FINRA recently released Regulatory Notice 12-03: Heightened Supervision of Complex Products, outlining their increased scrutiny of a wide variety of alternative investments including structured products, inverse or leveraged exchange traded funds, and asset-backed securities. Here at SLCG, we’ve done research on each of those subjects, and have a variety of ongoing projects that bear directly on the issues highlighted by the Notice.
The products identified include:
- Asset-backed securities and non-traded REITs;
- CMS-rate linked structured products;
- ‘Steepener’ and ‘flattener’ products;
- Reverse convertibles;
- Range accruals;
- ‘Worst-of’ structured products, whose payoff is linked to basket of securities;
- Products linked to complex indexes such as the VIX;
- Principal protected notes;
- Leveraged and inverse ETFs,
- Other products with complex payoff formulas.