Product Due Diligence And the Suitability Of Minibonds: Taking the Benefit of Hindsight
This article focuses on some problems arising from applying the product due diligence requirement of the suitability rule to complex financial products. The article draws several conclusions. First, the ‘not unsuitable’ test should be adopted to reduce legal uncertainty. Second, the comparative risk...
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sg-smu-ink.sol_research-30302012-05-08T10:24:03Z Product Due Diligence And the Suitability Of Minibonds: Taking the Benefit of Hindsight CHEN, Christopher Chao-hung This article focuses on some problems arising from applying the product due diligence requirement of the suitability rule to complex financial products. The article draws several conclusions. First, the ‘not unsuitable’ test should be adopted to reduce legal uncertainty. Second, the comparative risk approach is a better choice in assessing the suitability of investment products. However, there must be further elaboration of the classification of product risk. Third, there must be a balance between risk and return to avoid risk mismatches in product design. Fourth, what have been termed minibonds raise the problem of documentation suitability. Though it is difficult to define suitable documentation, it may be worthwhile for regulators to establish some minimum standards that might have a great influence on product risk. Financial regulators may consider differentiating between financial products in assessing their suitability rather than adopting a onesizefitsall approach. 2011-12-01T08:00:00Z text https://ink.library.smu.edu.sg/sol_research/1078 Research Collection Yong Pung How School Of Law eng Institutional Knowledge at Singapore Management University structured note minibond investor protection suitability conduct of business product due diligence documentation Banking and Finance Law Commercial Law |
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structured note minibond investor protection suitability conduct of business product due diligence documentation Banking and Finance Law Commercial Law CHEN, Christopher Chao-hung Product Due Diligence And the Suitability Of Minibonds: Taking the Benefit of Hindsight |
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This article focuses on some problems arising from applying the product due diligence requirement of the suitability rule to complex financial products. The article draws several conclusions. First, the ‘not unsuitable’ test should be adopted to reduce legal uncertainty. Second, the comparative risk approach is a better choice in assessing the suitability of investment products. However, there must be further elaboration of the classification of product risk. Third, there must be a balance between risk and return to avoid risk mismatches in product design. Fourth, what have been termed minibonds raise the problem of documentation suitability. Though it is difficult to define suitable documentation, it may be worthwhile for regulators to establish some minimum standards that might have a great influence on product risk. Financial regulators may consider differentiating between financial products in assessing their suitability rather than adopting a onesizefitsall approach. |
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text |
author |
CHEN, Christopher Chao-hung |
author_facet |
CHEN, Christopher Chao-hung |
author_sort |
CHEN, Christopher Chao-hung |
title |
Product Due Diligence And the Suitability Of Minibonds: Taking the Benefit of Hindsight |
title_short |
Product Due Diligence And the Suitability Of Minibonds: Taking the Benefit of Hindsight |
title_full |
Product Due Diligence And the Suitability Of Minibonds: Taking the Benefit of Hindsight |
title_fullStr |
Product Due Diligence And the Suitability Of Minibonds: Taking the Benefit of Hindsight |
title_full_unstemmed |
Product Due Diligence And the Suitability Of Minibonds: Taking the Benefit of Hindsight |
title_sort |
product due diligence and the suitability of minibonds: taking the benefit of hindsight |
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Institutional Knowledge at Singapore Management University |
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2011 |
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https://ink.library.smu.edu.sg/sol_research/1078 |
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