Securities & Futures Commission of Hong Kong

Minimum information to be provided and warning statements

Set out below is a non-exhaustive list of examples of the minimum information on a complex product that should be provided in an easily comprehensible manner. Intermediaries should refer to this list for the purpose of complying with paragraph 6.7 of the Guidelines on Online Distribution and Advisory Platforms as well as paragraph 5.5 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.

  1. Product nature eg, convertible stock, option, bond, fund, structured product;
  2. Key terms and features of the complex product, eg, for bonds: (i) bond category; (ii) credit information; (iii) coupon and coupon frequency; (iv) maturity date; (v) special features; and for structured products: (i) product category, eg, equity-linked investment, equity-linked note, credit-linked note; (ii) maturity date; (iii) any possible adjustments to the terms and conditions of the product; (iv) investor's rights over collateral, if any;
  3. Whether the complex product is available to professional investors only;
  4. Key risks of the complex product eg, whether there is a risk of losing more than the amount invested;
  5. Worst case scenario analysis for structured products;
  6. Whether potential gain may be capped or limited;
  7. Whether the complex product is principal protected or not;
  8. Whether there is an early termination feature;
  9. Any penalty for early exit; and
  10. Whether a secondary market is available for the complex product.

Set out below is a list of the types of warning statements which should be made, where applicable. Intermediaries should refer to this list for the purpose of complying with paragraph 6.8 of the Guidelines on Online Distribution and Advisory Platforms as well as paragraph 5.5 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.

  1. A warning statement to the effect that the product is a complex product and investors should exercise caution in relation to the product.
  2. A warning statement to the effect that investors may lose more than the invested amount (if applicable).
  3. For complex products for which the offering documents or information provided by the issuer have not been reviewed by the SFC, a warning statement to the effect that the relevant offering documents have not been reviewed by the SFC and investors are advised to exercise caution in relation to the offer.
  4. For complex products described as having been authorized by the SFC, a warning statement to the effect that authorization does not imply official recommendation or that SFC authorization is not a recommendation or endorsement of a product nor does it guarantee the commercial merits of a product or its performance.
  5. Where past performance information is provided, a warning statement to the effect that past performance is not indicative of future performance.
  6. For complex products only available to professional investors, a warning statement to the effect that the product is only available to professional investors.
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