16 July 2021

Latest regulatory update (PRIIPs, AIFMD II and more)

Just time for a quick catch-up on where things stand with notable EU legislation

  1. EU-PRIIPS / UCITS: further extension requested

While the European Commission (EC) have now discretely proposed a “quick fix” to extend the UCITS grandfathering exemption by six months until 30 June 2022, it is still uncertain when they will legally adopt the draft RTS PRIIPS KID supplied by the European Supervisory Authorities (ESAs) back in February.

Latest media rumours indicate this may not be for another 2 months (i.e. around the same time as the end of the current EC mini-regulation feedback period).   If confirmed, this will leave the entire EU funds industry with only 9 months to prepare for a massive, unprecedented industry transition.

The German BVI (including Kneip in their membership) are the latest fund association to declare a need for a further extension, i.e. ” at least 12 months …for a proper legal analysis and technical implementation”.

A final outcome for the 10 year-old UCITS KIID remains ambiguous (i.e. not only for non-retail EEA investors, but also EEA fund firms left to ponder a further 5 year UK-PRIIPS exemption for UCITS products).

What will prevail in due course?  Keep watching this space.


  1. EU ESG: fund firms “left in limbo”

Although largely based on a letter (unofficially leaked) last week, it is now readily accepted that the EC will delay for six months the legal application of the ESA’s RTS documents covering detailed rules for the Sustainable Finance Disclosure and Taxonomy regulations (SFDR, TR).   The EC reportedly acknowledged in advance they had “envisaged amendments” to the ESA’s current specifications.

As noted previously, this would leave fund firms facing daunting SFDR / TR disclosures on the same date as the re-scheduled PRIIPS KID update / UCITS migration deadline: Friday 01 July 2022.

Until then, asset managers remain obliged to comply with their “principles-based” entity and product disclosures required since 10 March (based on the EC’s original level 1 legislation).

The EC have yet to issue a response to the  ESA’s request for interim clarity on highlighted SFDR priority issues.  Prominent legal and regulatory intelligence firms are now highlighting widespread ESG ambiguity (amid further legislative challenges pending in 2022); one interviewee cites “the continued uncertainty is unsettling” within the industry.

NB: the EC has also recently announced a welter of additional ESG initiatives within the past week, including an updated Sustainable Finance strategy and a package of Green Deal legislative proposals.

We shall look at these in more detail shortly.

In the meantime: a reminder of the unique dual TCFD / SFDR climate-related disclosure (starting July 2023) proposed by the FCA in their continuing UK ESG regime consultation.


  1. AIFMD II: legal updates expected Nov 2021

The EC’s AIFMD II legislative proposals remain expected late-November 2021. 

At this stage, the finalised range of regime amendments remains unclear, including prospective UCITS regime alignment alongside refinements to the current Annex IV reporting framework, the imposition of liquidity management tools (LMTs) and a common supervisory reporting database.

Meanwhile, UK portfolio managers face a nervous 4 month wait to find out if there will be a significant re-structuring of the current EEA delegation model.


  1. Cross-border fund rules pending: 02 Aug 2021

Finally for now, the Cross-Border Distribution of Funds (CBDF) directive and regulation package begins to largely apply from 02 August 2021.   As cited previously, there is continued doubt surrounding Directive rules applied by local NCAs in relation to interlinked notifications required from UCITS fund firms.

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