Will the KID make Prips too risky for retail?

Author: Gemma Varriale | Published: 24 Jul 2012
Following release of the European Commission’s (EC) finalised draft rules on packaged retail investment products (Prips) on July 3, the countdown to implementation has begun. But market participants are debating whether fundamental issues stemming from the key investor document (KID) will result in Prips no longer being sold to retail investors.

While Prips could help retail investors access financial markets, the instrument can be complex to understand. Prips distributors can also face potential conflicts of interest since they are often remunerated by the product manufacturers rather than directly by retail investors.

Perceived gaps in the framework that has developed to address these risks have raised concerns over the overall effectiveness of the regulatory regime - its capacity to protect investors and ability to ensure efficient operation of markets.