The European Commission's proposals to amend the Prospectus Directive create more problems than they solve, with changes to the summary definition, disclosure requirements and update rules all giving banks and industry bodies cause for concern.
Released with little fanfare at the end of September, the proposals have been top of the agenda at meetings of the International Capital Market Association (ICMA) all month, and have led to frantically arranged telephone calls to the Commission to explain exactly what's wrong with the changes.
The main concern is over the changes to articles 5(2), 6(2) and 7, which detail the requirements for the summary that is included with every prospectus. In its current form, this is a short, plain-English outline of the information in the full prospectus. It is limited to 2000 words, and includes a warning that it should be read as an introduction to the prospectus, but...