Global Markets Disrupted: BNP Paribas’ 5th annual Global Markets Conference

BNP Paribas' Global Markets Conference brought together industry leaders to speak on some of the disruptive transformations shaping markets.

After an 18 month pandemic-induced hiatus on physical events, the fifth annual BNP Paribas Global Markets Conference once again returned to London on November 3, where industry leaders and experts drawn from politics, sustainability, financial services and technology shared their unique insights into some of the disruptive transformations shaping the world today.

Sustainability: Action required

Taking place against the backdrop of the COP26 Climate Summit, sustainability was a recurrent theme at BNP Paribas’ Global Markets Conference. Policymakers highlighted the EU is at the forefront of the climate change debate and is pushing through a number of reforms around sustainability – including its Green Deal. It is not just politicians who recognise the urgency of climate change risk; one investment manager told the audience that climate change considerations are a major determinant behind their asset allocation strategies with renewables likely to form a large proportion of their portfolios. One speaker further noted that simply divesting from carbon intensive enterprises was not conducive, saying investors should be building up positions in businesses operating in pollutant sectors provided they are willing to transition.

Building back a stronger Europe

After a poor initial response to Covid-19, one former policy maker said the EU has since atoned for itself through its effective vaccination programme. It also demonstrated extraordinary resolve and flexibility in its monetary and fiscal response to the pandemic, most notably through the €750 billion pandemic recovery package, which helped blunt the crisis’ impact and facilitated a better than expected economic recovery, according to another politician. A French policymaker noted than in contrast to previous crises, the EU demonstrated extraordinary fiscal flexibility in its response to COVID-19, having suspended fiscal rules obliging member states to implement policies that keep deficits at less than 3% and debt under 60% of GDP – until 2023. He continued, however, that fiscal rules must be reintroduced post-crisis but added they needed to be different from what was in place previously.

Along with the EU’s budget, they remarked that the NextGenerationEU Programme would be instrumental in the bloc’s revitalisation, by laying the foundations for a green and digital economic recovery. Jean Lemierre, Chairman of BNP Paribas, said most Europeans believe the EU and its leaders backed them during this difficult period, which is translating into greater support for the EU as an institution, concluding that “Europe will converge on the new normal.”

Jean Lemierre, Chairman of BNP Paribas

Are digital currencies and smart assets democratising finance?

Digital assets are diverse in nature and do not simply comprise of crypto-currencies, the conference heard. This universe covers StableCoins, digital currencies whose value is pegged to underlying fiat money, along with Central Bank Digital Currencies [CBDCs], digital money issued and controlled by Central Banks, and security tokens, which are fractionalised, digital representations of real world assets [e.g. a corporate bond, lease agreement, a car etc] traded on DLT [distributed ledger technology].

San Dhillon, Head of Product at Exane BNP Paribas

San Dhillon, Head of Product at Exane BNP Paribas, said a handful of markets including the EU, China and the Bahamas are currently trialling CBDCs.  According to speakers, the emergence of CBDCs is a response to society becoming increasingly cashless, together with a growing realisation among Central Banks that these assets can facilitate significant efficiencies by eliminating intermediation pain-points in payments and securities settlement processes.

SPACs: Game changer or short-term trend?

We sincerely hope that SPACs are not a short-term trend, but a long lasting story and a game changer for the IPO market.

Emmanuel Dray, Global Head of Flow Sales Equity Derivatives, Global Markets at BNP Paribas

Special Purpose Acquisition Companies (SPACs) have exploded in both their number and market capitalisation with Emmanuel Dray, Global Head of Flow Sales EQD, Global Markets at BNP Paribas, highlighting a 10-fold increase in issuances this year alone compared to 2019, when issues totalled just $14 billion. A fund manager explained SPACs are typically run by private equity experts or serial entrepreneurs and operate as listed wrapper companies, which raise funds from investors and deploy the proceeds to take private companies public through a reverse merger transaction.

Emmanuel Dray, Global Head of Flow Sales Equity Derivatives at BNP Paribas

In addition to SPAC mergers being much quicker to execute than IPOs, the CEO of a European SPAC said the vehicles enable acquiree companies to benefit from upfront price discovery, and within the confines of a private setting. Conversely, IPO pricing tends to happen at the end of the transaction’s lifecycle, often in a public environment. “We sincerely hope that SPACs are not a short-term trend, but a long lasting story and a game changer for the IPO market,” said Dray.

The market view

Over the course of the day, investment experts gave their finely tuned market view on all the disruptive topics covered by the conference.

A leading fund manager said there is a record amount of cash currently sloshing around in the system yet the low and sometimes negative interest rates is making it harder for savers “to retire with dignity.” Exacerbating matters further is that inflation is projected to persist owing to labour shortages. A panel of investment experts reflected the sentiment on inflation, with one speaker noting that whether you believe inflation to be transitory or otherwise, it will take time for any normalisation to occur, and we may never return to our current equilibrium.

Disruption is everywhere, in the way we work, the way we communicate, and the way we invest. But if we can understand the disruptive factors impacting us today, we will be able to navigate them better, and invest more wisely.

Olivier Osty, Head of Global Markets at BNP Paribas

One CIO noted there was a huge bifurcation in the value of assets, depending on whether they are publicly listed or privately held, adding that the gap had widened significantly in recent years. He said that whereas previously private equity managers used to pay a 20% premium, a number of transactions nowadays have a 40%-60% premium. While some may argue private equity firms are overpaying for assets, he noted, corporate leaders might retort that the public markets are undervaluing their securities.

Against the backdrop of the range of disruptive topics under discussion at the conference, Olivier Osty, Head of Global Markets, commented, “Disruption is everywhere, in the way we work, the way we communicate, and the way we invest. But if we can understand the disruptive factors impacting us today, we will be able to navigate them better, and invest more wisely.”

Olivier Osty, Head of Global Markets at BNP Paribas

Related solutions

ALiX

ALiX has the full power of Cortex FX in a conveniently small window on your desktop. ALiX is indisputably pixel for pixel the most powerful FX platform on the market. Understanding everything from a spot ticket to a complex option ALiX is there to save you both screen space and time.

ALiX on Symphony

Get seamless access to ALiX through Symphony – our latest evolution to streamline the way you interact with ALiX. Set up a chat with ALiX, request prices and execute trades – all on Symphony.

Americas

BNP Paribas has been present in the Americas for more than a century. We provide capital markets, securities services, financing, treasury and advisory solutions to corporates and institutional investors.

Asia-Pacific

BNP Paribas has a strong heritage in the Asia-Pacific region, having established our presence over 150 years ago. Today the bank offers one of the region’s most comprehensive branch networks and provides investors with products and solutions tailored specifically to their needs.

Brio

This platform offers clients the ability to conceptualise and test their investment strategies before connecting with their sales representative to proceed to transaction, specifically for Delta One and Quantitative Investment Solutions (QIS).

Cash Equities

BNP Paribas’ best-in-class Cash Equities platform offers award-winning equity research and a premier, customisable execution experience. BNP Paribas Exane research is renowned for its depth and quality, reinforced by experienced, top-ranked sales and specialist teams as well as a dedicated corporate access service. This, combined with our market-leading global execution services including Cortex Equities, a state-of-the-art electronic trading platform, high-touch trading, portfolio trading, quant research and execution consulting deliver an unparalleled Cash Equities offering.

Commodity Derivatives

With a global footprint and over 30 years of expertise in the commodities market, we are one of the few banks in the world with a long term commitment to the growth of our commodity derivatives franchise bringing innovative and ground breaking solutions to clients worldwide.

Cortex ATS

The Cortex ATS is a non-displayed order book for listed equities that can be accessed by clients directly, or via any of BNP Paribas' equity execution products.

Cortex CD

Cortex CD is our online-cross commodity trading platform. It offers a wide range of hedging solutions for clients who are exposed to the price of physical commodities. The platform provides transparency and live pricing through its accessible interface and helps you track derivatives transactions on a wide range of energy and commodities.

Cortex Deposit

BNP Paribas’ corporate deposits platform, allowing you to quickly consult and securely trade deposits.

Cortex Equities

By harnessing the power of innovation, we continue to drive digital transformation and strengthen our electronic offerings for our clients by taking an agile approach.

Cortex Equities Americas

Cortex Equities connects you to the deep global pools of BNP Paribas' liquidity and our long-standing expertise to help you manage it.

Cortex FX

Cortex FX is BNP Paribas’ advanced multi-product FX trading platform

Cortex iX

Cortex intelligent execution (iX) is the cutting edge FX spot algorithm execution service from BNP Paribas

Cortex Listed

Our best-in-class Execution Management System for listed derivatives trading, powered by Fidessa

Cortex Plus

Cortex Plus is our online derivative structures platform, providing live pricing and simple click and trade execution.

Cortex Rates

Cortex Rates offers a comprehensive range of Fixed Income Interest Rates products and services

Cortex Secondary

Cortex Secondary is BNP Paribas’ secondary market trading platform.

EMEA

BNP Paribas has presence across most financial centres in Europe. Thanks to our strong local representation and long-standing relationships with governments and regulators we can offer unparalleled access to European, Middle Eastern and African markets.

Equity Derivatives

BNP Paribas has over 30 years of track record in developing innovative equity derivatives strategies and is an established global leader in structured products. Our comprehensive range of solutions across flow and structured products is designed to meet all our clients’ needs.

Global Credit

Our combined Primary and Credit business enables us to realise synergies while maintaining strict boundaries between the public and private sides. We provide solutions to clients throughout the entire credit continuum from origination through execution to secondary market trading and post trade services.

Global Equities

Building on our long-established world-class Equity Derivatives business, BNP Paribas continues to diversify and scale our Equities offering. Clients can now access the combined strengths of our market-leading Prime Services and Cash Equities platforms.

Global Macro

Global Macro offers the full spectrum of products across FX, Rates and Commodities in both developed and emerging markets, from millisecond electronic trading supported by the most advanced AI platforms, through to long dated, high touch solutions.

Global Rates

We aim to be a top 3 house across both developed and emerging market rates. Our business has grown substantially and we operate a culture of “shared purpose”. Our focus is aligned around the social and economic outcomes of supporting our broad client base across Corporates and Institutional Investors.

IBOR

London Interbank Offered Rates (LIBORs) are being replaced by Risk-Free-Rates (RFRs) with the reform leading to multiple impacts on market participants, including changes in the way certain products and contracts operate

Markets 360

A radical new approach to strategy and economics to provide you with top quality views, focusing on evidence-based research and thought leadership. We bring economics and strategy together in thematic notes across asset classes, delivering what you need when you need it and continuously adapting to your needs.

Regulation

Effective regulatory strategy to anticipate and mitigate risks is the best protector of our business. As the regulatory landscape is continuously changing, BNP Paribas Global Markets is well placed to adapt to new regulatory challenges with agility and a focus on the future.

Smart Derivatives

Distributors of structured products face multiple challenges on a daily basis. Smart Derivatives is your digital one-stop-shop to manage the entire lifecycle of structured products and AMCs in one place. We have leveraged the best of our internal resources and partnered with fintechs to provide you with cutting-edge technologies.

Sustainability

We aim to facilitate the emergence of a carbon neutral economy and socially responsible world, innovating new ways to help our clients integrate ESG into all their activities