All too often in recent editorials I have highlighted regulatory concerns. This month I feel obliged to do so again. The problem, it seems, is that no matter what regulation rears it head, market participants - and indeed the regulators themselves - appear somewhat confused about the implications.
This issue's cover story focuses on the Market in Financial Instruments Directive (MiFID), which comes into force across Europe in November 2007. The directive could spell the end of the line for distributors selling structured investments without advice, according to some market participants at least. This could be a real blow for distributors such as the Post Office in the UK and British retailers such as Tesco and Marks & Spencer. Then again, if others are to be believed, the directive may not have such a dramatic effect after all. The issue could easily be cleared up by the UK's Financial Services Authority, but because the regulator is still in discussions with other EU member states over various issues relating to the directive, clarity on the subject will take some time to arrive.
It's not all doom and gloom though. New entrants are flocking to the market. Last month, for example, Noble Group in London established a structured products presence, and Malaysia's Hong Leong Bank Berhad became the first local commercial bank in the country to officially launch structured products.
What's more, I was quite pleased to receive my copy of Investment Times last month. The Hargreaves Lansdown Asset Management publication, which reviews new fund offerings for the UK market, has never to my knowledge mentioned structured products. This month, however, it featured a HSBC product. Investment Times is distributed to many of thousands investors across the country - many of whom will be clueless about what a structured product entails.
Even if the UK's mass retail distribution channels do suffer under MiFID, such developments as the Investment Times plug can only be good news for the future development of derivatives-based investments.