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* Malta Better Retail Investor Information for UCITS







The Committee of European Securities Regulators (CESR) recently published its advice to the European Commission on “the content and form of Key Information
Document disclosures for UCITS”, known asKID.The new disclosure document is intended to simplify and highlight the crucial elements that a retail investor should consider when buying aUCITS. The purpose of the KID is ultimately to replace the Simplified Prospectus forRetail Investors, following further market testing to be undertaken by the European Commission. This work was launched at the request of the European Commission in April 2007, as part of its wider work to revise the UCITS Directive. CESR’s proposalwas subject to significant consultationwith market participants andEUretail consumer associations.This marks the first application of the Impact Assessment Guidelines adopted for testing by the 3L3 Committees last year.

“Stakeholders agree on the need to replace the Simplified Prospectus with a set of concise, meaningful disclosures for UCITS. As regulators, we are keen to see retail investors grasping the key information which helps them make informed judgements on risk and compare products effectively. Failure to achieve this will mean the single market in financial services for retail investors cannot advance effectively and this would be to the detriment both of market participants and ultimately retail investors who too will suffer from less choice at a time when saving and investing for your future is not a luxury any of us can afford to ignore,’’ Eddy Wymeersch, chairman of CESR, noted.
Enabling retail investors to distinguish the key information that they should consider when buying a UCITS will ensure they are better placed to make informed decisions.
The delivery of this advice to the Commission marks the culmination of the first phase in CESR’s work on key investor disclosures for UCITS and an important step forward in achieving this objective. CESR has considered the factors that are likely to make disclosures of product information useful to retail investors and, in particular, the need for such information to be short, focused, expressed in plain language and presented in a way that enables comparisons to be easily made between different offerings. Taking into account stakeholders’ views, CESR makes specific recommendations on a number of points, while in some areas proposes alternative options where testing on retail investors will be particularly important to understand better how consumers
react to particular approaches.

A general recommendation that should be noted at the outset is to rename the disclosure the Key Information Document orKID.CESR recommends that the KID should contain only the essential elements for making and carrying out investment decisions, which excludes information serving only legal or regulatory requirements.