Q: Are you a structured product provider? A: Probably (according to the FCA)June 09, 2015 - 13:19
“In the context of product governance, a ‘provider’ includes persons who offer services such as portfolio management (through distributors or otherwise) as well as those who develop, manage or package products such as life insurance, general insurance or investment products.”
According to the UK regulator’s Thematic Review of Product Development and Governance, if you hold structured products in your client portfolios then you are a provider of structured products.
What does this mean?
Luckily the FCA has clear product governance guidance for structured products setting out expectations of firms operating in this market.
Generally speaking, says the regulator (page 4), firms should:
- identify the target market and then design products that meet the needs of end customers in that target market
- stress-test new products to ensure they are capable of delivering fair outcomes for the target market of end customers
- ensure a robust product approval process for new products
How can Cube help you fulfil these obligations?
Cube identifies a target market by defining risk and return objectives (Income? Growth? Volatility? Chance of Loss?)
Cube works with an independent calculation agent (Investment Product Research) to produce back tests and stress tests to produce a robust understanding of potential product outcomes using a real-world methodology. (We use resampled historic data that allows us to create a robust stress test without requiring any assumptions such as future growth, drift, risk premia and interest rates).
By using an easily auditable and dynamic online platform, Cube allows key decision makers to track product development metrics over time, using the latest market data in an easy to understand format as well as providing a benchmark information (how does this investment compare to a tracker fund held for a similar length of time? How does this investment compare to a Libor?)
To find out more, please don't hesitate to contact us on 020 3693 7435 or email email@example.com.