customisation as a new reality
“In the past, creating a structured product was a full-day activity. Now it’s only a matter of seconds,” says Mauro Aversano, Head Tailored Solutions & Derivatives Sales at Julius Baer. What Mauro and his colleagues began 10 years ago with the idea in mind to build a platform that would enable to simulate, price, and trade a structured product easily, has now fledged into a future-ready mass optimisation and customisation tool.

The latest feature in its long history of improvements is called Spark. Thanks to Spark, creating a structured product almost feels like ordering a cup of coffee at one of the big coffee chains, adding or removing ingredients as you please. “Imagine you would like to invest in tech companies, but want to exclude a certain market, or only focus on a number of specific topics. This has now become a matter of a few mouse clicks,” says Cinzia Zandonella, Derivatives Sales specialist at Julius Baer. The latest add-on to the bank’s trading platform enables the construction and optimisation of tailor-made products from a wide universe of underlyings, industries, and markets. In only a matter of seconds, a factor-based investment algorithm whittles down millions of possible product combinations to match user-specific requirements.

Today, structured products are a significant revenue driver for Julius Baer, with ‎an issued volume of well over CHF 50 billion in 2018. A whole business around Structured Products and FX has transformed into a very broad-based offering. It is thanks to the introduction of the Markets Toolbox that this business has become immensely scalable.

Developing a state-of-the-art trading platform
But what guarantees success in the digital era? “The secret lies in listening to our clients and users’ needs,” says Christoph Kaufmann, Head IT Markets Toolbox at Julius Baer. What are their requirements? How do they navigate the platform? How do their needs evolve? Based on the findings of a test user group, the trading platform is constantly being enhanced further to guarantee a seamless user experience.

As with most innovations, it takes many brains to succeed. Therefore, another important success factor is collaboration across the whole company. “When embarking on such a project, it’s crucial to involve experts from different areas early on,” says Patrik Prêtre, Derivatives Sales specialist at Julius Baer. Not only client advisors, but also other specialists from various fields, such as trading, information technology, operations, and legal bring their insights and expertise to the table, thus helping to feel the user’s pulse and guiding the development of a relevant solution in the right direction.

Where will the digital journey lead? Nobody can predict with certainty. Yet one thing is clear: on Julius Baer’s trading floor, many new ideas will spark in the next few years.

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> Would you like to find out more about our Markets Toolbox? Then contact us.

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