ASIC warns on hybrid securities
The rise in popularity of hybrid securities has prompted the financial services regulator to update investor education resources.
Approximately $18 billion was raised through the Australian Securities Exchange (ASX)-listed hybrid securities in an 18-month period ending in July 2013, leading the Australian Securities and Investments Commission (ASIC) to revise its consumer finance website MoneySmart in relation to the complex products.
The updated MoneySmart website explains, in layman’s terms, the risks of these securities, breaks down common terms found in hybrid prospectuses and provides case studies to demonstrate how these terms operate in practice.
“Investor education is critical in this work. Investors must think hard about whether hybrids are suitable for them, weigh up the risks, and spread the risk by diversifying,” ASIC Commissioner John Price said.
As part of ASIC’s commitment to investor education, it has developed a quiz for the MoneySmart site to encourage investors to be fully informed and comprehend the terms of hybrid offers before investing.
“ASIC is committed to addressing the concerns that these complex products present,” John Price said.
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