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Morgan Stanley in bid to cut credit risk

Morgan Stanley has launched what it claims is the first retail structured product to be cash-collateralised and backed by UK Government gilts.

The FTSE defensive gilt-backed three-year growth plan offers a return of 9 per cent a year as long as the FTSE 100 does not fall by more than 10 per cent on each annual anniversary of the plan. It also includes a 50 per cent soft protection barrier observed at maturity. It uses Standard & Poor’s AAA-rated UK government bonds to secure capital protection and collateral arrangements to minimise credit risk by posting cash into a segregated account on a daily basis to secure returns created by the derivative.

Chelsea Financial Services head of investment products Matthew Woodbridge says: “If someone is getting 9 per cent after a year, with the FTSE falling up to 10 per cent with low credit risk it is an attractive product.

“The structured product market is very rate-driven so the question is how expensive will gilt-backed products become but, depending on the success of this plan, we may well see a shift to this area.”


Big in Japan

We turned bullish on Japanese equities in the second half of 2008 and we remain so today.

Tripartite role is criticised

MPs have questioned the tripartite authorities’ relationship after the Prime Minister claimed he had no idea the FSA had found failings in HBOS when considering James Crosby as the regulator’s deputy chairman.

Life sentences

The current rules of law relating to insurable interest in life assurance contracts are restrictive and, if not complied with, will render the contract illegal and void from inception. That is a severe sanction.

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Auto-enrolment — don’t leave it too late…

With auto-enrolment (AE) well under way for the UK’s largest businesses, over the next three years an additional 800,000 smaller employers (with less than 60 employees) will start their journey to comply with the legislation. AE mandates all eligible employees and their respective employers to make regular pension contributions into a qualifying pension scheme. To learn more about the legislation read our brief Jelf AEase — simple steps to AE compliance guide.


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