PRIIPS and KIDs for UCITS

Because of the extensions to the UCITS temporary exemption from providing a PRIIP KID, the ESAs subjected the PRIIPs regulations to a comprehensive review. Based on its findings, a proposal for adjustments to the Regulatory Technical Standards (RTS) was published on 30 June 2020. On 3 February 2021, the ESAs reached a consensus on the PRIIPs amendments. After having expressed reservations, EIOPA supported the proposal based on further details provided by the EU Commission on its approach to the broader review of PRIIPs Regulation. Thus, the draft RTS on amendments to the KID for PRIIPs were submitted to the EU Commission. After formal adoption be the Commission the RTS will subject to non-objection by the European Parliament and Council.

Compared those published in June 2020, there are no major changes to the draft RTS. Namely, asset managers, within a short timeframe, will have to undergo a substantial transition seeing that as of 1 January 2022, UCITS will have to prepare PRIIPS KIDs. Indeed, the disclosure rules of the new RTS are designed to make PRIIPs KIDs for UCITs fully applicable, with the aim of replacing UCITs KIIDs in the future. The investment fund industry is however lobbying for another extension of the UCITS exemption until January 2023. It is also expected that the UCITS Directive will be amended to avoid the coexistence of the PRIIPs KIDs and the UCITS KIIDs. Furthermore, in addition to providing for a greater use of historical data, the draft RTS include minor changes in the calculations, the presentation, and the class allocation structure of the Market Risk Measure. Moreover, an alternative calculation of the unfavorable, moderate, or favorable scenario for PRIIPs of category 2 - to which UCITS and AIFs also belong - is proposed.