SFC urges issuers to disclose risk of retail credit linked notes in time

Every reporter Li Lingxia as the global financial crisis continues to develop, investors holding credit-linked instruments need to keep abreast of the latest developments in the bill and to understand the risks that affect the investment in the instruments they hold.　　As a result, the Hong Kong Securities and Futures Commission has issued circulars reminding issuers of the risks involved in disclosing retail credit-linked instruments.　　The circular highlights the need for issuers to disclose timely the risks associated with such instruments and to present such important information in an understandable manner so that investors can make informed decisions or analyse the credit risks to be borne.　　In particular, the SFC has reminded issuers of the need to disclose detailed information to investors in a timely manner, such as the failure of overseas enterprises or the impact of the performance of bills. The circular urges the publishers to disclose a number of information, with particular reference to a credit-linked instrument with mortgage-backed securities, stating that the issuer must disclose the default of a mortgage-backed securities-related institution, as a breach of the collateral may result in an early termination of the bill,　　The amount of money that investors can get back is likely to be far below their original investment principal. At the same time, the SFC also said that investors holding retail credit-linked notes should contact distributors to obtain up-to-date information on the risks associated with the bill.