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Keeping It Real With Qiuyan – Episode 29 – Julien Musset – Privé Technologies – The Big Difference is on the Technology Side

This week Qiuyan Tian and I were joined by Julien Musset, the Head of Quantitative Research at Privé Technologies.  Julien started his career as an equity quantitative analyst at J.P. Morgan in London and has been involved in all aspects of the Derivatives and Structured Products business ever since.  Julien moved to Asia more than a decade ago and has maintained his Asia focus.

In Part 1 of this series, we noted that Structured Notes are highly customizable. This diversity can lead to financial hazards if the risks of these products are not well understood by the investor.

In Part 2 of this series, we had a more detailed and technical discussion, so that investors could get an in depth understanding of how some of these products work.

From a soon to be published article,

“The term “Structured Note” does not provide much information about the nature of the product. A “Note” has similarities with bonds: its valuation cannot go below $0, and it has credit exposure to the note issuer (i.e. you may lose all your capital if the issuer collapses, think Lehman Brothers). “Structured” product could be principal protected (that means you will minimally get back your capital) or highly leveraged (and you may lose all your capital). The tenor could be 1 month, 10 years and longer, the underlying could be commodities, FX, equities, indices or funds.

When an investor is looking at the prospectus of a new type of Structured note, the first challenge is to understand the features of the payoff, how the product behaves in different market scenarios, and what the main risk factors are. Even simple products can reveal a high level of complexity."

Listen to the rest of the discuss on this podcast and look for the full article at the Hive-Up website.