Backtesting is not the way forward for structured products

Projections represent the only way forward

Richard Jory
Richard Jory, Structured Products editor

There is peril if you look back, confusion if you look forward, but no way that you can stand still. The backtesting of structured products is considered poor form by many regulators, some of which are driven to ban the whole practice, while others express doubt about the practicality of using future projections to provide any reliable or understandable assessment of a structured product's quality.

The extent of views on backtesting range from those of the International Organization of

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