Prospectus Directive consultation: ‘Comprehensibility’ concerns top the agenda

Prospectuses for retail structured products should not be ‘legalistic’ or ‘overly mathematical’, says the UK Listings Authority, but can include payout formulae presented algebraically and examples to explain complex securities. It is perhaps no wonder the term ‘comprehensibility’ is causing confusion among structured products issuers, who must comply with the prospectus directive amendments by July at the latest

The UK Listing Authority (UKLA) has launched a consultation to gauge industry participants' views on some of the more subjective elements of the European Commission's Prospectus Directive.

The Prospectus Directive aims to help retail investors by providing clearer, more standardised prospectuses for the public offerings of securities. But market participants are concerned about what constitutes comprehensibility and how this can be achieved when all relevant information about the products