Asia Report

asia-colourful-wheels
Wheels of change: new regulations can put structured products on a new footing in Asia

Nearly two years after the Lehman Brothers default and the onset of the financial crisis, regulators across Asia are finalising new structured products legislation intended to bolster investor protection and close some of the loopholes so loved by practitioners.

There is no question that Asia’s regulators are still reeling from the shock of the Lehman bankruptcy, which explains the lengths that they have gone to put a legal system in place that, they hope, means retail investors never again suffer losses from complex investments they should not have been sold and which they did not understand. The regulators at the forefront of closing the door on super complexity and anything similar are those from Hong Kong and Singapore, though there has also been important action taken across the region, notably in Taiwan.

As structured products re-emerge from crisis, there are new trends to observe. Asia is potentially ripe for the full introduction of variable annuity products, which banks and insurance companies are investigating for new business. We include a review of the variable annuities and see how they could fit into the investment landscape.

Another new avenue of business, which ties in with regulators’ desire to get whatever they can listed on exchanges, is exchange-traded funds. We report from the first Art of Indexing conference in Asia, where the latest developments in ETFs in the region are reviewed and discussed, and the dire need of a regional benchmark product is made clear.

As the dust settles on regulatory intervention, it is easier to see the further development of structured products and ETFs in Asia, but the real progress is, as ever, dependent on a sustained revival in the broader financial markets. At least now a framework is in place to do sustainable business in which investors are protected.

Contents

Hong Kong Structured Products Bill ready for first reading

Desperately seeking a benchmark

Taking on variable risk

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