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' performance to effective stress scenarios; and (iii) the leveraged component of the product insofar as this component may multiply the applicable risks. In addition, the ECB recommends that the proposal should be amended so as to ensure harmonisation with other proposed European Union legislation introducing administrative sanctions, in particular by including provisions on administrative pecuniary sanctions.
Following these two opinions, the Committee of Economic and Monetary Affairs of the European Parliament ("ECON Committee") made a number of significant amendments to the draft regulation between December 2012 and February 2013
According to the summary of the meeting of the ECON Committee held in Brussels on May 27th and 28th 2013, half of the compromises had already been agreed. The voting of the ECON Committee on the proposed amendments to the draft regulation which was expected to occur on June 17th 2013 has been postponed to July 9th 2013, according to the information received from the ECON Committee. The vote in plenary of the Parliament is scheduled for September 2013.
To see all the amendments to the draft regulation, please refer
to the following links:
www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+COMPARL+PE-504.398+01+DOC+PDF+V0//EN&language=EN
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
