thewealthnet     About Us    |    FAQs    |    Contact Us
  Advanced Search       RSS Feed  twitter  linkedin 
Welcome to thewealthnet    |   Europe, Middle East & Africa Get The App   |   Login
  Thu 2nd Apr 2015  |    Make this my homepage  
Subscribe now!
Credit Cards Accepted
World Map
UK regulator restricts sale of contingent convertible securities
05/08/2014 , News Team

High net worth or sophisticated investors are among the few still able to be sold contingent convertible securities (CoCos) after the UK regulator acted to restrict their sale.

From 1 October 2014 these products will be banned from the mass retail market, the Financial Conduct Authority has ruled, in what is the first case of it using new consumer protection powers.

The temporary move will also allow institutional and professional investors to use CoCos. The restriction lasts for one year until 1 October 2015. There will be a consultation on permanent rules late in the year.

The FCA said that the UK market for CoCos is in its early stages, but that it expects more firms to issue these investment products in the future.

“CoCos can be written off (in part or entirely) or converted into equity when the issuer’s capital position falls, while issuers can have unusually broad discretion in relation to coupon payments making it extremely difficult for investors to assess, understand and price CoCos. At present there is little experience of how CoCos operate in practice,” the FCA said in a statement.

Whilst the restriction is in place the regulator said it will work with issuers to ensure the sale of these instruments is correctly targeted.

The move follows announcements from the European Securities and Markets Authority and Joint Committee of European Supervisory Authorities highlighting the risks of CoCos and firms responsibilities when selling them. 

Poor   Average   Good   Excellent
thewealthnet archives contain 40,364 articles dating back to 1997,making it the largest single source of information on the wealth management industry world-wide. To search for more articles, please click here.


© This article originally featured on thewealthnet. It is protected by international copyright law. If you copy this article illegally, you will be liable to prosecution. All rights in and relating to this article are expressly reserved. No part of this article may be reproduced, stored in a retrieval system or transmitted in any form or by any means without written permission from the publishers.

    Latest Headlines:    by Topic | All News
  Advertise   |   Contribute   |   Press Release   |   Terms of Use   |   Privacy   |   Contact Us Copyright Pam Insight Ltd., All Rights Reserved