Regulators again touch a nerve in the debate on proprietary products
With a relatively innocuous missive, securities regulators have seemingly opened the proverbial Pandora’s box. Addressing the proliferation of proprietary products — and the added conflicts they can create — the regulators have raised some important questions about the investment industry’s evolution that have yet to be addressed.
In February, the Investment Industry Regulatory Organization of Canada published a draft notice for comment that deals with so-called “non-arm’s-length investment products.”
When a dealer sells products issued either by itself or by one of its affiliates, regulatory concerns about conflicts of interest arise. The question is whether dealers can carry out effective due diligence or assess suitability.
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With a relatively innocuous missive, securities regulators have seemingly opened the proverbial Pandora’s box. Addressing the proliferation of proprietary products — and the added conflicts they can create — the regulators have raised some important questions about the investment industry’s evolution that have yet to be addressed.
In February, the Investment Industry Regulatory Organization of Canada published a draft notice for comment that deals with so-called “non-arm’s-length investment products.”
When a dealer sells products issued either by itself or by one of its affiliates, regulatory concerns about conflicts of interest arise. The question is whether dealers can carry out effective due diligence or assess suitability.
Read entire article:
James Langton
Investment Executive
May 31 2010
May 31 2010
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