Requirement and Implementation | My Assignment Tutor

Annex IRegistered Institutions (“RIs”) are required to implement the following recommendations in accordance with the timetable specifiedRecommendationsl Requirement and Implementation Timetable 5 “Health-warnings” should be attached to retail structured products with embedded derivatives or to retail derivative products generally. RIs should include a “health warning” statement, printed in reasonable font size, to all existing derivative products and structured products with embedded derivatives that are being sold to investors. RIs should draw investors’ attention to the “health warning” statement when selling such products to them. Immediately 12 To provide further protection for investors, the assessment of a customer’s risk profile be separated from the sales process and be carried out by non-sales staff and that the customer be provided with a copy of the risk profile and asked to confirm his agreement that the risk profile is accurate. Mandatory requirements to audio record the assessment process should be introduced. RIs should put in place appropriate structure and procedures for the separation of risk assessment and sales process. Also adequate records (including audio records) must be maintained as evidence of the risk assessment process and confirmation of agreement to the risk assessment by the investor. As soon as possible but no later than end of March 2009. 13 The regulatory requirements at point of sale should be reviewed with a view to introducing mandatory requirements for the audio-recording of the sales process and ancillary arrangements. RIs should ensure adequate records and audit trail (including audio records) are in place to show that due selling process is being followed for all investors. As soon as possible but no later than end March 2009. 14 Where the continuous review by a registered institution of the risk ratings of the investment products it sells results in a higher risk rating being attributed to a product, the institution should disclose this to customers to whom it recommended and sold the product. This is a requirement in the HKMA circular of 28 October.1 The recommendation numbers are those referred to in paragraphs 8.1 to 8.50 of the HKMA’s Report.1


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