The European PRIIPs Regulation requires the prior delivery of a Key Information Document (KID) of no more than three pages for complex financial products. This document summarizes the essential characteristics of the product, including the summary risk indicator and performance scenarios, to help the client understand the potential risks and returns.

The performance scenarios in the PRIIPs KID enable the client to concretely visualize potential gains and losses based on market movements. They include unfavorable, intermediate, favorable, and stress outcomes, thereby providing a comprehensive overview of possible financial results.

A product rated 7 on the PRIIPs risk scale presents the highest risk, combining high market volatility and significant issuer credit risk. This rating indicates that the product is likely to experience significant fluctuations in value and that the issuer may not be able to repay the invested capital.

Article 325-8 requires the professional to verify the suitability of the complex product with the client's profile. This verification is an integral part of the process: one must describe not only the product but also explain why it does or does not match the client's objectives, financial situation, and knowledge.

Liquidity risk is particularly relevant for complex financial products without an active secondary market. In such cases, clients may have difficulty selling their positions before maturity, which can lead to losses if the product must be sold below its nominal value. Even when a secondary market exists, it may be illiquid, making sales difficult.

Currency risk for a product denominated in foreign currencies refers to the potential impact of an unfavorable exchange rate movement on the final return in euros. For example, if a product is denominated in dollars, a depreciation of the euro against the dollar could reduce the return received by the investor when the funds are converted to euros.

The distinction between simple and complex products is established by Article L. 533-12-5 of the Code monétaire et financier and Annex of MiFID II. Complex products, such as derivatives and structured products, require an in-depth description due to their sophisticated mechanisms and associated risks.

Under Article 325-8 of the AMF General Regulation, the professional must verify the suitability of the product with the client's profile. If the product is too complex or unsuitable for the client's risk tolerance, the professional must describe the product while explaining why they do not recommend its subscription.