Structured Products Open Architecture Comes to US

Matthew Smith

21 March 2007

The big name Wall Street firms are close to embracing an open architecture model for structured products following the partnership between Deutsche Bank and UBS wealth management, according to a source. The wealth management arms of big investment firms in the US have, to date, allowed their clients to access only proprietary offerings in the structured product space. A source close to the major Wall Street firms said the structured product market in the US is on the verge of embracing open architecture. “Every firm is talking to everyone at this point,” said an analyst with an institution who preferred not to be named. Aside from Wachovia Securities – which began offering competitors’ structured products to its wealth clients though a new open architecture platform called “Advantage” mid-last year – the major US investment firms with wealth businesses have not embraced open architecture. UBS was the first cab off the rank, announcing three strategies it co-developed with Deutsche, including a currency linked, equity-linked, and rates-linked product. “Our partnership with DB is the first such partnership, but we hope to announce others in the coming months. This is part of our industry-leading position on open architecture,” Eric Glicksman, UBS Wealth Management managing director said in a statement. The US structured product business is in its infancy compared to Europe where the major firms have already embraced open architecture in the structured product space. “It could be 2007 or it could be 2008, but agreements between the big firms to offer each other's structured products will start to be signed,” the source said.