News

The KID has arrived

by James Chu
12/01/2018
The KID has arrived

The countdown is finally over. The key information document (KID) has arrived.

The KID is a new regulatory requirement under Packaged Retail and Insurance-based Investment Products (PRIIPs). This comes into force in the new year, and affects a range of investment products That includes structured products, structured deposits, investment trusts, some non-standard exchange traded funds (ETFs) like leveraged ETFs, and financial derivatives.

The regulator requires a KID to be produced by the manufacturer of these products. The KID needs to be shown to any retail investor who is considering the investment before any decision is made. The objective of KID is to help the end investor makes better informed investment decisions by improving transparency on these investments.

For structured products and structure deposits, the KID will be provided by the counterparty banks as they are the PRIIP manufacturers.

Months before the PRIIP regulations come into effect, Reyker has already adopted the changes and provided a similar Key Information Guide in our structured products marketing literature. Naturally, the move into KID went smoothly for us. Each Reyker structured product launched since 1 January has now included a KID provided by the counterparty bank.

The KID is a new concept for advisers and retail clients. Therefore we have produced a handy guide, which you can download from our website in our current offers section under Our Products.

As with many regulatory changes, PRIIP has been introduced with good and justifiable intentions. One feature of the KID is the reliance of simulation models prescribed by the regulator. In fact, we feel that there is an over-reliance on these models. This could result in unintended confusion among advisers and clients. As an early adopter of the PRIIP regulations, our investment team understands how the KID is put together by the counterparty banks. They are happy to answer any questions from advisers. The team will also be actively providing feedback to the industry and regulator on our view on the effectiveness of KID.

Our investment team can be contacted at investments@reyker.com. They can be reached by phone as well on 020 7397 2597.

James Chu

James Chu

James is Director of the Markets and Investments Team at Reyker. A CFA member and industry expert, James specialises in Structured Products, derivatives and development of service offerings for Reyker. A face at most industry events, James is sure to provide insight into some of the most controversial topics in the market today.