• Proposed to establish legal requirements for financial institutions (FIs) to disclose information to legal entities when they enter into complex derivative transactions.
• To eliminate existing legal gaps, protect non-financial firms' interests when entering into derivative trades, and reduce legal uncertainty for FIs operating in the market.
• Follows IOSCO September 2019 review on member efforts to deter mis-selling.

Summary

• Proposes that information such as risks should be disclosed before entering into complex derivative transactions with legal entities excluding qualified investors.
• Would welcome views on granting legal entities deemed to be qualified investors the right to request information on complex derivatives from a financial institution.
• Classifies as complex all OTC cash-settled and some OTC physically settled derivatives.
• Information should include data on the relevant derivative's nature, describe its inherent risks and potential implications of its usage in the form of scenarios.
• Makes suggestions on the qualified investor criteria, e.g., financial performance.

Effectiveness

• Comments to be received by 4 April 2020.