Structured products, once the domain of institutional investors, have entered the radar of the retail investment community. This has caused excitement and concern in equal measure. The explosion in the number of high-net-worth (HNW) individuals, combined with increasingly sophisticated tastes among retail investors, has created a demand for more tailored and complex investment opportunities. Recently, though,the liquidity crisis forced questions about the ability of retail to understand the potential risks of investing in these vehicles. For a while it seems that structured products, as well as their point of origination and distribution, will come in for closer scrutiny. Rather than being a bad omen, this process may actually complement existing initiatives to bring clarity to

an opaque market. It may ultimately ensure the market’s long-term growth.

While structured products for the retail market may only now be creating waves in the broader business community, it is by no means a new initiative. Financial institutions in the US and Europe spotted the potential in European retail markets and leapt into action some time ago. There are

several jurisdictions where local regulation caters to these products. Germany, the Netherlands and Switzerland all have reasonably mature markets for retail-structured products. In addition, the growth in HNW individuals in areas such as Russia and other emerging markets provides interesting potential. The UK market in retail-structured products has historically been small. Nevertheless, it is

growing in both size and significance. London is rapidly establishing itself as the centre of global innovation.

The matter raises an important question: is it the responsibility of the originator or the distributor to ensure that the retail market is sold a product which it understands and which matches its appetite for risk?