SGX enhances safeguards for retail investors

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#1
Will this better protect consumers? Views, please? Smile

Jul 30, 2011
SGX enhances safeguards for retail investors

Educational programme available online; system also helps brokers gauge clients' knowledge
By Yasmine Yahya

THE Singapore Exchange (SGX) has launched an online system to help brokers figure out whether their clients are knowledgeable or experienced enough to invest in complex investment products.

It has also rolled out an online education programme to help investors gain a better understanding of these products.

These initiatives were developed in response to the Monetary Authority of Singapore's (MAS') move to enhance safeguards for retail investors of complex products, the SGX said.

Under new measures that MAS announced on Thursday, all banks and brokerages will have to assess the financial knowledge and investment experience of any customer keen to buy such products starting from Jan1, next year.

The SGX 'Customer Account Review Module' aims to make this assessment process easier.

A retail investor interested in buying complex products such as exchange-traded funds (ETFs), futures or warrants, can now sign up for a free account on the SGX website. Once logged in, they can click on the link to the Customer Account Review Module to fill in details about their educational background and work and investing experience.

Banks and brokerages can then access this same module to see whether their customers have the relevant knowledge and experience to trade in complex products.

MAS has said that a customer will be approved if, for example, he has a business diploma, or has bought certain products at least six times in the past three years, or has a minimum of three years of working experience related to investment products.

If a customer is found to be lacking the knowledge or experience to invest in complex investment products, his broker can ask him to go through the new SGX Online Education programme.

The SGX has prepared seven modules under the programme, giving investors a basic overview of the features and risks of warrants, options, ETFs, exchange-traded notes, futures, certificates and callable bull/bear contracts.

Once the investor has read through all seven modules, he will be able to take a quiz to test his knowledge and he and his broker will be able to see the score.

Investors can also read through the online education modules and take the quiz without having to fill in the Customer Account Review Module.

'We would like all our investors to be well-informed of our products before they invest in them,' said SGX's chief regulatory officer, Ms Yeo Lian Sim.

'With these initiatives, investors can access in their own time and at their own pace the relevant information on specified investment products listed on both the securities and derivatives markets.'

The SGX will add new education modules to the programme as and when it introduces new products on the bourse, she added.

The Customer Account Review Module and the Online Education programme can be accessed under the 'Individual Investor' tab on the SGX website.

yasminey@sph.com.sg

My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#2
I think we need to differentiate between knowledge acquisitions and knowledge application.

Whether this will help protect consumers remain to be seen, but if it will do away with all the ugly scenes after the minibonds fiasco, I'm all for it.
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