Investors should be alert to their exposure to sovereign credit risks despite the fact that the overall risk level of the global market has diminished in recent months, according to the Securities and Futures Commission (SFC) in Hong Kong.

Speaking at the American Chamber of Commerce luncheon conference, Martin Wheatley, chief executive of the SFC, said that since the onset of the global financial crisis, investors had been paying more attention to risks posed by complex financial products - such as structured products - and restructuring in the financial sector. But that misunderstanding of risks is one of the underlying causes of the recent global financial crisis.

He said recent market volatility brought upon by concerns of debt restructuring of a sovereign-backed investment company suggested that investors still may not fully appreciate some aspects of risk due to the complexity and inter connectedness of global financial markets.

He said: "Recent market volatility suggests many risks remain in the global market. The pricing of sovereign risk may not be where it needs to be. Although one set of risks may be better understood, another set of risks may be being created, even at this moment, which are not yet on people's agenda."

The SFC launched a public consultation in September on proposals to enhance investor protection regarding sales of retail investment products, including unlisted structured products. Some of the proposals include producing details of the terms of the offer of the structured product, including fees and charges; a product key facts statement, the appointment of a Hong Kong-licensed product arranger in respect of unlisted structured products issued by certain types of issuer, and daily indicative valuations of their products throughout their respective terms.

The consultation will close at the end of December.

Wheatley added: "We hope and expect that we can have a lot more input from the public so we can further fine-tune our proposals to make them as sensible and practical as possible. After all, it's a piece of regulation for all of us."