Academics call for changes in performance scenario rules

European regulators have introduced guidelines for a new key investor information document under Ucits IV, and are expected to extend aspects of the rules to other retail structured products. But some participants feel the use of performance scenarios is a backward step. By Alexander Campbell

European regulators want to shine a light on the murky world of retail structured products. The crucial issue, they say, is one of disclosure. Investors often did not understand the risks of certain products, overwhelmed by reams and reams of dense, legal jargon within prospectuses, designed more to protect the issuer from legal challenge than provide a clear, easy-to-understand explanation of the risks involved.

This is set to change. The European Securities and Markets Authority (Esma)