Skip to main content

Structured CDs examined by FINRA

FINRA is examining sales of certificates of deposit tied to derivatives after banks sold a record number of the investments last year.

The industry-backed regulator wants to make sure the so- called structured CDs, where principal is protected by the Federal Deposit Insurance Corp., are properly understood by investors given their increasing complexity and lengthening maturities, said Maria Rabinovich, a lawyer in Finra’s risk division. The watchdog issued an alert on complex products in January, without referring to the CDs. The notice avoided defining what constitutes such products, while outlining a few examples, such as those where information is not readily available about the assets they’re tied to, and so-called “steepeners,” which typically bet on the shape of the Treasury yield curve.

Demand for derivative-linked certificates of deposit has risen as the Fed holds rates below 0.25 percent for the third straight year. Yields on five-year, fixed- rate CDs have declined to 1.55 percent, the lowest level since at least June 1998, according to

Banks sold a record 1,271 of the investments in the U.S. last year, according to, a database used by the industry. Statistics on total volume are incomplete because banks aren’t required to register issuance with the Securities and Exchange Commission, and the FDIC doesn’t track the products separately.