SINGAPORE: The Monetary Authority of Singapore (MAS) will ban the use of the term "capital or principal protected" in all disclosure documents as well as marketing and advertising materials for investment products.
This is to prevent confusion among investors who may have difficulty understanding the definition of the term.
The new rule is included in the first part of MAS' response to feedback on proposed regulatory changes in the
"The prohibition is not intended to discourage the selling of products that are structured with the objective of returning full principal to investors at maturity," said MAS in its published responses released yesterday.
wake of the collapse of Lehman-linked products.
"Issuers and distributors should highlight to investors that these products do not unconditionally guarantee the return
of their principal investments at maturity."
On March 12, MAS issued a policy consultation paper to propose enhancements to the regulatory framework for
unlisted investment products.
The proposals focused on, among other things, promoting effective disclosure by improving the quality of information available to investors, and strengthening fair dealing in the sale and advisory process.
The second part of MAS' response will be published in the fourth quarter.
For a full report of the first part of the responses, go to: http://www.mas.gov.sg/resource/publications/consult_papers/2009/MAS%20consult%20paper%20structured%20pdt%20review.pdf
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