After the first draft was rejected by the European Parliament in September 2016, on 8 March 2017 the European Commission published a new draft of a Delegated Regulation, laying down regulatory technical standards in relation to the key information documents (KIDs) for packaged retail and insurance-based investment products (the PRIIPs RTS). It supplements the Regulation on such KIDs issued in 2014 and sets out further technical details regarding the presentation, content, review and revision of such KIDs, as well as the conditions for fulfilling the requirement to provide these KIDs.
The new PRIIPs RTS are meant to address the concerns that led to the rejection of the first draft, in particular by way of the following amendments:
- While the calculation methodology based on future performance has not changed, a fourth performance scenario (stress scenario) has been added
- The comprehension alerts have been aligned with definitions under MiFID II
- The treatment of multi-option PRIIPs has been clarified, including the use of UCITS KIID and synthetic risk and reward measures in certain circumstances (limited until end of 2019)
The insistence on excluding a historical calculation methodology (as used by UCITS KIIDs) seems to signify that the PRIIPs model will not be aligned with the existing UCITS methodology. Noticeable is also the lack of clarification in terms of the frequency with which the PRIIPs KIDs will need to be updated; this may however be provided in further Level 3 guidance documentation.
As with the first draft that was issued last year, the European Parliament and the European Council will review the PRIIPs RTS during a period of up to three months (which can be extended by a further three months). If no objections are raised, the PRIIPs RTS will enter into force twenty days after being published in the Official Journal of the EU, and subsequently apply as of 1 January 2018.
Link to PRIIPs RTS
Annexes to RTS