The Joint Associations Committee has released a combined set of principles aimed at achieving fair treatment for individual investors and clarifying the roles and responsibilities of those involved in creating and distributing retail structured products It took three years for the Joint Associations Committee on Retail Structured Products (JAC) to agree on a series of guidelines that define the professional relationships that exist between the creation and distribution of structured products. That agreement was reached in July 2007, and now, four years later, the JAC has reaffirmed these principles, as well as those for managing the distributor-individual investor relationship, originally published in July 2008. "The reaffirmation has been in the pipeline for several months while people looked at the principles again, and we reviewed changes in light of what has happened over the past three or four years," says Richard Metcalfe, senior policy director at the International Swap Dealers Association in London. "The substance was pretty clearly right, and these are issues about which you cannot have too much awareness." There are two notable aspects to the reaffirmation of the principles, which were agreed upon prior to the global financial crisis. First, both sets of guidelines remain in the same form as before the crisis. "They are probably more relevant today than when we first issued them," says Tim Hailes, chair of the JAC. Second, the JAC is now a larger body thanks to the addition of more representation from structured product distributors. In 2007, the principles were put forward on behalf of the European Securitisation Forum, the International Capital Markets Association, Isda, the London Investment Banking Association and the Securities and Financial Markets Association, the last two of which are now known as the Association for Financial Markets in Europe. The expanded collective now includes the British Bankers' Association, the Asia Securities Industry and Financial Markets Association, Italy's intermediaries organisation the Associazione Italiana Intermediari Mobiliari (Assosim), the Institute of International Finance, the US Structured Products Association and the Futures and Options Association. "They have all endorsed the principles and are mailing the principles to their members, and Assosim is mailing to Consob," says Hailes. The reaffirmation comes at a time when the European Commission (EC) gets ever closer to laying down rules covering structured products for member states, and as national governments continue to implement rules, legislation and guidelines for the products. Structured product-related laws have so far been passed in Hong Kong, Singapore, Germany, France, Italy and the UK, and are being introduced in Belgium and in the US via the Dodd-Frank Act. With the speed of implementation of new national laws on structured products, the timing of the reaffirmation is astute. "More than ever, there is potential for international consistency, which is probably beneficial, but you can learn from other jurisdictions," says Metcalfe. "There is room for different emphases and styles, particularly in implementation. But everyone is conscious that this is a market that is still growing, which makes all of these principles very pertinent." Perhaps more importantly, the announcement comes ahead of the EC's next statement concerning Packaged Retail Investment Products (Prips), as well as the second incarnation of its Markets in Financial Instruments Directive (Mifid II). "We are now involved in a very active dialogue with the regulators, particularly in Europe," says Hailes. The basis of the principles is simple, as is the intent behind them - to ensure fair treatment for individual investors and, perhaps more importantly, to clarify the respective roles and responsibilities of the various parties involved in the creation and distribution process. "The industry foresaw all of the themes that have emerged after the credit crisis - including the regulatory attention," says Hailes....
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