Trade bodies release structured product principles

RSP Principles focus on the relationship between providers and distributors

Five trade associations have released a set of non-binding principles relating to retail structured products.

Called the RSP Principles, they focus particularly on the management of the relationship between providers and distributors, from the perspectives of firms performing either function.

The principles seek to address issues that financial services firms have found helpful to consider when performing these roles in the process of delivering structured products to retail investors. They are intended to be sufficiently broad in their applicability to provide a reference framework for retail structured products markets globally.

The principles are the product of a working group of firms, taking in the views of both distributors and providers and supported by a coalition of trade associations including the European Securitisation Forum, the International Capital Market Association, the International Swaps and Derivatives Association, the London Investment Banking Association and the Securities Industry and Financial Markets Association.

The associations initially issued the principles for public comment on April 19 and are today publishing them in final form.

Structured products include a variety of financial instruments that combine various cash assets and/or derivatives to provide a particular risk-reward profile that would not otherwise be available in the market. The exact risk-reward profile varies from instrument to instrument.

“These principles have arisen from the practical experiences of firms active in this growing product area, and will also be of great value in dialogue with regulators around the world,” said Timothy Hailes, chairman of the joint associations working group.

The principles are available on the associations’ websites.