J.P. Morgan has proposed an industry standard for U.S. retail structured products that it says would increase transparency, alleviate investor confusion and facilitate easier comparison among various investments.
The proposal, submitted to the Structured Products Association, would create a standard classification system for structured products, allowing investors to quickly separate prospective investments by their respective features. The nomenclature project is expected to be adopted by other leading issuers and implemented as a pilot program in 2007.
“We have found that a significant hurdle to increased acceptance of structured investments in the United States is the difficulty for investors to compare products among different providers — and we want to help change that,” said Scott Mitchell, vice president of Structured Investments at J.P. Morgan. “A classification system with standard definitions will better serve investors as they learn about these products.”
J.P. Morgan says that retail structured products are increasingly popular investments in the U.S. According to the Structured Products Association, approximately $50 billion of structured products were issued in the U.S. in 2005, up 57% from a year earlier. J.P. Morgan has significantly expanded its offerings and currently distributes its structured products through more than 125 brokerages, up from 30 at the beginning of 2006.
“Many investment firms have adopted proprietary names for structured investments, resulting in a confusing array of terms for nearly identical products,” said Keith Styrcula, chairman and founder of the Structured Products Association. “Having the major structured product issuers rally around a proposal that creates more transparency is positive for both investors and the industry.”
J.P. Morgan proposes industry standardization for U.S. retail structured products
Classification would allow investors to quickly separate prospective investments by their respective features
- By: James Langton
- December 6, 2006 December 6, 2006
- 10:45