1. Postponement of the end of the UCITS exemption
Until 31 December 2021, investment fund managers and persons advising on, or selling, units of UCITS and non-UCITS which issue a UCITS KIID had a temporary exemption from the requirement to produce a PRIIPs KID (“UCITS Exemption”).
On 20 December 2021, in view of the end of the UCITS Exemption, two new legislation (“UCITS/PRIIPs Quick Fixes”) were published in the Official Journal of the EU:
- a Regulation amending the PRIIPs Regulation in order to postpone the end of the UCITS Exemption to 31 December 2022 (Regulation (EU) 2021/2259 ); and
- a Directive amending the UCITS Directive in order to prevent retail investors from receiving two different pre-contractual documents, i.e. the PRIIPs KIDs and the UCITS KIIDs (Directive (EU) 2021/2261 ).
According to the provisions of the UCITS/PRIIPs Quick Fixes:
- investment funds sold to or acquired by retail investors, that currently produce a UCITS KIID have until 31 December 2022 to produce a PRIIPs KID;
- UCITS exclusively distributed to professional investors will have the choice to issue either a UCITS KIID or a PRIIPs KID.
2. Amendments to the PRIIPs Level 2 RTS
Also in relation to the end of the UCITS Exemption, new PRIIPs regulatory technical standards (“RTS”) were published in the Official Journal of the EU on 20 December 2021 (Commission Delegated Regulation (EU) 2021/2268 ). The new PRIIPs RTS introduces changes to the existing KID PRIIPs in order to adapt it to UCITS.
The new PRIIPs RTS provide for a greater use of historical data and changes to the presentation and content of the KID, including methodologies for the calculation and presentation of risks, rewards and costs.
As regards past performance information in particular, the new RTS require certain types of investment funds and insurance-based investment products to publish information on the past performance of the product, in a standardised and comparable format, and to disclose, in the KID, where the information is available.
As regards the timing, unfortunately the application date of the new PRIIPs RTS (i.e. 1 July 2022) is not aligned with the UCITS/PRIIPs Quick Fixes package. In order to solve this issue, the EU Commission is expected to publish a new regulation in the first quarter of 2022 to change the application date of the new PRIIPs RTS.
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