Why the Priips risk indicators hurt structured products

Risk ratings ignore soft barrier protection and make differentiation difficult

Tim Mortimer is managing director of Future Value Consultants

With the publication of the final draft of the Packaged Retail and Insurance-based Investment Products (Priips) regulation, the European structured products market can at last begin in earnest the labour-intensive process of implementing the seismic changes being forced on it by the rules. No task is more pressing than that of assessing which products must be badged with a given risk rating on a sliding scale from one to seven.

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