Complex Financial Products – International Support for yet More Investor Protection

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The International Organisation of Securities Commissions (IOSCO) has recently released its final report on "Suitability Requirements with respect to the Distribution of Complex Financial Products" (Report), which outlines the key principles in respect of the distribution of such products by intermediaries to retail and non-retail customers (wholesale clients).

While the recommendations of IOSCO are not binding on securities regulators, they do provide insights into how the Australian Securities and Investments Commission (ASIC) may approach guidance on similar issues.

Complex Products -

The Report broadly defines "complex financial products" as financial products, whose terms, features and risks are difficult to value and are not reasonably likely to be understood by a retail customer because of their complex structure. Examples of "complex financial products" include, but are not limited to, structured instruments, hybrid instruments and financial derivative instruments (eg credit default swaps). The term does not include conventional equities, conventional bonds, simple vanilla unit trusts and mutual funds and exchange-traded standardised derivatives contracts.

Please see full alert below for more information.

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Topics:  Australian Securities and Investments Commission, Complex Financial Products, FOFA Reforms, Foreign Investment, Investor Protection, IOSCO

Published In: Finance & Banking Updates, International Trade Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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