MAS lifts ban on 6 brokers' structured notes sale

Encourages consumers to refer to "Making Sense of Structured Products" guidebook before investing in structured notes.

The Monetary Authority of Singapore (MAS) on Tuesday gave a further update on the actions undertaken by financial institutions to comply with the formal directions issued by MAS1 following its investigation into the sale and marketing of structured notes linked to Lehman Brothers, according to a MAS report.

CIMB Securities (Singapore) Pte Ltd, DMG & Partners Securities Pte Ltd, Kim Eng Securities Pte Ltd, OCBC Securities Pte Ltd, Phillip Securities Pte Ltd and UOB Kay Hian Pte Ltd have formally confirmed to MAS that they have taken measures to rectify all the weaknesses identified in MAS’ investigations. They have also reviewed and strengthened internal processes and procedures for the provision of financial advisory services across all investment products.

Under MAS’ directions, the financial institutions were required to appoint an external person to review their action plan and report on its implementation. CIMB Securities (Singapore) Pte Ltd appointed Ernst & Young LLP, DMG & Partners Securities Pte Ltd appointed KPMG LLP, Kim Eng Securities Pte Ltd appointed Stamford Law Corporation, OCBC Securities Pte Ltd and Phillip Securities Pte Ltd appointed PricewaterhouseCoopers LLP, while UOB Kay Hian Pte Ltd appointed Deloitte & Touche LLP as their external person. The external persons have completed their review, and have reported their findings and recommendations for enhancements to the financial institutions. Based on their review, the external persons are satisfied with the action plans and their implementation by the financial institutions.

The six financial institutions have publicly pledged their commitment to effectively implement various measures on an ongoing basis in order to deliver fair dealing outcomes to their customers. These include stepping up training and supervision of their staff and enhancing the policies and procedures on their sales and advisory process. MAS will hold the Board and Senior Management of the financial institutions accountable for meeting this commitment.

MAS will lift the ban on the sale of structured notes for CIMB Securities (Singapore) Pte Ltd, DMG & Partners Securities Pte Ltd, Kim Eng Securities Pte Ltd, OCBC Securities Pte Ltd, Phillip Securities Pte Ltd and UOB Kay Hian Pte Ltd with effect from 24 August 2010.

The six financial institutions are also taking steps to incorporate the proposals in the Consultation Paper on Regulatory Regime for Listed and Unlisted Investment Products issued on 28 January 2010 (“Consultation Paper”) in their policies and procedures. All six financial institutions have committed to fully implement the proposals in the Consultation Paper when they are finalised.

To help consumers make informed decisions, MoneySENSE has published a consumer guide "Making Sense of Structured Products". MAS encourages consumers to refer to this guide before deciding whether to invest in a structured note. Developed jointly with the Association of Banks in Singapore and the Securities Investors Association (Singapore), the guide explains key features of structured notes, the risks involved and what consumers should look out for when investing in such products.

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