27 May 2021

Latest regulatory watch

Tuesday 25 May 2021

1. PRIIPS / UCITS: speculation continues; UK divergence ahead


With barely 7 months remaining of the current UCITS funds grandfather period, there still is no formal indication of when / how  the EC will proceed with the legal application of the draft PRIIPS key information document (KID) RTS obtained from the European Supervisory Authorities back in February.

Latest guesstimates of the EC’s PRIIPS public announcement vary from mid-June to early July.

Meantime, most in the funds industry now presume that, once formally approved by all EU institutions, the revised PRIIPS RTS will be applied legally after a 6-month delay (i.e. postponed until Friday 01 July 2022).   This is based on the recent (leaked) EC letter to the EU Committee on Economic and Monetary Affairs and ECOFIN council (which is still formally unpublished).

However, it should be noted that prominent recent press coverage makes no specific referral to the EC’s apparent intention to end duplicate pre-contractual disclosure for retail investment funds, only.

Hence, the fate of the UCITS KIID regime for non-retail investors remains unclear.

In addition, the interim status of the PRIIPS KID filing regime (currently discretionary per NCA), facing the obligatory UCITS IV KIID equivalent (i.e. home and host fund NCAs) is also uncertain.

Moreover, the UK Financial Services Act 2021 (passed earlier this month) empowers the Financial Conduct Authority (FCA) to directly determine the scope of the UK-PRIIPS regime (e.g. ‘appropriate’ performance information for the UK-KID) with a UK-UCITS exemption period extended up to 5 years.

In summary: there are still more PRIIPS questions than answers facing European UCITS / AIF fund firms at this stage.


2. AIFMD: AM delegation amendments pending

“We understand that delegation helps efficient management of portfolios and sourcing the right expertise. We know some stakeholders want us to clarify the rules.” 

Mairead McGuinness – European Commissioner, DG FISMA

There has been prominent media coverage of recent AIFMD comments made by the European Commissioner for EU financial services (e.g. Reuters, FT Ignites).  Last Thursday, Mairead McGuinness indicated the EU Commission will propose targeted regime changes later this year covering rules applicable for investment managers located outside the EEA (on behalf of EU investment funds, based mostly in Luxembourg and Dublin).

Last summer, ESMA made controversial pre-emptive suggestions that current EU delegation rules should be amended (i.e. in accordance to the UK’s imminent departure from the EEA financial services single market).   While acknowledging ESMA’s letter in her speech, the EU Commissioner avoided any indication whether these will form part of the EC’s finalised AIFMD II legislative proposals (i.e. currently anticipated to appear Q3 / Q4 2021).

Meanwhile, the market awaits EC publication of previous AIFMD level 1 public consultation feedback (including respondent appetite for AIFMD delegation rules applied to the UCITS fund regime).

NB: Mrs. McGuinness was speaking at the Online Annual Global Funds conference organised by the Irish Funds (IF) association, which includes Kneip as a member.


3. MiFID II: FinDatEx templates amended

Last week, FinDatEx refined both their MiFID II and ESG templates (EMT V3.0, V3.1) at the request of WM Datenservice (c/o “range of delivery values used for codification in CSV target market delivery file in WM-EMT format”).   This impacts data field: 00090_Product_Category_Or_Nature_Germany.

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