The Financial Conduct Authority (FCA) will restrict firms from distributing contingent convertible securities (CoCos) to the mass retail market from 1 October 2014, in the first use of new consumer protection powers.
The FCA believes CoCos are "highly complex" and that they are unlikely to be appropriate for the mass retail market. As a result it has stepped in to temporarily restrict their distribution to only professional, institutional and sophisticated or high net worth retail investors ahead of consulting on permanent rules later this year. Christopher Woolard, FCA director of policy, risk and research said:"In a low interest rate environment many investors might be tempted by CoCos offering high headline returns. "However, they are complex and can be highly risky, and the FCA has used its...
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