Retail Investment Strategy: A package for the retail investor


Last May, the European Commission adopted the Retail Investment Strategy (RIS), which aims to protect retail investors, help them access European capital markets and provide them with a clear view of the return on their portfolios.

This strategy, which comprises a range of measures, is the result of the Capital Markets Union initiative launched in September 2015 to promote economic growth and employment. The Commission’s objective at the time was to increase household savings while directing traditional bank deposits to European capital markets.

Against the background of the regulations precipitated by the 2008 crisis, and a number of initiatives to promote investment in capital markets, the Commission has identified five main priorities:

  •  Simplifying the documentation required of companies when raising funds on capital markets,

  •  Developing quantitative methods and “ratings” to assess the solvency of SMEs,

  •  Supporting high-quality securitization,

  •  Promoting the development of European Long-Term Investment Funds (ELTIFs),

  •  And developing the European private placement market.

Consumer interests

The Retail Investment Strategy focuses on the interests of the consumer with the goal of promoting retail investment in a context of transparency, protection and sustainability. The measures are intended to create genuine economic growth and will amend existing European directives and regulations (MiFID, AIFMD or UCITS) as necessary. Specific regulatory and technical measures will be implemented to achieve this growth by prioritizing savings, investment and employment. Digitalization, Fintech and ESG are dominant themes.

This strategy focuses on several areas: protecting retail investors from misleading marketing, combating potential conflicts of interest in the distribution of investment products, increasing transparency and comparability of costs and, lastly, better communication on investment products and services for retail investors.

What about Luxembourg?

Looking towards Brussels, this proposal - adopted by the Commission and whose legislative text is being negotiated by the Council and Parliament under the Spanish Presidency (1 July to 31 December 2023) – is not expected to be validated under the current legislature.  A reasonable expectation would be the end of June 2024.

This focus on retail investing will be an opportunity to broaden the product offering by streamlining transparency rules and generating new possibilities for savings products: retirement and traditional funds with or without ESG criteria.

Some elements of the RIS package are specific to the European investment fund industry, a sector that is still growing and constantly seeking transparency across all financial products. This plays into the hands of Luxembourg, a leading country in the domiciliation, distribution and servicing of investment funds, which will no doubt have a significant role to play in leveraging this new strategy.

The Public Affairs Department of Societe Generale Group is closely monitoring the development of this new legislative package by taking part in discussions organized by various market associations, in particular in France where it is a major player.  

Article published in Delano.

Jean-Pierre Gomez
Head of Public and Regulatory Affairs
SGSS Luxembourg