Tech Tuesday: Technology, partnerships expand market for structured products.

Tech Tuesday is a weekly content series covering all aspects of capital markets technology. TECH Tuesday is organized in partnership with Nasdaq.

Structured products, where customized investment returns are linked to assets, have recently gained appeal amid rising equity-market volatility and interest rates.

As more investors seek alternatives, technology is providing increased transparency and access to investors, which has historically been limited to structured products. This should enable continued rapid market expansion, say speakers at a recent industry panel.

The U.S. structured products market has grown from $50 billion to $100 billion in the past two years as technology has made investments more accessible and easier to communicate. That’s according to Tim Bonacci, CEO and founder of Luma Financial Technologies, whose platform helps financial advisors buy, create and track structured products.

“I’m very excited about the next steps,” Bonacci said. “The use of structured products by many advisors or having them in investment portfolios is similar to making structured products a major component.”

Luma recently partnered with Morningstar to register structured products on the NFN platform with Nasdaq Fund Network, having previously partnered with Morningstar to bring structured product data and analytics to its 180,000 Morningstar Advisor Workstation subscribers in the US and Canada.

“What we’re working on together is really making it a more mainstream product,” Bonacci continued. “And from what I see at a higher level, while we’re making good progress in adoption, we’ve got technology that makes it easier to use.”

Kevin Reid, Head of Strategic Partnerships at Morningstar, highlighted the importance of easy access to structured products: “How do you get that into the portfolio? You have to use the technology consultants use to review their portfolios, so that means consultant workstations,” he said. “We’re excited to have data on structured products on the platform that wasn’t available until the partnership with Luma. So having this data sit alongside the other research universes that advisors use is really new for us.”

Keith Strickula, chairman and co-founder of the Structured Products Association, noted that Nasdaq has an opportunity to help bring structured notes into the mainstream. The exchange asked Oliver Albers, Nasdaq’s vice president of investment intelligence, about his commitment to that.

Luma’s partnership is an example of Nasdaq’s reach, Albers said, as NFN is a way to deliver more than 400 different investment information resellers. “We avoid additional conflicts to access the data on the network,” Albers said. “Anyone with an internet connection around the world can access this information.”

According to Luma Bonacci, the market is likely to double again in the next two years at the pace in structured products. “If we can do this well, it will be a revolution for organized products.”

About the Nasdaq Fund Network (NFN):

The Nasdaq Fund Network (NFN) provides fund data services that provide transparency into targeted products to help professionals and non-professionals make more informed decisions about their assets. NFN facilitates the collection and distribution of performance, net asset value (NAV), valuation and strategy-level reference data for over 35,000 products to 100 million+ investors.

To learn more about Nasdaq Fund Network, contact NasdaqFundNetwork@Nasdaq.com.

Read more about the NFN and Luma partnership here.