Improved transparency for structured products
The Committee and members of SSPA, the Swiss Structured Products Association, are further improving structured product fee transparency: Beginning March 1, 2015, issuers will state product distribution fees. Mandatory disclosure is part of the new Guidelines on Informing Investors about Structured Products (see press release of SBA), issued by the SSPA together with the Swiss Bankers Association (SBA). The SSPA is also participating in Europe-wide cost transparency discussions with eusipa, the European umbrella association. Steps such as these are designed to help improve structured product cost transparency. At the same time a new, Europe-wide, investor-friendly, easy-to-understand index figure, recognized by the supervisory authorities, will be launched. SSPA members are free to issue presently available key cost figures for their products.
Zürich, September 10, 2014. The SSPA has for some time discussed ways to render structured product prices more transparent and readily understandable. Discussions by the SSPA Committee regarding structured product key figures, including Total Expense Ratio (TER) and Issuer Estimated Value (IEV), are part of the process.
As a first step toward greater transparency, SSPA members will state structured product distribution fees, beginning March 1, 2015. Distribution fees include fees structured product issuers include in the issue price, such as compensation paid to distribution partners. As SSPA President Daniel Sandmeier explained: “The SSPA and its members wish to further enhance structured product transparency. In a significant first step distribution fees included in the product price will be stated, as investors should be aware of distributors’ financial incentives for marketing the products concerned.” Beginning March 1, 2015, distribution fees as a percentage of the issue price will be stated in all simplified prospectuses.
New European cost index planned
In a second phase, SSPA, in cooperation with European umbrella association eusipa, will launch an industry-wide cost index that clearly and openly states product costs included in product prices. SSPA Vice President Georg von Wattenwyl formulated the industry’s objective thus: “Current efforts are a good start for creating a cost index. Past experience helps optimize the index as a European industry standard that renders structured product costs and performance ever more transparent and understandable for investors.” A Europe-wide cost index will make the structured products industry one of the most transparent in the financial markets.