Watch out

Watch out




The Hong Kong Monetary Authority has asked institutions to comply with regulatory requirements while selling accumulators - a high-risk financial product which caused losses worth billions of dollars two years ago.

``Authorized institutions should adopt a cautious selling approach and ensure that accumulators are only sold to customers who can fully understand the structure and risks,'' said Meena Datwani, executive director of the de facto central bank.

``The HKMA should ensure that the suitability of the recommendation or solicitation for the customer is reasonable in all the circumstances.''

The authority requested institutions to take into account the financial impact on customers as well as credit risks of sellers.

HKMA expects the products to be sold only to professional investors.

The regulator is concerned over signs of renewed accumulator selling activities, triggered by a buoyant market.

Many investors lost huge amounts of money after investing in accumulators back in 2008.

CITIC Pacific (0267) lost HK$15.5 billion from unauthorized accumulator trading on future contracts of the Australian dollar and the euro. TONY LIAW