HSBC and its majority-owned Hang Seng bank have both received regulatory authorisation for documents offering equity linked investments (ELIs) to retail investors within the last month and are understood to be selling the products to individuals via in-house advisers.
The offers are for non-capital protected unlisted bull equity-linked investments linked to single stocks, which behave like discount certificates, paying at maturity (typically two months) a specified amount provided the underlying has not fallen below a certain level. Otherwise the losing asset is returned in cash or shares.
There appears to be some confusion over how the products are presented to clients under new regulatory guidelines, as reported by SRP at the beginning of the year.
In keeping with suggestions from the central bank (HKMA) and the Securities and Futures Commission (SFC), meetings are now audio recorded. However, SRP researchers were told by bank staff that they would not be able to see hard copy documentation until they had purchased the products, although they were allowed to have them described in detail.
When one researcher said he would like to have a printed example of the product he was told that written descriptions could not be given out as they might be perceived as solicitations for business.
The new documents, which follow the updated guidelines such as highlighting product risks on the front page, are the first to appear as publicly authorised on the SFC's website since the collapse of Lehman Brothers last year.
These appear in Recent Additions (Hong Kong).