The European Commission is set to delay extension to the Packaged Retail and Insurance-based Investment Products (PRIIPs) Key Investor Document (KID) requirement to UCITS funds by two years.
The decision follows opinion from the European Fund and Asset Management Association (EFAMA), which said PRIIPs regulations were “not fit for purpose”, as the proposed changes in the performance scenarios section of the KID was “misinterpreted”.
Responding to a consultation paper from the European Supervisory Authorities on proposed amendments to the PRIIPs regulation, EFAMA said the paper would not address the full extent of the PRIIPs Key Information Document (KID) flaws.
Industry observers have said the commission’s decision has come “as no surprise”.
Andre Nogueira, director of trading analytics at ITG, said: "With proposed changes being discussed on the calculations and methodologies, it wouldn’t make sense to enforce the regulations on UCITS until the changes are finalised.”
He added: “As a result, putting it aside for now and bringing UCITS in line when the PRIIPs approach has been revised is a sensible move.”
"What’s interesting about this is the length of the delay—two years seems an awfully long time to simply iron out some creases. This could suggest that the changes to PRIIPs are more complicated than expected. "
Alexander Dorfmann, senior product manager at SIX, commented: “The consultation on proposed changes to the PRIIP KID requirements to UCITS funds is yet another example of the need for firms to adopt a flexible approach to compliance in the face of regular modifications. In order to guarantee compliance, funds need to ensure that they are ahead of the game and have access to all the data and information necessary to comply."
He added: “2019 will be another year of multiple regulatory changes, challenges and enhancements both on European and national levels. Working closely with financial markets industry participants we appreciate every effort undertaken by organisations such as the European Supervisory Authorities to harmonise regulatory standards, specify a common framework and streamline the implementation efforts for the entire industry.”
