A distribution agreement is a contract between two parties that lays out the specific terms of an arrangement for the distribution of products or services. Structured products, on the other hand, are investment products that have been designed to meet specific needs of investors. A distribution agreement for structured products can help ensure that these tools are available to investors in a consistent and efficient manner.

Structured products can provide investors with a range of benefits, including diversification, downside protection, and the potential for higher returns. Examples of structured products include equity-linked notes, principal-protected notes, and structured deposits. These products are often complex and require specialized knowledge to understand, which is why they are typically sold through distribution channels that include banks, financial advisors, and broker-dealers.

To ensure that these products are distributed effectively, a distribution agreement can be put in place. This agreement will outline the roles and responsibilities of the parties involved, as well as the specific terms of the arrangement. Some of the key components of a distribution agreement for structured products may include:

– Product eligibility: The agreement may specify which structured products are eligible for distribution, and outline any restrictions or limitations on their sale.

– Sales targets: The agreement may set sales targets or performance benchmarks that the distributor is expected to meet.

– Compensation: The agreement will outline how the distributor will be compensated for selling the products, including any commissions or fees.

– Compliance requirements: The agreement may include provisions related to compliance with applicable laws and regulations, as well as requirements for ongoing training and education.

– Termination provisions: The agreement will outline the circumstances under which the agreement may be terminated, and the steps that must be taken to do so.

By putting a distribution agreement in place for structured products, both the product issuer and the distributor can benefit. The issuer can be assured that its products are being distributed in a consistent and compliant manner, while the distributor can benefit from having a clear roadmap for how to sell the products and earn compensation. Ultimately, a distribution agreement can help make structured products more widely available to investors, while minimizing the risks of improper sales practices.