Global securities regulators are proposing new “suitability” standards that would define the responsibilities of brokers and others who offer complex financial products to retail or other investors who might not be able independently to assess risk. The work is part of a global effort in this area that also addresses suitability standards to govern bank product sales to similar customers, although the Basel Committee has yet to issue rules comparable to the IOSCO proposal. If finalized as proposed, the IOSCO standards would require significant change in broker-dealer activities, including those related to non-retail customers deemed less than wholly suitable for complex products.
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