On 13 October, the European Fund and Asset Management Association (EFAMA) and Better Finance sent a joint letter to the European Parliament, European Commission, European Supervisory Authorities and Presidency of the Council of the EU & Financial Attachs relating to the Packaged Retail and Insurance-based Investment Products (PRIIPs) Key Information Document (KID).
As covered in the September edition of the Arthur Cox Regulatory Update, the European Parliament rejected the Commission Delegated Regulation which set out a template for the KID. The Delegated Regulation has therefore been returned to the Commission for revision.
The letter states that there are two crucial issues concerning the KID which need to be addressed. Firstly, the KID should allow the disclosure of past performance as investors should not be deprived from accessing information. Secondly, the proposed calculation methodology in respect of disclosure of fees and costs, in particular the method of calculating transaction costs, in the views of the authors, will deliver misleading results.
The letter proposes replacing the methodology with the methodology suggested by the European Supervisory Authorities in their draft regulatory technical standards and extending this to existing PRIIPs.
On 17 October, the Joint Associations Committee, which is sponsored by multiple associations with an interest in structured products, including the International Swaps and Derivatives Association (ISDA), the International Capital Market Association (ICMA), the Global Foreign Exchange Division of the Global Financial Markets Association (GFMA) and FIA, sent a letter to the European Commission, EIOPA, European Banking Authority and European Securities and Markets Authority proposing that the application of the PRIIPs Regulation be postponed for reasons similar to those outlined in the EFAMA and Better Finance joint letter.