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Responding to CESR’s call for evidence on technical issues relating to Key Information Document (KID) disclosures for UCITS, the EBF has some more fundamental concerns with regard to the calculation of a synthetic indicator. An accompanying narrative description is therefore indispensable to provide additional explanations and help investors interpret and put into context the
The Federation points to the fact that an indicator based on past volatility has a limited validity as such. In addition, it cannot be used for structured funds. CESR could therefore consider deriving the synthetic indicator instead from value-at-risk models.
EBF also notes that as KID-style disclosure documents for other kinds of retail investment products are currently under discussion, the EBF considers that it might be necessary to reconsider the set-up of the UCITS KID.
The European Banking Federation calls on CESR to bear in mind that the fundamental objectives of the KID is to
In some cases CESR considers a trade-off between a ‘more scientific’, and a ‘more understandable’ approach, EBF notes. Keeping in mind that the nature of the document as such is not scientific, it justified a priority to give preference to that option which is clearer and more easily understandable for less experienced retail investors, the Federation argues.
The full response is attached below.