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  • Final Draft EU Technical Standards Amending Requirements for PRIIPs Key Information Document

    The European Supervisory Authorities have published a final report and final draft amending Regulatory Technical Standards on amendments to the RTS on the presentation, content, review and revision of a standardized "key information document" and the conditions for fulfilling the requirement to provide a KID (Commission Delegated Regulation (EU) 2017/653). The RTS supplements the Packaged Retail and Insurance-based Investment Products Regulation, which introduced a requirement for manufacturers of PRIIPs to produce a KID with the intention of improving retail investors' understanding of the financial products they were purchasing.

    The ESAs were asked to review the RTS and present proposals for amending the RTS. In July 2020, the ESAs wrote to the European Commission to explain that agreement among them had not been reached on all of the proposed changes and that, therefore, the final draft amending RTS could not be submitted to the Commission. The Board of the European Insurance and Occupational Pensions Authority did not approve with qualified majority all of the proposals.

    Following receipt of a letter from the European Commission detailing its approach to the wider review of the PRIIPs Regulation, the EIOPA has approved the final draft amending RTS for submission to the Commission. The ESAs' draft final report and draft RTS include proposals to:
    • introduce new methodologies to calculate appropriate performance scenarios and a revised presentation of these scenarios;
    • revise the summary cost indicators and changes to the content and presentation of information on the costs of PRIIPs;
    • modify the methodology to calculate transaction costs; and
    • clarify the rules for PRIIPs offering a range of options for investment (known as MOPs), in particular, to identify the product's full cost implications.

    The Commission's letter to EIOPA confirms that the review of the PRIIPs Regulation will include consideration of a range of matters, including: (i) how to better align the provisions on costs disclosure across the PRIIPs Regulation, the Markets in Financial Instruments Directive and the Insurance Distribution Directive; (ii) the scope of products subject to the PRIIPs regime; and (iii) balancing the information requirements of the KID to ensure that appropriate information is provided to retail investors without being too complex. The proposed revision of the scope of products subject to the regime is of particular interest, given the unintended consequences that this ill-thought-through legislation has had for the bond markets in Europe and listed or exchange-traded derivatives globally.

    View the final draft report and final draft amending RTS.

    View the Commission's letter to EIOPA.

    View details of the letter from the ESAs to the Commission explaining the difficulties in reaching consensus.

    You may like to see our client note, PRIIPs and Capital Markets Transactions: A Better Way Forward?, 26 April 2018.

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    TOPIC: Securities