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Other Structured Products
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Shift in US Investors' Risk Tolerance - The US investor has become
more risk tolerant in seeking returns that can enhance those of
traditional investments. This has opened up the possibility for
offering a wider array of products that fit a particular client's
risk/return profile. For example, there are principal protection products for low
risk investors; for those with more risk tolerance, there are products with no principal protection,
but leveraged upside to a cap or high relative coupon; and for those with the highest
tolerance, there are pure leverage products through warrants
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Institutional Acceptance of Structured Products - The acceptance of
alternative investments as an asset class and the fact that certain CIOs acknowledge
the benefits of SP have given rise to using structured products as a complement
to an investment within an asset class when there is a shift in asset allocation
recommendations, as an example. Another example is when certain CIOs added commodities
as an asset class and SP was the ideal solution for gaining access.
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Securities Offering Reforms - The Securities Offering Reforms that became effective on
December 1, 2005, represent a watershed event for the SP market. Before the reforms
were enacted, you could only sell US registered notes via a preliminary prospectus
and you couldn't show anything that wasn't currently being offered. The securities
offering reform created the concept of a Free Writing Prospectus. This allows dealers
to provide a wealth of information regarding an issue before, during and after a
particular note structure is offered.
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