X marks the spot

October 31, 2006 5:30 AM

Hey financial wizkids..... Are some financial products forbidden for Americans? What are X-markets (in plain english)?

Click on this Deutsche Bank's page. OK, now pick from the left hand menu some jurisdiction like Switzerland or Saudia Arabia. And.. did you get a disclaimer?

Is DB dividing the global market by jusrisdiction? What is DB offering the Swiss/Saudis/etc that Americans can't get? What are X-markets? What is structured finance? Where can I read about these things in plain english? Thanks :)

posted by ruelle to work & money (11 comments total)

Structured finance.
posted by dmt at 5:37 AM on October 31, 2006

Simple answer: It's down to local financial regulations. Financial markets are highly regulated (partly to stop outright theft, lying & money laundering) and different markets have different regulations covering the type of financial instruments available to customers.

X-markets is some snazzy branding by DB to market a range of financial products.

I work in this industry (at the moment) and it's not even remotely as exciting as some would have you believe. And then some...
posted by i_cola at 5:56 AM on October 31, 2006

Lots of stuff linked from this Wikipedia article.
posted by i_cola at 6:00 AM on October 31, 2006

seconding i_cola - but it's mainly the US regulations that have extraterritorial reach and scare the crap out of banks.

The US government has extremely strict rules about marketing financial products to US citizens. Very generally, they prohibit any marketing into the US at a retail level (institutions must go through a US broker-dealer) and there are various hoops to jump through to get at institutional investors. The legislation includes severe penalties so banks are paranoid about not letting marketing materials get into the US, in case that this counts as "marketing". The definition IIRC is something about "concerted selling effort" but the lawyers are ultra-conservative on this point.

The hardcopy documents for a securities offering are plastered with warnings that people showing them to a US citizen will go blind and have plagues visited upon their houses. The same thing goes for the web as well - the part of the disclaimer that says "In particular US persons and persons resident of other countries not displayed in the list or any picture shown are forbidden from viewing further pages." is there to prove to the US regulators that the products are not being marketed to US citizens.
posted by patricio at 6:01 AM on October 31, 2006

this has been fascinating. may i redirect this thread into the "why" direction or perhaps that deserves it's own post?

op-ed's welcome. patricio, keep talking
posted by qbxk at 7:26 AM on October 31, 2006

i_cola, patricio - this really is fascinating stuff.

Few questions:
- re: local financial regulations.
Isn't financial regulation converging? (Basel II?) So, is the American position tenable for the long term?

- re: US rules about marketing to US clients.
Are you guys saying that Banks will not propose some financial products if you happen to hold an American citizenship? Or if you chose to invest in these schemes, will you have to sign off your right to sue in case of mismanagement?
posted by ruelle at 11:00 AM on October 31, 2006

These type of products are offered in the US, they just aren't terribly popular, as they are in Europe and the Middle East.
posted by milkrate at 11:49 AM on October 31, 2006

Ruelle: In terms of Basel II (and other regulatory drivers) you are correct, they are harmonising influences to some extent, at least in terms of capital requirements, and other principles that constitute a sound financial system.

But the retail environments differ markedly, and I don't believe we'll ever see large convergence.

For example, he UK system is based on principles, while the US is "rules driven". This is a fundamental difference. The UK relies far more on self-regulation than the heavy handed American approach (SEC, etc).

Another major difference between the US and UK (the two regulatory regimes I've got experience with) - in the UK there are certain financial crimes where the burden of proof falls squarely upon the accused. That would never fly in the US; another very intrinsic difference.

Its been a very long time since I've gone through the FSA training; maybe someone with a Series 7 from the US can add a few points.

In terms of your citizenship question its more where you are doing business that's relevant. That is the legal framework the bank and yourself are operating in.
posted by Mutant at 1:20 PM on October 31, 2006

whoops! should read

...where the burden of innocence falls squarely upon the accused...
posted by Mutant at 1:25 PM on October 31, 2006

Are some financial products forbidden for Americans?

Definitely, some countries do not allow foreigners to invest in their markets.
posted by Pollomacho at 10:20 PM on October 31, 2006

OK, THANK YOU everyone from i_cola down to Mutant (nice pics!). This thread has given me a lot to read and enjoy... including perhaps a change of career direction.

Of course, if anyone has anything to add, please do so.
Thanks once again.
posted by ruelle at 11:18 AM on November 1, 2006