Drop in volatility prompts move to exotic options

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The drop in equity implied volatility levels is making it harder to offer yield enhancement products, says Harold Kim, Hong Kong-based Citigroup managing director, speaking at a structured products forum in the Special Administrative Region earlier this month.

The use of exotic options has been a feature of the structured products market since volatility levels on global equity indexes started falling dramatically in July 2003 to the current 10-year lows. “The biggest issue facing traditional

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