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REGULATORY UPDATES – APRIL 2016 PRIIPS / UCITS V / MIFID II
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1. PRIIPS 1.1 European Supervisory Authorities release Final draft RTS on PRIIPs
The European Supervisory Authorities (ESAs) represented by European Insurance and Occupational Pensions Authority (EIOPA), European Banking Authority (EBA) and European Securities and Markets Authority (ESMA) have finalised the proposals for the regulatory technical standards (RTS) to be applied to the Key Information Document (KID) for Packaged Retail and Insurance based Investment Products (PRIIPs). The RTS and the accompanying impact assessment were published and submitted for endorsement to the European Commission on 07 April 2016.
The ESAs describe the form and content of the new Key Information Documents for retail investors as:
• An innovative and pioneering new approach on risks, performance and costs.
• For the first time, simple and comparable information for retail investors in all the financial sectors across the EU.
• Strong foundation for enhanced consumer protection.
Due to the tight timeframe for implementation of the regulation, the European Commission will aim to reduce the review time needed and intend to adopt the final RTS for the co-legislators' approval "before the summer break".
The RTS address the different sections of the KID and the underlying methodologies necessary for obtaining and calculating information to be included in the KID including the following:
• A mandatory template for the KID including certain mandatory texts • A summary risk indicator (SRI) comprising the seven classes and mandatory format of presentation of
SRI • Methodology for assigning each PRIIP to one of the seven classes of the SRI • Performance scenarios and presentational format of scenarios • Requirements on the calculation and presentation of costs
The ESAs will now start working on developing supporting material to assist with the implementation of the RTS across the asset management, banking and insurance sectors.
A copy of the final draft RTS can be found here.
Final draft RTS released by ESAs April 2016
Adoption of final RTS by EC early summer
Application of PRIIPs Regulation 31st December 2016
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2. UCITS V 2.1 UCITS V Update on Remuneration Policies New disclosures on remuneration policies are amongst the requirements under the UCITS V regulation which came into effect on the 18 March this year. Management companies will become subject to the remuneration code and disclosure requirements over the course of 2016.
Last month, the Financial Conduct Authority (FCA) released a policy statement where they set out the final Handbook changes affecting managers and depositaries of UCITS and alternative investment funds (AIFs). The Handbook changes cover implementation guidance on the following:
v Requirements applicable to management companies, including remuneration principles and transparency obligations towards investors
v Changes to the regime for depositaries, including eligibility criteria and capital requirements for firms acting as depositaries of UCITS
A copy of the policy statement can be found here.
3. MIFID II 3.1 Prudential Regulation Authority Consults on Implementation of MiFID II Earlier this month, the Prudential Regulation Authority (PRA) issued a consultation paper covering the implementation of MiFID II. Within the consultation paper, the PRA sets out its proposals for rules to transpose the MiFID II legislative package comprising the MiFID II Directive and MiFIR regulation.
The rule changes will affect PRA-designated banks, building societies, investment firms and their qualifying parent undertakings – financial holding companies and mixed financial holding companies, as well as credit institutions, investment firms and financial institutions that are subsidiaries of these firms.
Due to the proposed one year delay of application of MiFID II to 3 January 2018, it has not been possible to set out proposals in a number of areas within the regulation. However, in the interests of providing increased clarity, the PRA has decided to publish its proposals for implementing as much of MiFID II as possible. The policy proposals within the consultation paper therefore include:
v The extension of scope and harmonisation of the passporting regime v Systems and controls for firms who undertake algorithmic trading and provide direct electronic access
to trade venues The closing date for responses to the consultation paper falls on 27 May 2016.
A copy of the consultation paper can be found here.
In the interests of providing increased clarity, the PRA has
decided to publish its proposals for implementing as much of MiFID II as
possible.
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PRIIPS KID SERVICES FROM RR DONNELLEY
For further information on European regulations, please contact our Regulatory Solutions Manager: Patricia Myles Tel +44 203 047 6562 [email protected] www.FinancialEMEA.rrd.com
RR Donnelley (Nasdaq:RRD) helps organisations communicate more effectively by working to create, manage, produce, distribute and process content on behalf of our customers. The company assists customers in developing and executing multichannel communication strategies that engage audiences, reduce costs, drive revenues and increase compliance. RR Donnelley’s innovative technologies enhance digital and print communications to deliver integrated messages across multiple media to highly targeted audiences at optimal times for clients in virtually every private and public sector. Strategically located operations provide local service and responsiveness while leveraging the economic, geographic and technological advantages of a global organisation. __________________________________________________________________________________________________________________
LONDON & LUXEMBOURG John McCann Tel +44 203 047 6187 [email protected]
DUBLIN Robert McNamara Tel +353 1 818 9971 [email protected]
This regulatory update is for general information purposes only and RR Donnelley does not provide financial advice.
