On 8 March 2022, the Financial Industry Regulatory Authority, Inc. (FINRA) issued Notice to Members No. 22-08 (NtM 22-08) to “remind members of their sales practice obligations” for complex products and options and to “solicit comment” on effective practices and “rule enhancements” related to complex products.1
For purposes of NtM 22-08, what constitutes a “complex product” is critically important. Unfortunately, as FINRA acknowledges in the NtM, “[t]here is currently no standard definition of a ‘complex product.’” Rather, provides only a description based on prior FINRA discussions of products it perceived to be complex. Specifically, “FINRA has described a complex product as a product with features that may make it difficult for a retail investor to understand the essential characteristics of the product and its risks.”
In prior releases, FINRA has described each of the following types of products as complex:
|
In effect, under this description only plain vanilla index funds and certain long-only U.S. or developed market funds escape categorization as “complex.” As a result, nearly every broker-dealer selling or making available exchange-traded funds,…
Read complete post here:
Source link
Wanda Beck
View More PostsWanda Beck is a technology reporter who covers the intersection of business and crypto. A native of Boston, Wanda spent almost five years at The Boston25News, where she wrote extensively about the media industry's struggle to adapt to the Internet.
