PRIIPs KIDs: New reporting challenges for asset managers.

Enhanced regulatory technical standards from July 2022

The new PRIIPs RTS, applicable from July 2022, aim to provide clearer information to investors. Fund providers must be able to calculate and transmit PRIIPs data according to EPT and CEPT standards. This now includes for all mutual funds:

• an adjusted cost disclosure including implied transaction cost calculation
• the provision of PRIIPs KIDs and alignment with own factsheets, MIFID data and ESG reports
• For the UK, the continued provision of UK UCITS KIIDs.

Accordingly, the following adjustments are to be implemented promptly, subject to the vote of the European Parliament:

• The calculations of performance scenarios must be extended to include back tests and a history of up to 10 years (for insures up to 25 years) Here, 12 different criteria must be precisely complied with.
• The return is only to be shown over 2 holding periods.
• Implied transaction costs can be estimated with market prices according to the Full PRIIPS method or optionally until 2024 using benchmarks in the own broker environment (New PRIIPs method), however, the required 3-year history should be built up with so-called arrival prices already from 1.1.2022.
• The PRIIPs KIDs will become mandatory for asset managers in Q2 2022 after insurance companies and will replace the UCITS KIIDs.
• The PRIIPs and MiFID II data are to be harmonised, divergent cost information is to be avoided.

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As if this were not demanding enough, further challenges in regulatory reporting lie ahead.

Information on the sustainability of the funds must also be provided. This will require separate pre-contractual and periodic disclosures according to SFDR input, which are similar to the KIDs and should also be produced and distributed together for distribution.

We will be happy to advise you on further details.