BNP Paribas has announced that it has been granted a licence by Standard & Poor's to deliver derivative products linked to the S&P Hedge Fund Index. BNP Paribas will offer investors around the world exposure to the newly launched S&P Hedge Fund Index. This is the first licence to deliver derivative products based on this index.
BNP Paribas intends to provide a variety of derivative products linked to the S&P Hedge Fund Index that could include principal protected notes, swaps and options that will be available to investors worldwide. BNP Paribas expects products and liquidity to be available by early 2003.
StTphane Liot, global head of fund derivatives at BNP Paribas, says, "The S&P Hedge Fund Index provides us with an innovative asset on which to base derivative products that will add a new dimension to the S&P Hedge Fund Index products created by PlusFunds."
He adds, "The pricing characteristics possessed by S&P Hedge Fund Index should enable us to provide daily liquidity under normal conditions. In addition, the daily transparency offered by the index provides us, and in turn our clients, with the ability to track better what drives hedge fund returns and identify the risks in investing in this alternative asset class."
Steven Oyer, vice president, Standard & Poor's, continues, "One of Standard & Poor's objectives in creating the S&P Hedge Fund Index was to provide an index that could form the basis for a number of investable products that would offer investors exposure to the hedge fund universe. We are delighted with the interest we have received worldwide for licences and products based on the index and we think products like BNP Paribas' will offer opportunities for increased institutional and retail involvement in the hedge fund marketplace."
In the Asian market Liot says he expects capital guaranteed products linked to the S&P index to be of particular interest. In the Japanese market BNP Paribas will target institutional investors, while in the rest of the region the focus will be on private banks and their clients. He expects Asia, the US and Europe to all be about even in terms of volume of business, saying the response from investors has been very positive in each region. Liot says the S&P brand name will help this range of products in Asia.