The FSA has published its final rules for the listing of securitised derivatives available to retail...
The FSA has published its final rules for the listing of securitised derivatives available to retail investors.
Following a consultation period, securitised derivatives, such as covered warrants and certificates, will be classified as derivatives, with effect from 1 August 2002.
The derivatives will be listed on the London Stock Exchange and will be freely traded in the same way as stocks and shares.
The products enable investors to gain exposure to an underlying instrument, which could include shares, indices, commodities or interest rates, without having to invest directly.
FSA rules for selling the products state that investors must receive full disclosure of the risks involved and how returns are calculated. Intermediaries selling the products are required to get written acceptance from clients that the risks are understood.
The levels of risk associated with securitised derivatives vary and can include the risk of total capital loss. Now that the regulation has been resolved, the LSE can finally launch its covered warrants market, which was originally due to launch in April this year.
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