KIDs in America: Priips could be headache for US issuers

Author: Amélie Labbé | Published: 26 Oct 2017

US manufactured products that are subsequently resold in Europe retail investors can create a liability headache for the original issuer in the event the product has been labelled as miss-sold.

There is currently no obligation for a US issuer to produce a three-page key information document (KID) outlining the product’s risks and payout terms if they sell outside if the European Union. But under the European Packaged Retail Investment and Insurance Products (Priips) regulation, which is due to come into force on January 3 2018, any issuer that finds itself selling to EU retail investors at any point has to provide a KID.

Priips lists financial products that may be sold to non-professional investors including insurance-based investment products, derivatives, retail structured securities as well as most investment funds. 

This poses a risk for US issuers which may not necessarily be in control of primary or secondary sales, regardless...