Editor's Letter

Suggesting that investors need a crash course in structured products is, let's face it, a little condescending. Maybe it's the market participants who need to retrain themselves

"Investor education is key to the further development of the structured products markets." This is a common mantra, repeated at conferences by structurers and distributors alike. But what is the best way of educating potential investors?

Banging on about the need for education is all well and good, but to my knowledge few institutions have really succeeded in this area. What's more, suggesting that investors need a crash course in structured products is, let's face it, a little condescending. Maybe it's the market participants who need to retrain themselves. After all, surely it's easier to reconfigure the marketing methods of a few distributors than it is to re-educate the world's entire investor base?

Thankfully, the Structured Products Association (SPA) is working on a programme that could encourage market participants to rethink how products are marketed. As I write, the New York-based association is recruiting up to five US structured products firms to participate in a 90-day pilot programme to test a new classification initiative. The objective is to demystify structured products for retail investors by making the marketing of products more transparent.

The initiative's mission statement draws an analogy with pharmaceutical industry conventions, "in which Advil, Motrin, Nuprin and others market pain relievers under proprietary brand names, but also bear the label 'ibuprofen' to aid consumer understanding." It sounds like the SPA could help move marketing practices in the right direction and we will be monitoring the study closely.

But let's not forget the role that regulators can play in educational initiatives. In Hong Kong, for example, the Securities and Futures Commission has won praise for its TV docu-dramas on the benefits - and risks - of structured products. Which brings me to a highlight of this issue: our first annual awards for Asia, in which we celebrate excellence and innovation in the region.

Looking ahead to 2007, if you have any educational initiatives that you think are of interest, then please get in touch. Until then, happy holidays and have a prosperous New Year.

Paul Lyon, [e-mail], [phone].