In January 2018, several new European regulations came into effect with the aim of enhancing investor protection and improving confidence in financial markets.
These include an update to the Markets in Financial Instruments Directive, known as MiFID II, and new Packaged Retail Insurance and Investment based Products regulation, or PRIIPs, which we’re going to explain here.
The aim of the PRIIPs regulation is to help retail investors to better understand and compare the key features, risks, rewards and costs of different PRIIPs.
Examples of products covered by the PRIIPs regulation include derivatives such as FX Forwards.
So what is the main impact of the PRIIPs regulation?
Manufacturers and distributors of PRIIPs are required to prepare a key information document, or KID, for each PRIIP that they produce and publish it on their website.
The KID is not marketing material. It is a free of charge, stand-alone, standardised document which must be provided to Retail investors in good time before any transaction is concluded.
So what will the KID tell me and how will it benefit me?
A KID will provide you with essential information such as a product description, costs, potential risks and performance of the product to enable you to make an informed decision. You will also be able to compare similar products on their risks, costs and performance.
To discuss this topic further, or to gain a greater understanding of FX products and services from Barclays, please speak to your local relationship director or visit our website barclayscorporate.com.