Update On Proposal For A Regulation Of The European Parliament And Of The Council On Key Information Documents For Investment Products

On July 3rd 2012, the European Commission published a proposal for a regulation of the European Parliament and of the Council on key information documents for investment products (see our newsletter of September 2012).

On November 14th 2012, the European Economic and Social Committee ("EESC") gave its opinion following consultation requests from both the European Parliament and the Council of the European Union. The EESC welcomed the proposal as this legislation will, for the first time, regulate all types of complex financial products and will ensure they are comparable, regardless of the type of manufacturer (bank, insurer or investment company). In its opinion, the EESC hopes that the recommendations will be taken on board in order to make the regulation clearer, more immediately enforceable and applicable. One of the comments relates to the simultaneous existence of the key information document ("KID") as proposed and the key investor information document ("KIID") required pursuant to Directive 2009/65/EC ("UCITS"). The EESC suggested that within two years of the entry into force of the regulation for investment products, the European Commission should be empowered to propose the merger of the two distinct models, bringing the UCITS requirements into line with those for the KID.

Further to a request from the Council of the European Union and from the European Parliament, the European Central Bank ("ECB") delivered its opinion on the proposal on December 11th 2012. The ECB welcomed the proposed regulation but made a number of comments, including that the KID should include the following elements: (i) counterparty, operational and liquidity risks affecting the investment product; (ii) sensitivity of the products'...