II - What is HSBC's current strategy as regards structured products sales in Australia?

Bill Barden - HSBC Australia's structured product strategy is to work with insurance companies, platform providers and dealer groups to offer tailored financial solutions to their customer base.
Offering portfolio protection and variable annuity offerings similar to the recently released insurance based products is an area we believe will grow. We have an obvious strength with products related to Asia and the emerging markets, but index and ETF products in general are a core component of the solutions we are offering to clients.

II - What demand is there from investors? What structures are you offering at the moment?

Bill Barden - Investors are cautious. Demand is mixed and we are finding some planners are wary of putting clients back into structured products. This is where the HSBC 100+ Series S&P/ASX 200 Linked Investment we recently launched is appealing. It is tailored for cautious investors and can be a core part of their portfolio. It is Beta as it provides the index but has the bonus of being principally protected. The fees are on par with what you would pay an index fund manager. Giving up returns greater than 12% annually for a protected Beta portfolio is a reasonable price to pay for peace of mind.

II - Where do you see the market moving in terms of product offerings in 2010?

Bill Barden - We believe the market, with the focus clearly on advice rather than product push, will evolve towards longer dated and holistic portfolio solutions. In general, we do not like some of the short dated products we have seen lately with both CPPI and volatility targeting which have very low exposure to the risky assets. These products do little for the reputation of the structured products markets.

II - What are your thoughts as regards the rise of the insurance companies in terms of selling structured products to their customers in Australia? Has there been a noticeable change in terms of their appetite as a distributor?

Bill Barden - HSBC is enthusiastic about the move by insurance companies to offer GMLB (Guaranteed Minimum Life Benefit) and GMWB (Guaranteed Minimum Withdrawal Benefit) products. We believe HSBC's superior credit quality and systems stand us in a good position to provide the longer dated hedge and product required in this area. The insurance companies have always been interested in distributing these portfolio products but post global financial crisis the investors have really understood the need for some type of protection.