Editor’s letter

Paul Lyon [e-mail] [phone]

One leading distributor of structured products for the Italian retail market last month complained to me that increased scrutiny of new products by the Bank of Italy has slowed down the approval process considerably. “Product approval now takes up to twice as long in a post-Parmalat world. And we sometimes only get that approval the day before we are set to launch,” he said. “Of course, we observe the letter of the law, but lengthy waits can prove to be tedious.”

That same distributor also pointed out that regulatory requirements to provide investors with mountains of information may not be the best way to promote transparency. Instead, product specification details should be condensed to provide a more easily digestible overview, he said.

But some new regulation could prove to be more than welcome. As we report in our cover story, the European Union’s ‘Prospectus Directive’ rules, which come into force next year, could be a boon for the banks that structure investment products. The EU plans to create a single pan-European level playing field for financial products, effectively liberalising the selling of structured products in retail markets across the region.

It will be interesting to see if the rules really lead to true liberalisation. So far, opinions are divided. Dealers that structure products say most northern European countries, such as Luxembourg, Austria and the Netherlands, already uphold the principal of mutual recognition of products. It is those in the south, in countries like Italy and Spain, where they say state-level rules currently get in the way of a single market for structured products.

And as Javier Ruiz del Pozo, Madrid-based deputy director of primary markets at Spain’s securities market regulator the Comisión Nacional del Mercado de Valores, warns – “major problems could arise”.