Following release of the European Commissions (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.