The service comes at a time when many financial institutions grapple with the complex and changing legal landscape around marijuana. In the USA, for example, it is has been legalised in some states but is still criminal on the federal level. As a result, in some states MRB are able to raise money via the capital markets - enabling investors to access MRB-linked securities for the first time.
The fact that MRB-related securities can span several sectors, including pharmaceutical, recreational, transport and retail, makes it complex for firms hoping to control their exposure. SIX applied relevant data sources to identify more than 30,000 securities linked either directly or indirectly to MRB.
The issue goes beyond the US. Investing in MRB poses considerable challenges for companies with some countries in Europe considering it as money laundering. As a result, it is crucial for firms worldwide to know exactly how much exposure they have to MRB-related securities, and which category the securities fall into to meet regulatory requirements.
The MRB Securities service, built on the same model as the Sanctioned Securities Monitoring Service from SIX, identifies and lists securities that are either directly or indirectly issued by listed MRB entities. This includes any related structured products, options and warrants. The service will also help financial institutions identify the risk level of any given company.
Oliver Bodmer, Senior Product Manager at SIX, said: “As MRB becomes increasingly linked to the capital markets, our clients have been asking us how to best guard against any risk of portfolio exposure. This isn’t just from a legal perspective, as ESG becomes more and more prominent in investment strategies, some investors are against their money being used for buying any securities including stocks such as alcohol, tobacco and recreational drugs. As the regulatory landscape remains uncertain, we’re pleased to be able to guide our clients through any portfolio exposure risk.”
If you have any questions, please do not hesitate to contact Julian Chan.