IOSCO published 'Principles on Point of Sale Disclosure' for Collective Investment Schemes
02 February 2011
The IOSCO Report analyses issues relating to requiring key information disclosures to retail investors relating to CIS4 and their distribution prior to the point of sale. It also sets out principles to guide possible regulatory responses.
This Report was produced by the Joint Group according to the Joint Project Specification on Point of Sale Disclosure to Retail Investors and approved by the Technical Committee (TC) in February 2007.
Although TCSC3 and TCSC5 mandates relate to collective investment schemes (CIS) and similar products, this Report focuses only on CIS. The Joint Group carefully considered product scope at the outset and limited it to CIS. Similar products were considered by the group, but generally these included products unique to particular jurisdictions or wrapped insurance products that may not be subject to the regulatory jurisdiction of securities regulators. Although IOSCO does not consider it appropriate to extend the scope of this paper, it does encourage regulators in the respective jurisdictions to consider how these principles could be adopted for similar products.
This Report analyzes issues relating to requiring key information disclosures to retail investors relating to CIS4 and their distribution prior to the point of sale (POS). It also sets out principles to guide possible regulatory responses. The report does not examine issues relating to the suitability of CIS and does not purport to describe or address all disclosure obligations of the intermediary (e.g., relating to general information on the intermediary's range of services, the safeguarding of client assets, client categorization or information that needs to be disclosed in the client agreement).
Transparency in the market place, particularly disclosure of information to investors, has always been a high priority and goal of regulators in seeking to ensure that markets run efficiently and with integrity. Enhancing POS disclosure, i.e. helping to ensure that investors are able to consider key information about CIS products before they invest, clearly can contribute to this goal. The recent crisis in the financial markets has highlighted the critical role that accurate, understandable and meaningful disclosure can play. This and other IOSCO projects can assist regulators in developing a path towards renewed investor trust in both the producers of financial products and the intermediaries that sell them.
© IOSCO
