Even though the association is in strong favour for a unified KID format, in the EU, JAC is “very concerned that the PRIIPs Regulation is due to apply as of 31 December 2016 and there is still no agreed form of Level 2 RTS”. And considers 3 potential options in regards to the PRIIPs legislation date:
Option a) The rejected RTS to be applied from 31 December 2016 but will be very swiftly revised, agreed politically without any meaningful consultation
Option b) The PRIIPs Regulation to be applied from 31 December 2016 with no RTS, and the RTS revised and amended with prudence, in good time.
Option c) Application of the PRIIPs Regulation to be delayed in order to allow sufficient time for the RTS to be settled. Allowing the industry to have sufficient time for review, comment, and act upon its contents.
The Association considers Option C to be the best course of action, being 2 and a half months away from the supposed deadline, giving different arguments why Option A and Option B would not be viable.
JAC concludes that the only reasonable option that would allow effective implementation of the PRIIPs Regulation, is for the application to be delayed by one year to the 3 January 2018. This would allow the level 2 RTS to be clarified, agreed, and amended while also allowing markets sufficient time to implement technical solutions and systems required to comply.
Both organizations have always been supportive of the KID (Key Information Document) for PRIIPs but could see flaws in the Regulatory Technical Standards (RTS). These crucial issues were the basis of a joint letter sent to the European Parliament, the European Commission, the European Supervisory Authorities and the Presidency of the Council of the EU & Financial Attachés.
“There are two crucial issues that need to be addressed: allowing the disclosure of past performance, and fixing the misleading disclosure of costs and fees, and in particular the calculation methodology of transaction costs. The joint letter explains why both topics need to be solved” - Peter de Proft, Chairman of EFAMA
“Past performances of an investment product are an extremely valuable piece of factual information for investors in their investment decision, if only for investors to know whether the product has made any money or not. It is very difficult to understand why investors should be deprived of such information” - Guillaume Prache, Director General of Better Finance
PRIIPsHub, together with Veneziano & Partners, has been featured in an article published in The Hedge Fund Journal. The article expands on the following headlines:
· What is a PRIIP and who is concerned with the initiative
· Impact on the UCITS KIID
· Criticism of the RTS expressed by EFAMA
· Concerns about the final draft of the RTS and how the RTSs have been rejected
· Does this mean that PRIIPs legislation will be delayed?
On the 20th of September, 24 EU member states requested a 12 month delay in the PRIIPs implementation. While all of the countries calling for a delay fully support the regulation and the aims behind PRIIPs in order to protect retail investors, some of the stumbling blocks that derailed the Level 2 regulatory technical standards (RTS) and the resulting lack of clarity on how to proceed with the implementation were cited as one of the major reasons for requesting the delay.
The countries that are a part of the objection are Germany, the United Kingdom, France, Austria, Croatia, Sweden, Ireland, Slovenia, Lithuania, Cyprus, Romania, Finland, Denmark, Portugal, the Netherlands, Malta, Estonia, Hungary, Greece, Belgium, Bulgaria, Latvia, Czech Republic and Slovakia.
We are currently waiting for determinations in regards to when the final decision will be made.