On 7 September 2021, the European Commission published delegated regulation to the PRIIPs regulation amending regulatory technical standards developed by the European supervisory authorities in the Commission Delegated Regulation (EU) 2017/653. The latter defining the presentation and content of the KID.
The main amendments of the delegated regulation can be summarised as relating to:
- New methodologies underpinning the calculation of appropriate performance scenarios and a revised presentation of said scenarios, to ensure that retail investors do not have inappropriate expectations about the potential return on investment they may receive,
- Revised summary cost indicators and changes to the content and presentation of information on the costs of PRIIPs,
- Modified methodology underpinning the calculation of transaction costs to address practical challenges that arise when applying existing rules,
- Modified rules for PRIIPs that offer a range of options for investment to ensure clarity of the information on their cost implications.
To be noted in particular, the new chapter IIa setting out specific KID requirements for certain UCITS and AIFs providing specific provisions to be contained in the KID for investment compartments, share classes, funds of funds, master feeder, as well as structured funds.
The delegated regulation is accompanied by amendments to Directive 2009/65/EC ("UCITS directive"), to avoid, from 1 July 2022, investors receiving two pre-contractual disclosure documents i.e. the PRIIPs KID and the KID.
The delegated regulation is also providing amendments to Regulation 1286/2014 (on key information documents for packaged retail and insurance-based investment products) to extend the transitional arrangement for certain investment funds laid down in Article 32 of that regulation by six months i.e. to 30 June 2022.
It allows manufacturers of PRIIPs that offer investment funds as the only underlying investment options to continue using for the purposes of drawing up PRIIPs KID, UCITS KID documents drawn up in accordance with the UCITS Directive.
The delegated regulation applies from 1 July 2022.
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