Parliamentary Replies
Published Date: 20 March 2023

Written reply to Parliamentary Question on sale of sophisticated investment products to retail investors

Date: For Parliament Sitting on 20 March 2023

Name and Constituency of Member of Parliament

Assoc Prof Jamus Jerome Lim, Sengkang GRC


To ask the Prime Minister (a) what is the prevalence of sophisticated investment products such as structured products, or those involving derivatives, being sold to retail investors as a share of all financial products sold; and (b) what requirements does MAS impose in terms of disclosure and pre-purchase counselling before non-accredited investors are allowed to purchase sophisticated investment products.

Answer by Mr Tharman Shanmugaratnam, Senior Minister and Minister in charge of MAS:

1. Sophisticated investment products make up less than 5% of all investment products sold to retail clients.

2. Financial institutions and their representatives must adhere to MAS’ conduct requirements when selling investment products to retail clients. They must ensure that the products recommended are suitable for the client, taking into consideration the client’s investment objectives and financial situation. They must disclose and clearly explain to the client all material information on the product, including its risk and return features. They must also explain any option to unwind the purchase decision, which is typically within a 7 to 14 day period. In fact, 85% of transactions involving investment products are sold with such an option.

3. When selling more complex products, financial institutions must take the additional step of assessing the client’s investment knowledge or experience. If the client is assessed not to possess the relevant investment knowledge or experience, the financial institution must advise the client accordingly. However, should the client wish to proceed with the purchase against the advice, it must be escalated for higher approval within the financial institution. The client will be allowed to purchase the product after he has confirmed in writing that he has been properly informed of the risks and implications of proceeding with the transaction, and is making the purchase against the advice of the financial institution.

4. MAS reminds retail investors to understand a product’s risks and returns before committing to a purchase.

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