Structured Products

SSPA Chafes At Swiss Regulator Comments On Structured Product Information "Gap"

Osmond Plummer , Geneva , 10 May 2011


The Swiss Structured Products Association has rejected comments by the Swiss regulator FINMA, in which the watchdog said there remain significant gaps in the product information given to investors. The comments come at a time when the world’s watchdogs are looking to tighten control of the investment industry after the heavy losses of 2008.

The SSPA was responding to FINMA’s 2010 Distribution Report, in which the regulator said there remains an “issuer-to-investor information gap” with regards to structured products. The SSPA demurs, noting that the regulator’s web lists “valuable information regarding the nature and risks of each structured product category, as well as market risk (the risk figure) of individual products, and issuer creditworthiness (rating, core capital ratio, credit spread).”

The regulator said its current documentation policy, which is line with current legislation, should be retained. The trade group said its simplified prospectus provides basic, easy-to-read information for investment decisions about product issuers, and product risks and opportunities. It went on: “Many foreign supervisory authorities are currently copying the Swiss model.”

The SSPA said that neither a mandatory, long-form emission prospectus, nor an approval procedure for simplified prospectuses, would contribute additionally to investor protection.

The association sharply criticised a proposed concept of supervisory control for structured products. Investment advisors’ in-depth analyses of investors’ risk profiles as required by current legislation offers sufficient protection in this regard, the SSPA said. On the other hand, the SSPA does agree putting into place coherent regulatory directives, based on the MiFID directive, is worth pursuing. MiFID does not apply within Switzerland although a number of international institutions are applying its principles worldwide, including within Switzerland.

In the tradition of Swiss consensus politics, the SSPA said it is committed to “finding a reasonable solution, in cooperation with government representatives, their members and the various associations concerned”.


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