Structured Products Association to focus on girding for recovery in March conference, chairman says

By Kenneth Lim

Boston, March 3 - Positioning for a recovery will be the theme at this year's Structured Products Association annual conference in New York, association chairman Keith Styrcula told Prospect News.

"Whenever you have a sustained downtrend in the market, it gives some of the smartest people in our industry the opportunity to figure out how best to take advantage of the circumstances," he said.

The conference will take place on March 23. In a promotional brochure, the association's executive committee urged the industry "to look forward to its unique role as a dynamic, risk-management investment class."

"When the most challenging financial markets in a generation finally find stability, it will be the structured products investment class that many investors will seek out to repair devastated portfolios," the committee stated.

"Recent history bears this out. Following the dot-com meltdown that followed after March 2000, investors embraced certain types of structured investments to achieve high yields, enhance index exposure, access alternative investment markets, and to protect their initial capital."

Reputation repair

The industry must also address the damage to its reputation in the wake of the financial services meltdown, Styrcula said.

"How is structured products going to repair itself reputationally after it's been grouped with asset-backed securities or collateralized debt obligations?" he said. "The problem has gone from the financial media and seeped into the mainstream media. We have a number of people who will be discussing branding and how structured products can repair its reputation in a post-CMO marketplace."

The issue of reputation is not confined to just structured products, Styrcula added.

"We also exist in a world, post-Bernie Madoff, where not just Madoff but a number of clones have impacted the integrity of Wall Street in its entirety," he said. "When you're a financial services professional, you're trying to explain something to your clients and if they don't trust you that's a problem."

New award for innovative products

The association will also hand out its second annual Leading Edge Advisors awards to buysiders who are at the forefront of incorporating structured products into portfolios, and the first Best of Breed awards to manufacturers for innovative products.

Some issues at the conference, like open architecture, could give attendees a sense of déjà vu, but Styrcula noted that those issues are long-term challenges for the industry.

"Obviously there's always going to be on the agenda similar themes in terms of what progress are we making with pension plans or college savings plans," he said. "It's going to be like an ongoing theme."

The industry as a whole has been active in working through the current market turmoil, Styrcula said.

"I find that there are a lot of interesting things going on...For example, Barclays just came out with two products linked to VIX," he said. "It's structured products, not ETFs or hedge funds that are providing solutions to enhanced volatility."

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