From AMC, Trackers and CLNs to Structured Notes: Trends, Opportunities, and Risks for Market Professionals

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Annie: Hello, everyone. Welcome to today's webinar, "From AMC Trackers and CLNs to Structured Notes: Trends, Opportunities, and Risks for Market Professionals." My name is Annie Triboletti. I will be your host for today. We're pleased to be joined by our two speakers. So without further ado, I will hand things over to our moderator, Marie, to get us started and to introduce our speakers. Marie?

Marie: Thank you so much, Annie. Yeah. Hello, everyone. Welcome to today's webinar. My name is Marie Le Maitre. I'm head of marketing capital markets here at CSC, and I'll be moderating this session today. So before we dive in, I'd like to introduce our speakers, Sven and Fabio. And maybe, Fabio, you could begin with introducing yourself and ISP and then pass over to Sven.

Fabio: With great pleasure, and thanks a lot, Annie and Marie. Pleasure to be here. My name is Fabio Oertle. I'm since six years already at ISP. The role that I have here is the head of asset solutions, and I'm also part of the Executive Board of the group.

ISP is a very interesting animal. We're a small investment boutique doing quite a lot of things. We're having two offices in Zurich, one in Geneva, one in Tel Aviv, one in Dubai, and last but not least, also in Hong Kong. We're a regulated security house here in Switzerland. So we're regulated by FINMA, but we're also regulated in all the other jurisdictions that we're active.

We have been around for a fairly long time. ISP already exists since 1993. And some of the things we do include wealth management to both private and corporate clients, also asset management. We do manage our own funds. Brokerage, both in fixed income and structured products. Also speaking of brokerage, we do offer both brokerage and custody for digital assets. And for a few selected top tier funds, we offer placement services.

Last but not least, of course, my department, Asset Solutions, which includes anything related to securitization. The team consists of product specialists, traders, and advisors, and therefore both institutional and also intermediaries, we offer securitization services, including products such as AMC, CLNs, and trackers. That's it. Thank you.

Sven: Thank you, Fabio. My name is Sven Haase. I'm a commercial director at CSC. Been with the firm for just about a year and a bit, a year and a half. Previously I worked in a similar space. Before that, I worked for 20 years at Deutsche Bank. The role at CSC is commercial director, so looking for new business focusing on the various markets across Europe. CSC is a corporate service provider. We do various capital market services, so the set-up, the administration of special purpose vehicles, SPVs. We do various agency and trustee roles. We do escrows, but we also do fund administration. We're very active in the corporate space. We'll work with corporate entities. And then we also have a business focusing on digital services. The company itself has been around for quite a while, 127 years, independent company and global. In the true meaning, we've got 140 or so jurisdictions where we serve our clients, and we have about 8,500 employees.

Marie, over to you, please.

Marie: Thank you. That was a good introduction. A quick introduction as well. Whilst we're at it, I think, Fabio, maybe you could share a bit of a background, how CSC and ISP work together, what's their partnership. And I think it could be helpful for the audience to really understand, given the focus of today's session really.

Fabio: Absolutely. Yeah, with pleasure. I guess it's a very nice example of how a partnership like ours can evolve. I think it's really a success story.

It all started pretty much exactly five years ago. One year before that, I joined ISP with a structured products brokerage mandate, building up the business here at ISP. And given my background at both UBS and Vontobel, I always had in mind that structured products are always sold together with AMCs.

So we also wanted to do AMCs here at ISP. However, looking at ISP's balance sheet, which is fairly significant, however still relatively small, we had to get creative, right, because issuing out of our own balance sheet wasn't really an option. This is why we had to get creative. We put a lot of thought in it, and we came up to issue AMCs out of SPVs.

So we reached out to several corporate service providers, really did almost a doctor's thesis on which jurisdiction we want to be active in. And back in those days, we reached out to Intertrust, today CSC, and got a very, very professional service. We reached first out to the Swiss colleagues, who then kind of introduced us to all the jurisdictions. And we ended up teaming up with the Jersey team to build a really, really successful business case.

So today we work successfully together. So CSC is helping us to incorporate all the SPVs we need, providing directorships, etc. And we act as the window to our clientele, professional asset managers and the likes, to coordinate the setup of their own products.

Marie: Nice one. Thanks, Fabio.

Fabio: Pleasure.

Marie: Let's start with the fundamentals. So we're looking at the world of AMCs, trackers, CLNs, other structured instruments. So what are they? How are they being used, and why have they become so relevant to market professionals? So maybe, Sven, can you walk us through the basic concept of it? How do they work? How do those vehicles work? What's the role of the SPV? And how does CSC support their clients across jurisdictions in general? If that could be good, actually, from the start.

Sven: Thanks, Marie. And I think, as Fabio just mentioned, I mean, ISP is really the face to the client, to the investor, institutional family offices, etc. We, as the corporate service provider, we sit at the middle of the structure. We are, let's say, at the epicenter, so in a way, the critical part, the plumbing. And what we do, as I alluded to, we set up the entity. We set up special purpose vehicles, and we'll talk about that a bit later, whether that is in Jersey or in Luxembourg, in Ireland or many other jurisdictions. So we set up the SPV, which means we set up a legal entity together with a sponsor/originator, together with law firms and other entities advising on the transaction, on the structure. And that means that we set up the structure, we work with the notaries as well, and then ultimately, our colleagues, so people from CSC, will act as a director, so, as Fabio alluded to, the directorships. Our guys will run the entity in line with transaction documentation, etc.

So the sponsor, with the advisor, etc., they decide on what kind of structure they want, and then we implement it. And over the course of the lifetime of the transaction, we will work with the sponsor on issuing new programs, whether they be AMCs, CLNs, trackers, etc., and always in line with the transaction documentation. So in a way there is a so-called independence of the originator. So that is to ensure the safeguarding of the assets. We use so-called orphan entities. And we'll touch about that a little bit later because again, from an investor perspective, you want to make sure that the assets are being ultimately separated, segregated from the originator from a safety perspective.

So we do the internal plumbing, and Fabio and team in this case will work with the outside clients, whether it be investors, asset managers, private wealth advisors, etc. Fabio, maybe you want to dive deeper into the various underlying different instruments and how they differ from one another.

Fabio: Yeah, absolutely. I guess it's going to help a lot also the audience to navigate within the bigger picture, right? When I think about the product diversity, it's really a vast set of products that we see on a fairly daily basis, right? We're seeing a lot of bonds, a lot of notes, ETPs. We also do share mandates. We also provide listing services. However, if I really had to name three evergreens, so to say, it would clearly be AMCs, trackers, and credit-linked notes. So allow me to say a few words about each one of them to explain a little bit to the audience what is each product is about.

AMCs are, by quite some distance, the one that is used the most, right? The reason for this is probably coming from its flexibility. It can be compared to a fund. Of course, it is not a fund. It's not as regulated as a fund. It's seen as a certificate or a structured product. And it's typically managed by a regulated asset manager. So this regulated asset manager then can discretionarily manage a pool of assets that can be stocks, ETFs, etc. And these products typically then have daily liquidity, so investors can buy and sell them in a secondary market. And very often these are also open-ended structures, so that the asset manager really has a long-lasting tool to efficiently manage his clients.

Now trackers, on the other hand, are very, very similar, but they're not discretionarily managed. They're rule-based. So at the very beginning of the product, it is clearly predefined in what the tracker is going to invest in, at what time, and with what money, right? There is no discretion left. And therefore, very often the tracker, as the name indicates, then tracks one underlying. It could be a private equity, for example, or a cryptocurrency.

Now AMCs and trackers, as you might get the feeling, are there for pretty much Delta 1 products, right? They're pooling the assets. While the third, credit-linked notes, the CLNs are rather a bond-like instrument. So also, for credit-linked notes, it's again about pooling the investors' money and then provide that money to a borrower. The borrower can be literally anything and related to anything. So you could kind of compare it with project finance, where projects could be, let's say, a real estate development case in Germany. It could be a Swiss company that wants to elaborate or kind of grow into the Italian market for its fashion design. It could be literally anything.

So these are really the main three that we see and are very, very frequently used.

Marie: Thanks, Fabio. If we build on that, what's actually motivating clients to set up those products with you at ISP? Where do you see the biggest drivers really? Oh, and one more thing, I'm just seeing that Annie put up the poll question. So if you can please respond to it whilst Fabio is talking, that would be wonderful. Sorry, Fabio, go ahead.

Fabio: No worries. Thanks a lot. It's a really good question, right? I think I've used the word before. It's a lot about being efficient, right? And for our typical clients, such as professional asset manager, efficiency is absolutely key.

If we're just thinking about a typical example, an asset manager approaching us and he wants to do an AMC, I mean, what are the key benefits, right? On the one hand side, he can really pool all his high-net-worth individuals that he manages into one instrument, and instead of then managing dozens or maybe even hundreds of clients separately, he can look at it as just managing the one AMC. So a lot of time and efficiency gains, and at the same time it's also, from a cost perspective, very, very cost-efficient. So that's really, from an efficiency point of view, great because it really helps the asset manager to scale his business.

The second big point is really about accessibility. And this is a trend that came up only, let's say, the last five, six years and has been boosted also by ISP's initiatives. What do I mean by accessibility? There's a lot of instruments in the market that are hard to access. Examples being private equity as a prime example. Some of us have already invested in private equity. And so those who have remember very, very, yeah, very cumbersome, big documentation, be that support subscription agreements or operating agreements, really going into the nitty-gritty of everything. And this is something for the typical investor that is very, very cumbersome.

Now by pooling the investor's asset, the asset manager can really reduce complexity here and just pool all the investors' money into that one product and then just have one subscription into the private equity or, for example, a Cayman fund. From an investor perspective, it's also super handy because for him the transaction is going to be very, very smooth. We provide that product, a Swiss ISIN, and we make it clearable. That means he can just call his private banker, provide the ISIN, and off we go, a normal delivery versus payment transaction, like any other clearable bonds. So that's really making things a lot, lot easier. And that's why since a couple of years through AMCs, these hardly accessible products became very, very interesting.

Marie: Makes sense. So let's talk about how these instruments are really evolving. So with any financial product, markets change, regulations develop, and investor demand usually shifts. So Sven, maybe from your perspective, what would you say are the most common products you're seeing today, and how is the demand really evolving, let's say, across different investor types? And maybe, Fabio, for you, what's driving the transition on your side? Regulatory developments, new types of underlying assets, you can look at crypto, non-bankable assets. And yeah, the broader growth in AMCs, I think if you could kind of dive into that, that would be quite helpful, I think.

Sven: Thanks, Marie. From our side, what we work on or what the most common products, I mean, first and foremost, it's probably important again to stress the flexibility off of the SPV structure being suitable for a wide range of different products. Now for the context of this discussion and this webinar, probably the most common instruments we see are indeed the AMCs, actively managed certificates, and trackers. Probably these two instruments that we see the most. And irrespective of the type of jurisdictions that you use, we mentioned earlier, Jersey is one location or one region where we work together with ISP, but also in other jurisdictions like Luxembourg. And most of these jurisdictions, they offer flexibility to issue new series, new cells, and new instruments or compartments, again, depending on the jurisdiction that you are. And that's why these instruments are so suitable for the investor demand. So AMCs and trackers are probably the two most common products that we see.

In terms of investor demand and how demand is evolving, probably see sophistication of investors. They demand a wider range of products. So where maybe historically they were happy or sufficiently satisfied by a limited range of products, they are becoming increasingly sophisticated. And as Fabio mentioned, they're looking to have access to certain alternative assets. We mentioned private equity, for example. And the efficiency, the operational advantages of working with these types of structured products is probably key.

So AMCs and trackers are probably the two most relevant products. And in terms of the evolving demand, yes, it's alternative assets, private equity, private credit, commodities, etc., that previously were not accessible to these type of investors.

Marie: Fabio?

Fabio: Yeah. No, I can only echo what Sven said. I think it's really good examples. I can clearly agree to the also increased sophistication of our clientele, which also keeps life very, very interesting here at ISP. It's also a highly welcomed evolution, right?

Now when I try to add a couple of trends that we see, I think now that I reflect about it, we do see more and more requests also from unregulated players that want to do AMCs. It seems like AMCs got so popular that everybody wants to have one. But kind of reflecting on this, I believe there's probably a lot of call them younger, less experienced, early-stage asset managers that want to build a business, they want to grow. Given the cost efficiency of AMCs, AMCs do offer a potential way to enter this market, build a track record, and build your own asset management company. So this is probably where things are coming from.

Of course, however, there is licensing requirements, right? So an unregulated asset manager in most jurisdictions therefore still cannot just have his own AMC. However, there are certain players in the market, including ISP, that can give a hand. So the unregulated party then turns into an advisory role, and players like ISPs would then take over the official asset management, getting the advices, checking those advices, whether they fit into the strategy and universe of the AMC. And if yes, it will be executed accordingly, right? So this is a trend that we do see.

A second trend, as you mentioned, Marie, is clearly crypto, despite, of course, the latest downward trend in the market. And it's also interesting to see there is still more talk than action so far. Great ideas. I think there is a lot of great minds in the industry. It is still very, very expensive. When you think also about tokenization, we still see that it doesn't yet make economic sense to go for a lot of tokenization products. We have, however, made lots of progress also with our own ISP offering and have already set up products that allow subscriptions, for example, in stablecoins or Bitcoin, for example. So that's something that we clearly observe, and yeah, but let's see where the market goes.

As a third trend that we have already mentioned, which probably is the biggest of the last five years, is really the trend to use AMCs to not only invest in traditional financial assets, but largely into non-bankable exotic assets, such as private equity, private debt, real estate, and the likes.

Marie: We're seeing the second poll question, so please take some time to respond. In the meantime, you both touched on alternative assets. We clearly see there's an increasing appetite for private equity, private credit, real estate, etc. Fabio, could you take us a little deeper into the evolution of the non-bankable side, so how private equity, credit, real estate, and other alternatives are being brought into these structures? Yeah, if you can touch on that, that would be great.

Fabio: Absolutely, yeah. Allow me to draw the picture even a bit wider and telling you a little bit about the history of AMCs in general. I mean, I haven't been part of the early hours, but I know and I've been reported to that AMC have first been used probably more than 20 years ago. So in that first wave of AMCs, it has really been the banks issuing AMCs out of their balance sheet and mainly investing into bankable assets, right?

Now ISP was really kind of an early mover that then launched a second wave of AMCs issued out of SPVs, as we explained before. And this really opened up then the whole asset universe. Why? Well, because the assets that are being invested in don't end up on ISP's balance sheet or the bank's balance sheet, but they're on the SPV balance sheet, which provides a lot more flexibility, right, due to topics like risk-weighted assets, etc.

Now I think due to that, now we have seen, since five years, an ever-growing trend to invest into, as mentioned, private equity, debt, real estate projects, but also other things, like wine, whiskey. We've done and seen AMCs on luxury watches and even an AMC on horses. So it really got exotic. Thanks to being an early mover, we've made great experiences there and really learned a lot and consider ourselves securitization experts.

Now it's definitely cool to see how the players evolve and how whenever they see the idea that they copy that and they try to try to materialize their own ideas. But of course, with that additional complexity and exotic projects, it's also an additional risk that comes along, right? We all know that exotic underlyings are often more risky than traditional ones. And this has, of course, also raised the public interest and also public scrutiny in those assets.

Now luckily and also thankfully, we have this Swiss Structure Products Association, the SSPA, and they have also kind of observed this development and have guided it also with some best practices, which are very good to follow. So I believe, really, as we have it today, the Swiss AMC market is a very good one. I feel very comfortable with the setup that we have and really do believe that these AMCs on non-bankables are a great addition to the product offering to professional asset managers.

Marie: On that note, let's walk through the mechanics, right? So how are these instruments actually set up? Who are the parties involved, and how does the process overall look like? Maybe Sven, you could start to talk about the role of the SPV at the center of the structure, how CSC interacts with market participants, and how these vehicles are kept orphaned, ring-fenced. And maybe then you, Fabio, could expand on the various roles of ISP and how ISP manages the legal, regulatory, operational risks across those complex products. Does that work for you guys?

Sven: Yes.

Marie: Sven and you, Fabio, after that. Sorry.

Sven: Thanks, Marie. So you mentioned and you reiterated the characteristic of the SPV being at the center of the structure. You touched on the term "orphan structure." So what do we mean by that, and why do we have that? So as I said earlier, we want an entity that is at the beginning empty, so a special purpose vehicle that is just being set up for one specific purpose. Let's just, as one example, use that as an issuance vehicle for AMCs.

So you need to set up a structure, which means that we will work with lawyers, with banks, if there are some involved, with advisors, with auditors, etc. in setting up the vehicle. We will work with lawyers who draft transaction documentation, who will draft certain agreements or certain documentation, contracts for the entity, draft the articles of association, etc. We can provide certain templates. Depending on the complexity, lawyers will draft these, and we will work on setting up the entity.

You also need to create this orphan characteristic, you need a shareholder. So you need an entity that holds that special purpose vehicle. And what we typically see in the market, you see either a Dutch stichting that is being set up as a sole shareholder of the SPV. You can also have an Irish share trustee. So two options here. Again, it will be down to the sponsor/originator together with the legal advisor to decide which shareholder structure is most suitable. But both work to achieve the separation from the originator. And then we incorporate the SPV. And then, in line with the transaction documentation, the entity will enter into the first transaction by acquiring certain assets and issuing AMCs, for example.

In the context of the setup of the entity, there will be certain KYC checks that we will obviously have to perform on the investors if these are registered investors. If the investors access via the clearing system, which is most likely in these types of structures or always or most likely the case, then as these instruments settle in the clearing systems, there are certain lines that we can place on the clearing systems.

But then depending on the assets that are being acquired, and we mentioned earlier, fine whiskey or wine or watches or horses, you would imagine that the issuer, the SPV would have to perform a certain due diligence to make sure that the horse is there or that the painting is there. So again, we are not experts on horses or fine watches or art. But again, we would work with advisors, with independent consultants, auditors, etc. to confirm the accuracy or the validity of the underlying asset. And then the SPV would issue AMCs to investors, for example.

So we are in the middle of the structure. We work with a wide range of different counterparts, lawyers, banks, advisors, ISP, for example, as the issuing entity, paying agency, or calculation agency, or agent. But maybe, Fabio, more for you to talk on the various roles that you can perform and where, again, we would work very closely with ISP.

Fabio: Yeah, sure. And very well explained, Sven. Thanks a lot. So yeah, let me elaborate a little bit on the typical roles that we see within a typical securitization deal, and also, maybe lastly, what roles ISP typically takes within such a setup, right?

Now a very complex securitization deal has probably around a dozen of different roles included, some of which can be taken by the same party. But it could also be, let's say, 12 different parties involved, right? But today we're not about complex.

Today we're looking into a simple, let's say, AMC on bankable assets. So what we use is, of course, first and foremost, a corporate service provider. As Sven just outlined before, there's a lot of help involved by the directors of the SPV. All services provided by CSC.

Now Sven also mentioned the paying agent role. Now this is, in Switzerland, a regulated activity. So ISP does offer regulated paying agency services. In short, that means we do provide the product Swiss ISIN and therefore make it clearable and tradable. That's obviously of utmost importance.

Next to the paying agent, there is also the need of a custodian and broker. ISP can also provide both these services. Very often we equip the AMC, however, with an additional broker, such as Interactive Broker, in order to provide the asset manager further facilities to very efficiently and cost competitive trade down the lines that he wants to.

I mentioned already so there's also an asset manager needed. I've also mentioned before that, in most of the cases, this asset manager needs to be regulated. Also, here, ISP does have the according license to be potentially the asset manager. But of course, our business case is to mainly go out to other asset managers to make use of our unique AMC structure.

Last but not least, it's the calculation agent, kind of the NAV calculator. So most of our products have daily NAVs. They need to be calculated, summing up all the positions, dividing it by the number of units. That's it. This is not regulated. However, this is also a service that we can provide.

So you have realized ISP can pretty much take all of the roles that there is within a simple structure. Very often we do offer most of them, as mentioned, very often not the asset manager. But it gives us a very, very nice position because the asset managers can approach us for a pretty much one-stop shop experience.

Marie: Now you explained the setup on both sides. Maybe we can move to more the jurisdiction, so where these vehicles are set up. So maybe, Sven, you could give us an outline on the landscape, what's possible, what makes sense in certain situations, what not, and how CSC supports clients across jurisdictions. And then maybe, Fabio, you could let us know where ISP operates, perhaps most actively today. That would be great. And then maybe tell us how it changed over the past decade. So yeah, maybe let's start with Sven.

Sven: Thanks, Marie. So I think CSC has a presence or can service such entities and set up such entities in 140 jurisdictions. But just because it's possible to kind of select between all these 140 jurisdictions does not mean that investors or their sponsors will opt for that. So what we see is typically a concentration around certain jurisdictions where most of these AMCs, trackers, CLNs, etc. are being set up.

In Europe, we see a lot of activity in the Channel Islands, for example, Jersey or Guernsey. We see Luxembourg as one very established and a hub where investors are very familiar with. In Jersey, you can issue what they call different cells. In Luxembourg, it's called compartments. In other markets, it's called series. So ultimately you look for a jurisdiction where you can issue repeatedly or new instruments as investors come to the platform and want exposure, want an AMC or tracker or a new tracker to be set up. So you have a wide range of choice. But in practice you see concentration around the key structured finance or securitization hubs, Luxembourg, Ireland, and the Channel Islands.

So it's a wide range that is possible. But then again, also from a timing, from a cost perspective, most people will focus on areas that (a) they're very familiar with, where the operational setup is well understood, where you can achieve a so-called copy-paste as time to market is critical. And then it's a cost question. Certain markets, the fees may be slightly higher. So think about certain jurisdictions that are more heavily regulated, you're more likely to see that reflected in a higher cost of setup but also ongoing fees.

And then the timing question is critical. So ultimately it will be very much driven by ISP, for example, together with investors or family office or institutional investors who will be looking at a structure that CSC will then work on implementing. So a lot of choice is possible, but the fact is that you can see it concentrated in these three jurisdictions that I mentioned.

Fabio: I think that gives a very good overview, and probably my input is going to sound somewhat similar. Unfortunately, not on the number of jurisdictions that we cover. At ISP, we covered 12 jurisdictions within the paying agent services, which is also a fair lot for the size of ISP. And I think we really gained a lot of experience within the securitization market. But thinking of those 12 jurisdictions, I mean, it's still good to say, I mean, we have issued already between 2,000 and 2,500 products and are these days servicing around 8 billion of assets. So it is a really significant business that we do.

And as Sven pointed out, I believe that pretty much all of the jurisdictions that we've heard, and there are so many more, they all have their advantages and disadvantages. On our side, I would say we have four main jurisdictions that we use the most. Two of them coming out of the Channel Islands, so Jersey and Guernsey. Also, Luxembourg, as Sven mentioned. And last but not least, also Cayman. So that's the four that we see the most.

The Channel Islands are often used for smaller projects also due to the cost efficiency of those setups that we have there. So we tend to see plain vanilla products going there, with sizes between 2 million and 10 million. Cayman is very crypto-friendly. So this is where we mostly do the crypto products over Cayman. And Luxembourg is really a little bit the Rolls-Royce of the jurisdictions from our perspective. It has its own securitization laws. It's therefore nicely regulated. But as Sven points out, regulation also comes with a certain price. With all the pros and cons, it attracts institutional clients. So some of them really look out for heavily regulated places such as Luxembourg. But it also is a bit more expensive. Therefore, products south of 10 million hardly makes sense there.

If we look at emerging markets or emerging jurisdictions, I think it's worthwhile to mention the UAE on the one hand side. Sven and I talked about that lately. During my latest business trip also to Riyadh and to Dubai, we indeed had quite a few requests for Saudi SPVs. But so far, we believe the time is not yet exactly ripe to offer these. So it hasn't materialized just yet. But the demand is indeed growing.

And a little bit similar on Switzerland itself, right? We have seen on the paying agent side already quite a few setups, where we serve Swiss AGs as a paying agent issuing several types of products. So it's also a trend coming up slowly but surely.

Marie: I'm conscious of time, but at the same time, yes, I'm seeing that we're getting questions, and I would love to respond to at least some of them. So quickly, maybe for both of you, again, what innovations or trends are you seeing? What should the audience watch out for? How should they prepare for where the market is heading? Maybe Sven, again you could start and then pass on to Fabio quickly. That would be great.

Sven: Thanks. In terms of assets, we see new type of assets. So we mentioned digital assets. Crypto is certainly an area where, let's say, four or five years ago you had very sporadic examples of interest, and now that's becoming definitely not mainstream, but definitely more requests for more established players also within the regulated space. So that's on the asset side. But on the liability side, how the SPV issues themselves, we kind of see also interest in digital securities, i.e., the digital securities that the SPV would be issuing. So that's what we observe overall. And Fabio will dive deep in what type of new assets they may be seeing at ISP.

I think it's important that from an SPV structure we're very flexible. At the same time, we need to understand the underlying assets, the investors, etc. So I'm thinking in terms of risk, in terms of KYC, because we, as a corporate service provider at CSC, being the directors of the issuance, we need to make sure that we understand the structure, the assets, the investors, etc. So a lot of the focus is on KYC, AML, obligation, etc. because we are regulated in certain markets. So again, not because something is possible or because there's interest will it be possible to also execute. But again, that's where we work closely with advisors to make sure that the structure itself is sound and they will fully understand it.

Fabio: Yeah. To add on to that, I believe, also to keep it short, I think one innovation that I'm personally very proud of, that we have achieved within ISP, also in collaboration actually with CSC, is to make our platform, the product platform sharia-compliant. So we do have now, for Islamic investors and for Islamic asset managers, a perfect platform, which is actually a lot more complex than it sounds, but really a platform ready to invest in a sharia-compliant way, in any sort of assets compliant with the sharia law. So this is really great.

On the other hand side, thinking of innovation, I mean, it sounds a bit counterintuitive, but I also want to speak about time to market, which then also on the other hand side, it's a conflicting interest with due diligence, right? And we have seen here and there a little bit of scrutiny from some of our clients, not really understanding why sometimes a product setup can take quite a bit of time. I think the due diligence that we do is very often underestimated. And we see there a little bit of a trend reversal, where more and more clients are very, very happy to see how much due diligence we do making them aware of the potential risks that are lying within their potential products. So that's really, really a positive trend. And we work very heavily on, at the same time, bringing down time to market with very innovative process measures, etc.

Marie: Thanks, Fabio. We are at the end of the webinar already. It was super-fast. I'd love to pick some questions that you've submitted. But before we do this, please, last poll, I promise. If you could respond to that, it would be wonderful. We received one question from A. Thomas. What is the typical timeline to set up such an instrument? Sven, maybe you can take that on.

Sven: Thank you. I think it's important to be realistic, and when discussing setting up a new structure with a client, you need to provide realistic expectations. On one hand, it is a very quick, a very smooth process. But of course, the more complex the transactions, the longer it will take.

One of the key questions to ask who are the legal advisors that the client work together, or is it something that is very much copy-pasted from a previous transaction. You need to set up an SPV. Again, it depends on the different jurisdictions. Some setup may be quicker than others. You need to open bank accounts. You need to review transaction documentation. You need to do a certain amount of KYC. Overall, I would say within a time frame of three to five weeks is realistic to set up a new structure like that. But again, it will ultimately be driven by the amount of preparation and the circle of advisors that the sponsor or investor is working with.

Marie: Awesome. Thanks, Sven. There's another one from David. What would you say are the biggest risks clients should be aware of both at setup and during the life of the product? Fabio, maybe you.

Fabio: Yeah. Well, it's a very good question. Thanks a lot, David. I think the biggest risk that one should be aware of, I think there are two that jump into my mind. On the one hand side, it's really timing, as Sven pointed out. Good things take their time. So we have to do a proper due diligence. There will be questions. We're very much focusing on AML risk, so give us time. That's important. On the other hand side, it's also distribution. I think many of the asset managers that approach us underestimate distribution. So make sure that you have your seed money ready, that you have an attractive product that you're happy to distribute because distribution is difficult. That's what I would say.