Iosco Proposes Structured Product Rules Amid Mis-Selling Concern

A global group of regulators is proposing new rules on how sales of structured products to individual investors should be governed, amid concern buyers of the securities that combine debt with derivatives are vulnerable to mis-selling.

The International Organization of Securities Commissions, which brings together market regulators from more than 100 countries, is seeking feedback on a consultation report published yesterday on the regulation of retail structured products.

Iosco’s proposals aim to improve sales practices and disclosure for the securities, which have been criticized for being too opaque and complex. National regulators in Asia, Europe and the U.S. have been seeking to tighten rules governing structured notes since the 2008 collapse of Lehman Brothers Holdings Inc., which was a major issuer.

“Complex products, due to their nature, can be difficult for investors to understand,” said Iosco chairman Greg Medcraft in a statement. “This can lead to them being mis-sold, particularly when investors are searching for yield.”

Madrid-based Iosco is asking members to consider coordinating and aligning their regulations on structured notes, as well as the amount of information that should be disclosed to investors. Iosco is also asking national regulators to investigate banks and other distributors of the securities, to see whether they are keeping buyers informed on the performance of their investments.

To contact the reporter on this story: Alastair Marsh in London at

To contact the editor responsible for this story: Shelley Smith at

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