Product & Services
Product & Services
Governance does not stop at the boardroom door; it travels with the product. This domain tests how disclosure, custody, valuation and conflict management attach to the products and services a licensed entity offers.
Where governance bites
- Unit trusts and private retirement schemes: manager, trustee and deed; the trustee safeguards scheme assets and can remove the manager.
- REITs: management company, trustee, and annual valuation of real estate.
- ETFs: tracking error, index licensing, and market-making arrangements.
- Sukuk: the Shariah contract structure plus a trustee acting for sukuk holders.
- Structured products: issuer credit risk and transparency of the payoff formula.
- Advisory and corporate finance services: conflicts between deal teams, research and proprietary desks, managed through information barriers.
Disclosure backbone: the prospectus under the CMSA, the Product Highlights Sheet, and the Lodge and Launch framework for specified wholesale and retail products.
Worked example
A fund manager proposes buying, for its unit trust, a bond issued by its own parent company. Reasoning: this is a related-party conflict at product level. Steps: identify the conflict (manager's group incentive versus unitholders' interest); check the deed and SC guidelines for permitted limits and the approval route; obtain an independent valuation of price and terms; secure trustee sign-off; disclose to unitholders. Only then execute. The trap is treating the purchase as routine because the bond is exchange-traded and priced.
Traps
- Assuming Lodge and Launch removes prospectus or Product Highlights Sheet obligations.
- Confusing the trustee (scheme oversight) with the custodian (safekeeping).
- Ignoring the advice-versus-suitability boundary when distributing structured products.