Response to FINMA’s report of December 9, 2011

SSPA, the Swiss Structured Products Association, takes exception to FINMA’s report, issued today, based on spot checks of simplified prospectuses.

The SSPA is frankly surprised at the report’s conclusion that today’s regulations are insufficient protection to structured product buyers and must be improved. Surprised because FINMA itself stated that spot checks were limited to adherence to legislative requirements such as standard format and labeling, rather than sufficient investor protection.

In the SSPA’s view, current legislative requirements and self-regulation are proven in practice. However, it is prepared to further improve investor protection within the framework of existing regulations (including in cooperation with the Swiss Bankers Association), and self-regulation, in cooperation with FINMA. The SSPA finds it irritating that FINMA has ceased altogether revising Swiss Banker Association guidelines on structured product investor information.

While FINMA’s report concludes that in most cases issuers and distributors explain fully the most important structured product risks and individual products’ profit and loss prospects and that sales documentation at the point of sale is largely satisfactory and easy to understand, FINMA seems of the opinion that both understandability and extent of individual prospectuses could be improved.

The SSPA takes this criticism seriously and, together with its members, will attempt to make the simplified prospectuses easier to understand but would be remiss in not stating that with information such as the Swiss Derivative Map, the SSPA has in recent years helped make individual structured products much easier to compare and understand.