'We're not alchemists' A struc prod provider speaks out

Some say product development is a mysterious business – one that requires the use of a cauldron or at the very least a wand. Once you have assembled the relevant implements simply pour on some volatility, add a smattering of six-year sterling swap rates, sprinkle some credit spreads and grate in some ear-of-bat. Bring to the boil and lo and behold, a structured product rises from the mist. My first confession is to dispel that myth – as product providers we are neither magicians nor alchemists. There, I’ve said it. We can only achieve what is possible from a pricing point of view when...