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This study addresses certain concerns raised by the European Parliament (EP)’s ECON committee related to the development of the market for retail investments in the European Union (EU).
It aims at analysing some of the most relevant rules and practices applicable to the functioning of EU capital markets, identifying some areas for improvement, in view of the overarching objective of increasing participation and protection of retail investors to develop the Capital Markets Union (CMU). The purpose is to propose further measures to support the achievement of the goals established under the CMU Action Plan and the Retail Investment Strategy.
On 24 May 2023, the European Commission (EC) published a comprehensive package for the implementation of the Retail Investment Strategy (the so-called Retail Investment Package), which comprises:
(i) a Directive amending rules set out in the Markets in Financial Instruments Directive (MiFID II), Insurance Distribution Directive (IDD), Undertakings for Collective Investment in Transferable Securities Directive (UCITSD), Alternative Investment Fund Managers Directive (AIFMD) and Solvency II (the “Omnibus Directive Proposal”);
(ii) as well as a Regulation amending the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation, in particular with regard to rules on the key The proposals set forth therein elaborate and expand on many rules designed to protect retail investors in the EU market, taking stock from a long period of analysis and a comprehensive impact assessment.
Scope of the analysis
This study explores a number of specific, relevant areas, many of which are also covered by the Omnibus Directive Proposal itself, to support the development of a retail market for investments in the EU. More specifically, the study discusses: information document (KID). (i) a possible new regulatory approach towards inducements;
(ii) the enhancement of rules addressing the digitalisation of capital markets and the need to improve investors’ protection and confidence;
(iii) the opportunity to improve cross-sectoral integration to address legislative misalignments between, as well as quality and content of, disclosure rules;
(iv) the need to improve rules on product mapping;
(v) a (possible) reassessment of the current classification of professional and retail clients; and
(vi) the need to enhance financial literacy.