Regulatory Alerts2024-02-23
Added · Updated
Portfolio-based Approach to Suitability Assessment: Annex 2 - Frequently Asked Questions
Regulatory guidance clarifies that registered institutions may recommend products deviating from a customer's specific risk tolerance under the Portfolio-based Approach, provided the overall portfolio remains commensurate with the customer's risk profile. Institutions are permitted to adopt flexible methodologies for assessing suitability regarding investment horizons and concentration risk, focusing on holistic portfolio liquidity and the relative size of specific accounts. Furthermore, the framework does not mandate continuous intraday monitoring, requiring only that institutions verify portfolio suitability at the point of each new transaction.
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