Bondlinc’s Private Wealth Management Association (PWMA) endorsed Product Due Diligence Utility (PDDU) is now LIVE!

Why is the Partnership between PWMA and Bondlinc Important, and How Does It Affect You?

Investment advisors have to be aware of complex product requirements established by the Securities and Futures Commission (SFC), as outlined in the July 2019 version of Guidelines on Online Distribution and Advisory Platforms:

WHAT IS A COMPLEX PRODUCT?

A complex product is an investment product whose, terms, features and risks are not reasonably likely to be understood by a retail investor because of its complex structure.

Set out below are factors to determine whether an investment product is complex or not:

(i) whether the investment product is a derivative product;

(ii) whether a secondary market is available for the investment product at publicly available prices;

(iii) whether there is adequate and transparent information about the investment product available to retail investors;

(iv) whether there is a risk of losing more than the amount invested;

(v) whether any features or terms of the investment product could fundamentally alter the nature or risk of the investment or pay-out profile or include multiple variables or complicated formulas to determine the return; and

Note: This would include, for example, investments that incorporate a right for the investment product issuer to convert the instrument into a different investment.

(vi) whether any features or terms of the investment product might render the investment illiquid and/or difficult to value.

WHY IS DETERMINING COMPLEX PRODUCT IMPORTANT?

To enhance investor protection in regards to complex products, whose more complex terms, features and risks may not be easily or readily understood by a typical retail investor, the SFC extended its suitability requirements to the sale of complex products.

Financial Institutions (FIs) should determine whether a product may be treated as non-complex or complex with due skill, care and diligence. FIs should ensure key product terms and complex features are provided to the investor. There should be prominent and clear warning statement(s) on their Online Platforms, where appropriate, to warn clients about a complex product prior to and reasonably proximate to the point of sale or advice.

HOW CAN BONDLINC HELP?

our partnership with pwma

Complex Product Definition & Classification

Fulfilling regulatory requirements and disclosures should not be a competitive advantage, but a tool readily available to all Financial Institutions.

The collaboration between Bondlinc and PWMA aims to standardise and simplify Product Due Diligence requirements for Financial Institutions, and to ensure an industry-wide streamlined approach is adopted.

The partnership also seeks to increase the degree of data accuracy and competency within the market, with oversight and governance from PWMA.

Sample Factsheet & Custom COMPANY overview

HAVE YOU adhered to your product due diligence (pdd)?

Leverage on us to free up your resources for issues that matter more for you!