FINANCIAL INSTRUMENTS
PRODUCT MANUFACTURING
✔✔Clients have to give express permission to enter into securities financing transactions with their own financial instruments in writing with a signature .
✔✔Client financial instruments can only be used as specified in the signed agreement .
✔✔Fund firms must monitor the success rates and accuracy of declared settlement dates .
✔✔Firms manufacturing financial instruments must ensure their product does not adversely affect end clients or lead to issues with market integrity .
✔✔Staff manufacturing financial instruments should have sufficient experience to assess and evaluate the likely performance of the product .
✔✔Management should commission compliance reports on financial products with information on the distribution strategy .
✔✔Specific target markets for each financial instrument must be identified before marketing begins . This report should detail client groups for which the product is unsuitable .
✔✔New financial products should be ‘ stress tested ’ for poor outcomes in different market scenarios .
✔✔Products should be able to perform even if the product manufacturer experiences financial difficulties .
✔✔Products should be tested for their sustainability if they become commercially unviable .
✔✔Products should be tested against a higher-thananticipated demand .
✔✔Products should have a charging structure which is appropriate to the target market .
✔✔Charges for products should not impede return expectations .
✔✔Charging structures of products should be completely transparent .
✔✔Information on how products are distributed should be made available .
✔✔Firms are required to conduct a review of the financial instruments they manufacture on a regular basis , with an additional review of individual products before any re-issue or re-launch .
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