Structured EdgeI

In March 2012 the UK regulator (then the FSA) issued important detailed guidance for product development and governance process for structured products. A central part of this guidance was the formalising of the concept of "stress-testing" of structured products prior to issuance or on-boarding. The purpose of this is to ensure products represent value for money and have outcomes prospects suitable for the intended investor base. In 2015 the UK regulator (as the FCA) issued further guidance and an assessment of how market participants had progressed their governance processes.

In response to these regulations, FVC developed an initial reporting service for its institutional clients which it brought to market in late 2012. As our clients' experience and requirements evolved, particularly in light of the 2015 paper we developed our service to provide greater flexibility around assumptions and reporting options. We also migrated to a portal service which allows our clients to perform instant analysis of their products and track their issuance channel much more effectively. In 2016 we added calculations which will form part of the Key Investor document (KID) which will be required in the forthcoming PRIIPS European wide regulation due to be implemented in January 2018.

Our service has been adopted by many investment banks and plan managers in the UK. We believe that this is due to a combination of accurate pricing curves and up-to-date historical data, extensive modelling capability, the flexibility of analysis and reporting, compliance and workflow tools, and full support from our dedicated team of analysts.

We have also tailored this service to be relevant for other international structured products markets and regulatory regimes as a fully featured service to ensure due diligence and compliance of product issuance pipelines. The FCA was one of the first regulators to set out its requirements on structured products but similar themes have now been adopted in different countries and we believe that this is set to continue. Being able to demonstrate proper processes protects institutions from future problems around product issuance and suitability and we believe that our service provides comprehensive benefits.

More information

More information about the features and benefits of our stress testing service can be found in the attached document below.