MAS Issues Consultation Paper on Regulatory Regime for Listed and Unlisted Investment Products
Singapore, 28 January 2010...MAS is consulting the public on a revised package of proposals to enhance safeguards for retail customers for a wider range of investment products.
2 On 12 March 2009, MAS issued a consultation paper on the sale and marketing of unlisted investment products. MAS carefully reviewed and considered feedback received on the consultation paper and published our responses to the feedback in two parts. The first part of our response was published on 8 September 2009 and we published the second part of our response today (95.2 KB).
3 In the March 2009 consultation paper, MAS had indicated our intention to consider whether enhancements would also be required for listed investment products. After careful consideration, MAS has decided to issue revised proposals aimed at enhancing the safeguards for retail customers covering a wider range of investment products. They will apply to both listed and unlisted investment products.
4 Under the revised proposals, MAS will impose a new obligation on financial advisers and brokers to formally assess a retail customer's investment knowledge or experience before selling investment products to the customer. Customers who do not have the relevant knowledge or experience in specific unlisted investment products must be given financial advice before being able to purchase the product. In the case of listed investment products, additional safeguards will be required when brokers approve trading accounts for customers who are assessed not to possess the relevant knowledge or experience in derivatives. These new obligations will apply for all investment products other than a list of products which are already established in the market and generally understandable by retail investors. MAS will prescribe the list of products that will be excluded from the new obligations.
5 Additional proposals include:
(i) Expanding the scope of the CMFAS examination module that was planned for the three classes of unlisted "complex investment products" consulted in March 2009 to cover other non-excluded investment products; and
(ii) Requiring issuers of debentures which are asset-backed securities and structured notes, collective investment schemes and sub-funds of investment-linked life insurance policies to prepare Product Highlights Sheets.
6 In developing this revised package of proposals, MAS has considered the views and comments from the public, investors, market practitioners and industry associations.
7 Most of the proposals will require legislative amendments. Subject to feedback received from this consultation, MAS will encourage financial institutions intending to sell investment products before legislative implementation of the proposals to adopt the proposed safeguards as good practice in conducting business with retail customers.