Fair Dealing

When I met John Bogle in Vanguard, he told me that NASDAQ requires all products traded through the exchange to pass the test of "fair dealing".

If any product is not designed to be "fair", then NASDAQ will not allow the product to be traded.

I like this concept. I hope that a similar concept should be adopted in Singapore.

In recent years, many structured products were introduced in the Singapore that were, in my opinion, not fair to consumers.

For example there was a capital guaranteed product that earned a return of only 2.1% over 5 years (or 0.4% per year) for the investor.

If the investor had invested in government bonds (which are guaranteed by the government), the investor would have earned at last 15% for the 5 years.

According to the product structure, the investor could have earned more than 2.1% under certain conditions. It was impossible for the investor to know the chance of earning more than 2.1%. The chance must be extremely slim.

In my view, such a product could not have passed the test of "fair dealing".