A stable, well-functioning financial market for allA stable, well-functioning financial market for allEquity-linked bonds - an evaluation of the new prospectus rules
Investors´strong interest in equity-linked bonds is continuing. In the first nine months banks and other financial institutions issued equity-linked bonds and other index-linked bonds to a value of almost SEK 38 billion.
FI has examined the information provided to clients in prospectuses and marketing brochures when they buy equity-linked bonds. FI has found shortcomings in the way that information is presented to clients. This applies foremost to how risks are described in the marketing material, complex prospectuses and inadequate information about how yields are calculated and the underlying assets which determine yield.
As a result of this study, FI will tighten up its review and supervision in the area. The more stringent review and supervision will focus on:
- Information about the advantages of an offer should be balanced against information about its risks.
- The prospectus should be written in a way that is comprehensible to normal consumers.
- There should be clear descriptions of the underlying assets or index on which the yield is based.
- The way in which the yield is calculated should be described in a consumer-friendly way in the prospectus.
FI and the Swedish Consumer Agency (Konsumentverket) share the responsibility for the supervision of marketing in the financial market, and will strengthen their collaboration regarding the supervision of the marketing of equity-linked bonds.
This study is based on one equity-linked bond from each of the following banks; Nordea, Swedbank, SEB and Handelsbanken. Between them, the banks issue the vast majority of equity-linked bonds in Sweden. FI has no reason to suspect that the information provided by these banks is of poorer quality than that of any other issuer.
