ASIC and derivatives

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I wrote a couple of weeks ago about some dodgy derivatives being flogged on prime time TV ads. One comment on my blog pointed out that ASIC (not the RBA or APRA) is the appropriate regulator of these practices. Well according to yesterday’s AFR ASIC are taking offence at some of these practices, with commissioner Greg Medcraft quoted as saying “CFD issuers often tell me that they’re a sophisticated product, yet they advertise at prime time on mass market TV, so there’s a bit of a disconnect there…often people have no idea what they’re buying.” The article goes on to say that ASIC is working with the Australian Financial Markets Association to establish standards for new-product approval processes to make sure products don’t get through to the wrong investors. I have no problem with the existence of ETFs, CFDs and leveraged forex products, the problem is to make sure that only fully informed investors are they buyers of these products.

3 Responses to "ASIC and derivatives"
  1. Maybe just ban trustees from referencing credit rating agencies in investment mandates would suffice? Ratings don’t contain new information, but might cause market dynamics if investors have to sell to fit mandates. So just break that link?

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