A) EU PRIIPs / UCITS latest
1. Post-transition PRIIPs hangover
Since the pre-Christmas deluge of Q&As (c/o Luxembourg CSSF, the Central Bank of Ireland and the European Supervisory Authorities (ESAs), official PRIIPs KID announcements have calmed down.
In the aftermath of the landmark UCITS transition, FT Ignites recent leading article was a striking summary of widespread pessimism. Those expressing negative opinions included EFAMA, Better Finance and More Carrot.
2. UCITS annual update deadline pending
In the same article, the recent UCITS transition to the PRIIPs regime was said to be “further exacerbated by discrepancies between local regulatory filing deadlines“. As mentioned here previously, these emerged in the absence of specific clarity from the European Commission (despite the ESA’s urgent request).
Ambiguity persists, ahead of the pending annual update deadline for the remaining Key Investor Information Documents (KIIDs). Fund firms who will continue to produce UCITS KIIDs are still obliged to revise and file these to the required home and host national competent authorities (NCAs), no later than 17 February 2023.
However, current advice available from some local NCAs may cause confusion.
In France: a recent statement from the L’Autorité des marchés financiers (AMF) is titled ‘The key information document (KID) is now generalized to all collective investments’. It states: “The KID replaces the old KIID (Key Investor Information Document) for all collective investments since January 1 , 2023.”
No referral is made to UCITS investor distinction, nor that firms have the legal option to continue producing the UCITS KIID for non-retail investors.
By contrast, the Central Bank of Ireland’s latest UCITS Q&A states (p.32):
“Where an existing UCITS produces a PRIIPs KID, there is no requirement to submit the PRIIPs KID to the Central Bank on 1 January 2023. The first reporting/submission of these PRIIPs KIDs to the Central Bank is expected to take place in 2024. Periodic updates to such PRIIPs KIDs will only be required to be filed with the Central Bank after the first reporting exercise. Once finalised, the Central Bank will publish further details of reporting requirements for PRIIPs KIDs.”
However, the CBI’s PRIIPs KID website contains a section on ‘Regulatory Reporting Requirements of Irish Authorised Investment Funds’. This indicates:
“Annual updates to the UCITS KIID to be submitted via the ONR [Online Reporting System]. Where a PRIIPS KID is produced instead of the UCITS KIID, the PRIIPS KID should be submitted as part of the annual reporting exercise. Where a UCITS produces both a PRIIPs KID and a UCITS KIID, only the UCITS KIID should be provided.”
NB: we continue our efforts to obtain NCA clarity on UCITS pre-contractual filing, where required; we will inform you separately of any key updates we receive.
B) Other EU updates
1. AIFMD II / UCITS VI: long-term L1 changes
Last week, the European Parliament’s Economic and Monetary Affairs Committee (ECON) adopted a final report on the EC’s proposed amendments to the AIFM and UCITS Directives (i.e. ‘Level 1’).
As mentioned before, key changes will include ESMA’s updated supervisory reporting framework, alongside liquidity risk management tools and Delegation arrangements. However, the extensive due process remaining (e.g. EU trialogue discussions) means these are unlikely to be enacted until 2025.
2. AIFMD: EEA Annex IV report changes by Nov 2023
Meanwhile, ESMA have recently updated their AIFMD reporting IT Technical Guidance.
The latest updated technical specification (‘revision 5’) introduces new validation rules “making more fields mandatory or with stricter rules” in the effort to improve data quality. Reporting entities are directed to use this version to submit their required Annex IV reports “by November 2023”, with the “exact date” to be confirmed in due course.
The reference period for first set of updated reporting will be Y1,H2,Q4 or X2 2023.
There are 68 items modified within the AIFM and AIF reporting templates.
Meanwhile, ESMA have also instructed each AIFM “to contact directly the national competent authorities to know how the filling of the XML reports will be handled at national level”.
NB: Kneip will shortly contact each EEA-NCA (in order to establish their local transitioning approach to ESMA’s updated specifications in the coming months).
3. AIFMD: additional local changes also pending
a) The Dutch Authority for the Financial Markets (AFM) have notified non-EU fund managers operating locally they must begin to file additional AIFMD Annex IV reports, effective from Q1 2023, within the standard April 2023
b) The Finnish Financial Supervisory Authority (FIN-FSA) have also recently confirmed the transitional timetable of certain regulatory reporting to their new regulatory filing system. AIFMD Annex IV reporting will now move across to the new local Reporting Portal on 30 June 2023.
4. CBDF: ESMA draft notifications of cross-border marketing & management of UCITS / AIFs
ESMA continue their attempt to streamline the EU notification processes within the Cross-border Distribution of Funds (CBDF) framework.
Their recent report to the EC (106 pages) proposes a standardised approach for firms to notify NCAs of their intention to market and / or manage their AIFs and UCITS in another EU member state.
ESMA’s draft CBDF level 2 legislation includes:
- technical specification of information to be supplied by UCITS / AIF entities to their home regulator
- a set of ten communication templates to be used between fund firms and their respective NCAs
The EC will decide within three months (before 15 March 2023) whether to adopt the draft proposals (i.e. also subject to the non-objection of the European Parliament and of the Council).
The CBDF specifications will legally apply 3 months after publication in the EU OJ.