IFR Award - A testament to the consistency of the Bank’s strategy in its market activities
As Societe Generale has been named “Overall Derivatives House of the Year” by International Financial Review (IFR) for the first time, Frank Drouet, Head of Global Markets, tells us a bit more about what this means for the bank.
You have received one of IFR’s most prestigious awards: “Overall Derivatives House of the Year 2016”. To what do you attribute the Bank’s success ?
It is a great honor to be recognized by IFR for the work and progress achieved by our Global Markets teams. This is one of the top awards in the market, coming from a reference publication in the financial sector.
We are very proud because it has a special meaning for our institution. In 1986, the bank started its journey in derivatives with a start-up frame of mind – a team of five; and since then, the Bank has built a derivatives platform which has continuously been developed and adapted to our clients’ needs.
The award is the result of a long-term vision. Thirty years ago, Societe Generale decided to pursue a strategy based on the firm conviction that derivatives would offer a very large range of solutions for our clients: they would allow us to be tailored as much as possible and would better match our ambition to solve risk management issues.
During these three decades, market conditions, competition and regulation have been fluctuant, but Societe Generale seamlessly continued investing in derivatives.
Today, we benefit from this commitment. This award is a testament to the consistency of the Bank’s strategy in its market activities.
You mentioned that Societe Generale has been focusing on derivatives for three decades now. How did this come about?
Our first steps in derivatives were guided by our determination to create tools to protect investors & corporates from market movements & volatility. In the mid 80s, the Bank put together teams first dedicated to Forex derivatives which were then swiftly extended to all asset classes. Our stance on markets activities has always been to be a true market-maker, always giving a price to our clients. During those years, the activity was also marked by the development of computing which enabled us to better manage our risks and those of our clients by creating global books benefiting from different flows of markets.
Then, in 1991, we launched our first capital-protected products. These products, which are now common place, were a breakthrough. For the first time, they allowed retail investors to take advantage of stock market upturns without risking their capital.
What did it take to convert this business into a world leading platform?
It is precisely because we have been committed and innovative that we have been able to reach this position.
I remember the creation of Lyxor, Societe Generale’s Asset Manager, in 1998. Lyxor started to propose Managed Account Alternatives quickly and launched its first Exchange Traded Fund (ETF) in the Paris Stock Exchange in 2001. ETFs were a true innovation at that stage: with a single transaction, investors were able to access all components of an index or basket of products. Today, Lyxor manages over 116.4bn Euros of assets of which 51bn Euros of ETFs and is one of Europe’s largest ETF provider.
Over time, we have also been able to reinvent ourselves: in 2009 we created our Global Markets division which has enabled us to better manage risks, develop new products such as hybrids and provide cross-asset advisory and solutions.
Societe Generale’s first recognition for excellence in derivatives came 15 years ago for our Equity Derivatives franchise. But, as this award – a new milestones on its own – attests, we are now truly cross asset. This is also thanks to our diversified business mix which has allowed us to cope with the various economic crises and market upsets over the years.
Is this award important for your clients ?
In a way, what we do every day is simple: we support our clients by designing solutions that meet their financing, hedging & investment needs. It is all about clients!
Being named “Derivatives House of the Year” recognizes the fact that Societe Generale has become a leading fully integrated cross-asset derivatives house. The latest addition to the platform was the integration of Newedge in 2015 and the development of our first-class prime services activity.
We want to be the first bank to be called by companies when they need advice on complex challenges. To reach this goal, we are leveraging on our ability to provide customized solutions in a constantly changing market environment.
This award is a clear sign from the industry that we are working in the right direction. I want to thank all our clients for their trust and reiterate that our teams are committed to bring them the best of our franchise!
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© illustration :Muriel Otelli