KIDs for PRIIPs

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Spirit of the PRIIP Regulation - Transparency for retail investors needs to be increased specially with regards to costs, chances and risks.
The aim is to make all product types comparable by means of a uniform document.
KID should be “accurate, fair, clear and not misleading“.

In order to keep your customer business successful despite complex innovations, we accompany you professionally, technically and always personally.

Capmatix combined with LPA KID Calc service serves as a powerful KID one-stop-shop solution.

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We have built

5elements
into our KID Calc service that will create a proprietary solution for KIDs for PRIIPs results.

One-product-mask for structured investment products

Easily structure payoffs of SRPs in one product mask and thereby be able to reduce time-to-market.

Restriking for OTC derivatives

Before calculation PRIIP numbers for OTC we price OTCs in order to keep costs constant.

Structuring service

We build up a structuring and optimization service to create products given PRIIP results such as SRIs.

Ad-hoc calculations

One-click initiation of PRIIP calculations.

Regulatory expertise

Our experts are a part of EUSIPA and are always one step ahead in implementing new regulatory requirements.

Funds will be subject to mandatory application of the PRIIPs regulation in all EU member states in 2022

The Key Information Document (KID) is mandatory for PRIIP funds from January 2022.

  • 11-2014Capmatix extracts all essential parameters for KID production from input by product manufacturers.
  • 06-2015Publication of a technical discussion paper on the PRIPPs regulatory by ESAs
  • 04-2017European parliament approves final RTSon PRIIPs regulation
  • 01-2018Start of mandatory application in all EU member states e.g. for non-UCITS PRIIPs
  • 12-2018Postponement of the start of mandatory application in all EU member states e.g. for Non-UCITS funds
  • 01-2022Start of application in all EU member states e.g. for UCITS funds

Current development and next steps:

  • The ESAs (EBA, ESMA and EIOPA) are reviewing currently content aspects within the framework of the public discussion and consultation process.
  • Possible publication of additional technical guidelines in the form of FAQs in 2019.

Amendments to KIDs for PRIIPs regulation

The European Supervisory Authorities (ESAs) are currently consulting amendments regarding:

 

PRIIPs Performance Scenarios

Whether to keep the Probabilistic Approach or to move to an Illustrative Approach. In case the Probabilistic Approach is continued, the ESAs are considering changes to the calculation methodology (e.g. changes to the growth rates, instead of using the realized last 5 years) and to the presentation of the scenarios (e.g. reduce IHPs, remove/change stress scenario).

 

PRIIPs Costs

  • Presentation of costs - The ESAs are considering changes to the presentation of the costs and suggested four alternatives for the two cost tables.
  • Transaction Costs - The ESAs are suggesting a few changes to facilitate the implementation of Transaction Costs.
 

UCITS

Towards the expiry of UCITS exemption from PRIIPs the ESAs are suggesting the inclusion of various topics from the UCITS regulation into PRIIPs. In addition, the ESAs suggest to add past performance to Category 2 products (e.g. mainly for funds, similar to UCITS KIID).

 

Multi Option Products (MOPs)

The ESAs suggest when applying Article 10 b (i.e. generic KID and specific information) to select at least four “most commonly selected options” and produce an Article 10 a-like KIDs for them (to allow investors to see the “full picture” of scenarios and costs in one document).

Go live of obligation for KIDs for PRIIPs of UCITs

The European Supervisory Authorities (ESAs) are currently consulting amendments regarding:

From KIID...

Objectives and investment policy

Risk and earning profile

Costs

Previous performance

Practical information

3 instead 2 pages

Highly standardized specifications for KID Documents instead of flexible formulations

Annual & ad hoc updates in case of important changes regarding risks or future forecasts

Increased effort in terms of scope (product & data), risk, performance & cost calculations as well as updates and maintenance

…to KID

Purpose

What is this product?

What are the risks and what can I get in return?

What happens if the Issuer is unable to pay out?

What are the costs?

How long should I hold the investment and can I take money out early?

How can I complain?

Other relevant information

Highlights

June 2020 Draft Amended PRIIPs RTS: What’s inside for Structured Products?
In a letter sent by the ESAs (the European Supervisory Authorities, i.e. EBA, EIOPA and ESMA) to the European Commission, the ESAs have included a draft amended PRIIPs RTS. As the letter points out...
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PRIIPs methodology in light of COVID-19 pandemic – Does it deliver? PART 2
In the first article of this series, we compared the actual performances of several equity indices, equity ETFs and oil during the COVID-19 crisis with the PRIIP KIDs’ Stress Scenarios. We had...
Read more
PRIIPs methodology in light of COVID-19 pandemic – Does it deliver?
The PRIIPs regulation came into effect in January 2018, with intentions to help investors understand investment products behaviour and support comparison with other investment products. As COVID-19...
Read more

Features for a succesful KID production

Capmatix in combination with LPA KID Calc provides the six most important features for a successful KID production

  • Product parametrisation
  • Calculated data
  • Archiving
  • Market data
  • Life-cycle events
  • Document distribution

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