The Construction of Suitability Obligation of Financial Institutions when Selling Structured Products: From Comparative Law Perspective

Alternative Title

由比較法觀點論金融機構之適當性義務

Publication Type

Journal Article

Publication Date

4-2011

Abstract

The purpose of this article is to examine the suitability rules regarding structured products under Taiwan law from a comparative law perspective. After the global financial crisis, Taiwan has imposed specific suitability obligations on financial institutions when they promote derivatives and structured products. However, the suitability rule is only placed in administrative regulations and its scope is also limited. In addition, Taiwan law does not distinguish different types of relationships between a financial institution and a client. Furthermore, the biggest challenge to the suitability rule is to define the meaning of ‘suitable’. This article argues that the starting point is the analysis of risk suitability. However, the analysis of return aspect should not be ignored. As to product due diligence, regulators must further venture into the review of documentation and offer more detailed guidelines to financial institutions in order to serve the purpose of the suitability rule and create an efficient mechanism for investor protection.

Keywords

Suitability, appropriateness, conduct of business, comparative law, investment advice, structured notes, derivatives, structured products

Discipline

Asian Studies | Banking and Finance Law | Commercial Law | Comparative and Foreign Law

Publication

Military Law Journal [軍法專刊]

Volume

57

Issue

2

First Page

75

Last Page

98

ISSN

0529-5483

Publisher

軍法專刋社, Jun fa zhuan kan she

Comments

軍法專刊

Additional URL

http://ssrn.com/abstract=1832126

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