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View the article online at http://citywire.co.uk/wealth-manager/article/a745517

WMA claims victory as EU scraps share trade restrictions

by Elsa Buchanan on Apr 09, 2014 at 10:02

WMA claims victory as EU scraps share trade restrictions

The Wealth Management Association (WMA) claims 'common sense prevailed' as the European Parliament is set to adopt changes to its comprehensive regulation on investment products.

The trade body has been campaigning for amendments to the Packaged Retail and Insurance-Based Investment Products (PRIIPS) Regulation, to ensure retail investors can trade stocks, shares and other investments in real time without unnecessary delays which might have disadvantaged them.

As originally drafted, the PRIIPS Regulation would have required retail investors to return signed Key Information Documents (KIDs) for each investment before trades took place. According to the WMA, this would have meant an end to real-time share dealing in listed funds in the UK, representing 20 million-plus trades a year.

WMA chief executive Dr Tim May (pictured), said: 'This is a welcome recognition from the EU’s policymakers that consumer protection doesn’t have to come at a cost to consumer choice.'

'The lesson is that common sense, properly presented, can prevail. We absolutely respected the aims of this regulation – to protect consumers – but had to work hard to explain to policymakers what the severe unintended consequences to the markets would be.

'We had to propose changes which would safeguard the UK’s investment culture without compromising the wider aims of the EU’s institutions. It was a lonely position at times.

The new regulation is expected to win approval at the last session of this European Parliament, which meets on 15 April.

The amendments secured include the removal of the requirement to return a signed KID before making an investment transaction, recognition that discretionary fund managers act on behalf of their clients, and can therefore receive a KID on the client’s behalf and confirmation that responsibility for producing KIDs lies entirely with the manufacturers of investment products, not the investment professionals who acquire them for their clients.

Additionally, an exemption was secured for investment managers to provide the KID after a transaction, rather than before, when the transaction is requested by the client and the service is not offered face-to-face.

'We worked long and hard during this parliament to ensure legislators properly recognised the needs of the UK’s investors. Our investing culture is virtually unique in the EU: on the continent, individuals are largely content to invest in a limited range of products through banks,' May added. 

'But through a long campaign supported by UK MEPs and officials, we were able to secure the vital clauses which enable UK investors to continue to enjoy their freedom to invest as they choose.'

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