The Greek Presidency started trilogue negotiations on the regulation on Key Information Documents (KIDs), also known as Packaged Retail Investment Products (PRIPs) in early February. Since then, several technical and political meetings have taken place in order to find an agreement between the two co-legislators: the European Parliament (EP) and the Council.
The EP position differs considerably from the Council’s general approach in a number of key provisions, such as the scope or the advisory aspects contained in MiFID.
The EP and the Council are particularly divided over the “MIFID rules” introduced in the KID, as the Parliament strongly supports the inclusion of a complexity label as well as product intervention powers for the competent authorities. Europe’s banks warn that the purpose of the PRIPs proposal is to regulate the production and distribution of KIDs. Any other issue, such as product rules or risk managing rules, is already being addressed in existing pieces of legislation such as MiFID or should be dealt in other pieces of legislation after proper consultation with all stakeholders.
While the Council’s General Approach covered packaged retail investment products only, the EP proposed to extend the scope to include corporate bonds and financial instruments issued by securitisation institutions. European banks strongly believe that packaging should be the central feature of the legislation as that is where increased information will benefit investors most by comparing and choosing between substitutable products. EBF therefore supports the Council approach.
Time is running out for the Greek Presidency to successfully achieve a trilogue agreement before the EP goes in recession ahead of the European elections in May. If the EP shows flexibility on certain key aspects for the Council, an agreement is still possible. Otherwise, it will be for the Italian Presidency to strike a trilogue agreement with the newly elected MEPs.
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