Reuters: Regulatory News: Singapore wants new rules for retail investment products

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Singapore wants new rules for retail investment products May 28th 2012, 11:08 SINGAPORE | Mon May 28, 2012 7:08am EDT SINGAPORE May 28 (Reuters) - Singapore's financial regulator is proposing to bring in new rules for some popular retail investment products to help safeguard investors if a broker gets into difficulties. The Monetary Authority of Singapore (MAS) wants stricter rules for firms offering unlisted derivative products such as contracts for differences (CFDs) and leveraged foreign exchange products, which can leave investors nursing big losses if the issuer or counterparty collapses. "Trading in unlisted margined derivatives involve real risks which can be difficult to assess," the MAS, the city-state's central bank, said in a consultation paper issued on Monday. "These include not only the market risk of leveraged trading but also other risks such as counterparty risk and recovery risk of customer moneys." Retail investing is hugely popular in wealthy Singapore, where interest rates are close to zero. But investors in Singapore who bought CFDs from collapsed brokerage MF Global have had trouble getting all of their margin payments back as they were held overseas at the broker's Australian arm. The collapse of Lehman Brothers led to thousands of retail investors in Singapore and Hong Kong facing big losses after they bought structured derivatives products backed by the stricken U.S. investment bank. The measures the MAS is proposing include ensuring derivatives dealers are adequately capitalised, improving the way retail investor money is recovered and forcing brokers to make more thorough disclosures about the risks attached to certain products. The consultation on the new rules will run until July 2. Link this Share this Digg this Email Reprints

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