Singapore Lifts Ban on Structured Note Sales of Six Brokers

Added: (Thu Aug 26 2010)

Pressbox (Press Release) - The Singapore government on Wednesday lifted the ban against six brokerage firms, which were earlier prevented from selling structured notes after the anomalous Lehman Brother transaction two years ago.

In a statement, the Monetary Authority of Singapore (MAS) said that DMG & Partners Securities, CIMB Securities, Kim Eng Securities, OCBC Securities, UOB Kay Hian, and Phillip Securities can now sell structured products after complying with regulator’s orders to implement various measures in ensuring fair and safe marketing practices.

It will be recalled that in July 2009, the Singapore government imposed the ban against 10 erring financial institutions for allegedly selling and marketing derivatives linked to the bankrupted Lehman Brothers Banks in the United States .

Amid public outcries, the government conducted a seven-month investigation on the anomalous marketing practice, which has cost hundreds of millions of dollars to thousands of Singaporean investors.

Based on its investigation, MAS found specific failures among the institutions in ensuring that their financial advisors were properly trained before being allowed to trade and market such product.

The regulator also found other defects in the financial institutions’ systems including the imposition of risk warnings on products that were inconsistent with the pricing and prospectus statement.

In February, the government lifted the ban imposed on DBS Bank, Maybank, and the Royal Bank of Scotland; while Hong Leong Finance was slapped with a two-year ban.

On Wednesday, MAS lifted the ban against the six remaining institution, saying that the brokerage firms vowed to review and to strengthen its internal processes and guidelines for the financial advisory services provision in all its investment products.

MAS also noted that reviews conducted by external parties, which showed that they were satisfied with the implementing guidelines and other action plans by the financial institutions.

For their part, CIMB Securities executive officer Carol Fong said that the company has no immediate plans to sell structured notes, saying that they will have to reassess the market situation before taking any risks.

Meanwhile, many Singaporean analysts expressed doubt that sales of structured notes will pick up anytime soon, citing its low market appeal following the Lehman incident.

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