Investing in Products issued by Financial Institutions

Date: November 5, 2008

Risks associated with investing in these products include investment risk, market risk and liquidity risk. There is also the risk that the issuer, market-maker and/or guarantor defaulting and failing to fulfill their obligations due to deterioration in their financial position as well as the accompanying performance risk of products.

It is noteworthy that there are off-exchange traded products that are issuer-led though not listed and/or traded through exchanges. For example, CFDs or “Contracts For Difference” are equity or index derivatives that allow investors to participate in the underlying flunctuations without having to own it. Such OTC products are exposed investment risk, market risk, liquidity risk, issuer risk and counterparty risk as well, In addition, unlike exchange-traded products, which are subject to transparent standards and contract terms, the individual contractual terms may differ from issuer to issuer posing an additional dimension that investors should be alive to. The risk disclosure of such OTC products are also not subject to the standards promulgated by exchanges.

Against the current market turbulence and rapidly evolving situations, it is important for investors to adequately understand the nature and all risks associated with issuer-led products before making investment decisions.

Investors are encouraged to read literature accompanying the issued products, and in particular, to evaluate if the risks involved suit their risk appetite and investment horizon. In addition, investors should keep abreast of the impact of global developments on their investments, as well as on the issuers of the products they invest in.

The current structured product’s saga provide valuable lessons to retail investors. SIAS hopes that investors bear in mind that they are investing in a caveat emptor – ” buyer beware” market.They should be educated and well informed before making their decision on investing.

Finally, retail investors should take advantage of the risk profile analysis which advisors should perform for them.

David Gerald

President / CEO