The Financial Services and Markets Authority (FSMA) launches today a consultation on new rules on the distribution of structured products to retail investors. By means of 18 questions, the FSMA seeks the views of all interested parties. The consultation runs until 15 October, and its results will be taken into account when preparing a binding Regulation relating to structured products.
"After the successful launch of the moratorium on distributing particularly complex structured products, this consultation is the second step in the process of adopting a binding Regulation", says FSMA chairman Jean-Paul Servais. "The aim of our initiative is to ensure a more transparent and simpler range of products offered to retail investors," adds Mr Servais.
On 20 June, the FMSA announced a moratorium on the distribution of particularly complex structured products to retail investors. Distributors of financial products can voluntarily sign on to the moratorium. By doing so, they commit themselves not to distribute any new structured products that, on the basis of criteria defined by the FSMA, are deemed "particularly complex".
The moratorium came into effect on 1 August. The vast majority of the Belgian distributors of structured products signed on to the moratorium. The complete list of participants (French - Dutch) can be consulted on the FSMA's website. As from 1 September, financial intermediaries such as brokers and agents will also be able to sign on to the moratorium.
Today the FSMA launches the next step in the process. Via a public consultation, the FSMA asks all interested parties to make known their views on the rules to be adopted regarding the distribution of structured products to retail investors. In a consultation note, the FSMA asks what the forthcoming Regulation on structured products should look like. In 2010, there were 85 billion euros' worth of structured products in circulation in Belgium.
The FSMA seeks reactions, among other things, to the criteria it uses to determine whether or not a product should be considered “particularly complex”. It also raises the question whether the Regulation – in line with the current moratorium – should apply only to the complexity of structured products, or whether the risk associated with such products should also be a consideration.
Furthermore, the FSMA asks whether the Regulation should also concern other products that are not structured but are nonetheless complex and/or risky.
All interested parties may participate in the consultation via the FSMA's website. The consultation runs until 15 October 2011. Taking into account the answers received, the FSMA will draw up a draft Regulation. The aim is for the draft to be prepared soon after the end of the consultation.