IOSCO has published a Consultation Report on the regulation of retail structured products.

The Report

  • Analyses market trends in the retail structured product market and related regulatory issues
  • Proposes a regulatory ‘Toolkit’ setting out regulatory options that IOSCO members may find useful in their regulation of retail structured products

Toolkit

The Toolkit does not seek to impose uniform rules but rather is structured as a series of regulatory options that IOSCO members might find useful to address issues they may observe in their own jurisdiction.  No regulatory action is proposed to be mandated by the Toolkit and it is recognized that not every Toolkit suggestion would work within the regulatory regimes of all IOSCO members. 

Organisation of the Toolkit

The Toolkit has five sections discussing tools for an overall regulatory approach and tools that are organised along the value chain of the retail structured product market.  They cover:

  • Potential overall regulatory approach to retail structured products
  • Potential regulation of the design and issuance of the products
  • Potential regulation of the disclosure and marketing of the products
  • Potential regulation of the distribution of the products
  • Potential regulation of post-sales practices (i.e. once the products are in the hands of investors)

IOSCO regards the following as structured products:

  • Structured notes, where the return on a debt security, such as a medium term note, is linked through an embedded derivative to the performance of reference assets, indices or other economic values
  • Structured funds, where the return on a fund is based, through derivatives or other portfolio management techniques, on the performance of reference assets, indices or other economic values
  • Structured deposits, where the return on a bank deposit is similarly dependent on the performance of reference assets, indices or other economic values

Comments must be submitted to IOSCO on or before Thursday 13 June 2013.