3. Things Are Getting Complicated
(Image: finews.asia)
On July 6 this year, licensed distributors and advisors in Hong Kong will effectively be required to classify all products sold as either «complex» or «non-complex» in yet another move to further investor protection.
To the industry’s delight, the Securities and Futures Commission (SFC) heeded the industry’s feedback on timeline challenges and revised its deadline last month. But other concerns loom ahead and private banks are generally pessimistic about the potential outcome.
Clients are bound to observe disagreements about product classifications from different providers (the SFC provides an exhaustive list of what is defined as «complex» but, outside of which, advises financial institutions to self-define) which could encourage distrust. Some banks already disagree with the set definitions. Some more reckon that this could eradicate «execution-only» businesses due to the cost of due diligence for a single product.
