New Product Examples

New Product Inquiry - Examples of What to Include

NEW PRODUCT INQUIRY - EXAMPLES OF WHAT TO INCLUDE IN YOUR RESPONSE

The following are a few hypothetical examples that are intended to be helpful in suggesting what types of products to include in the response to this inquiry.

These examples may reflect fictitious or anonymized existing products and should be considered in the context provided.

"Your firm" refers to the broker-dealer and its affiliates.

? A new index or benchmark that your firm has created, which you may license for use by others or that may be the basis for products that your firm will manufacture There are a number of indices that offer vanilla tracking of different maturities of commodity XYZ futures (e.g., one month, two months, six months), and these have existed for a number of years, but your firm has created ? one of the first indices that tracks an optimized long/short position across the term structure of XYZ futures to take advantage of contango or backwardation. Your firm is in the process of licensing its use to an exchangetraded note issuer.

? A product offering exposure to a new investment type, asset class, or novel index

?

(Investment type) Your firm is one of the first to offer its institutional and HNW customers fixed income products denominated in the curreny of an emerging market.

(Asset class) Your firm is issuing or has started selling a structured note giving accredited investors exposure to a

?

higher moment of the return distribution, skew, by linking the note's payoff to CBOE's Skew Index. While the index is not new, your firm's issuance of the note represents one of the first industry efforts to give non-

institutional customers direct exposure to skew -- an asset class that is new to them.

(Novel index) A new index, which is the first of its kind, has been launched that tracks the performance of a pool ? of life settlements. Your firm is issuing or has started selling a series of principal protected notes with payoffs

based on the performance of that index.

? A product that had been offered to institutional or select clients, but is now being offered more broadly in a format accessible to retail customers

Your firm has offered pension funds and other institutional investors a sophisticated strategy based on your ? proprietary market co-movement measures, McM 2 , which offer a rules-based approach to adjusting portfolio

positions among assets based on correlations across different asset classes, and now you have packaged a variation of this in an exchange-traded note that will be listed on the NYSE.

While your firm has offered institutions and some UHNW customers direct access to China A-Shares in the past, ? you have created the first mutual fund offering retail investors a direct investment in this highly restricted

market.

Copyright 2014 FINRA

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NEW PRODUCT INQUIRY - EXAMPLES OF WHAT TO INCLUDE IN YOUR RESPONSE

? A new version of a product in a different wrapper

?

There are a number of exchange-traded notes linked to volatility indices, but your firm is the first to offer the same type of exposure in a market-linked certificate of deposit.

? A product that introduces a material modification to existing products

?

Your firm has offered exchange-traded notes for a number of years, but you have begun issuing or distributing ETNs that are callable, which is a new feature.

? A new service or platform ? Your firm is setting up a new operation to become an authorized participant for a number of different ETFs. ? Your firm is offering securities backed lines of credits to brokerage clients

New Product Inquiry - Examples of What to Include

Copyright 2014 FINRA

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