MAS Proposes Changes to Classification of Investment Products for Retail Investors
Singapore, 3 November 2021...The Monetary Authority of Singapore (MAS) today issued a consultation paper on the classification of certain investment products as complex, whereby enhanced safeguards will apply when they are distributed to retail investors. The paper also proposes changes to increase retail investors’ access to diversified investment funds.
2The consultation seeks to enhance the existing complex products regimeProducts which are well-established in the market and have terms and conditions generally understandable are termed Excluded Investment Products (EIPs). Products that do not fall within the prescribed list of EIPs are regarded as more complex products (Specified Investment Product (SIPs)), and must be sold only with enhanced distribution safeguards. that was first introduced in 2012. The framework allows for retail investors’ access to a range of investment products, while helping them better understand the features and risks of products that are considered more complex.
3As part of MAS’ regular reviews of our regulatory regime, MAS seeks views on the following:
(a) classifying collective investment schemes that are authorised or recognised by MAS, as simple investment products;
(b) classifying debentures with varying interest payments or convertible features as complex investment products;
(c) the appropriate classification of perpetual securities and preference sharesPerpetual securities are a type of debentures with no specified maturity date and the issuer has the discretion whether or not to redeem the security or to defer interest payments. Preference shares have similar characteristics as perpetual securities., and suitable safeguards for investors who invest in these products; and
(d) removing the requirement for FIs to conduct separate assessments on the investment knowledge and experience of customers when advising customers on products.
4Mr Lim Tuang Lee, Assistant Managing Director (Capital Markets), said, “With these proposals, we strive to maintain the balance between providing retail investors convenient access to a range of investment products, while ensuring that sufficient safeguards are in place to enable them to make informed investment decisions. These include helping retail investors better understand and appreciate the unique characteristics and risks associated with more complex products.”
5The consultation paper is available on MAS’ website. MAS invites interested parties to submit their comments on the proposals here by 15 December 2021.