Five industry trade associations today issued a set of principles designed to address a range of issues affecting distribution of retail structured products to individual investors.

The voluntary, non-binding principles address issues such as: product transparency; risk disclosure; fees; conflict management; the use of credit ratings; new product reviews; liquidity; suitability; proficiency; compliance; performance reporting; and tax consequences. The principles were issued for public comment on May 12 and are now being published in final form.

The so-called Joint Associations Committee that developed the principles say that they complement an earlier set of principles designed to govern the manufacturer and distributor relationship. “The second set of JAC Principles represents many months of thorough member discussion and wider syndication, and articulates the values that market participants share as they promote the continued development of a healthy market in retail structured products,” said JAC’s chairman, Timothy Hailes, managing director and associate general counsel at J.P. Morgan Chase in London.

“As with the July 2007 Provider-Distributor Principles, the key will be intelligent and proportionate application to local regimes,” Hailes added.

The JAC is comprised of the following trade associations: European Securitisation Forum, International Capital Market Association, London Investment Banking Association, the International Swaps and Derivatives Association, and Securities Industry and Financial Markets Association.