The challenge of moving from UCITS KIIDs to PRIIPS KIDs
PRIIP-KIDs are finally coming into effect for UCITS products on 1 July 2022 and all investment and management companies of UCITS products will be required to produce PRIIP-KIDs for all their sub-funds that are distributed to retail investors at share class level.
What is a PRIIP-KID?
The PRIIP-KID is a pre-sales document intended to give potential retail investors an overview of the key features of the product to make comparisons easier. PRIIP-KIDs must be no more than a 3-page document, in plain language, in the language(s) of the country(ies) in which the sub-fund is distributed and provided for share classes distributed to retail investors.
Earlier this year, the European Supervisory Authorities delivered the draft Regulatory Technical Standards for the PRIIPs to the European Commission. As the UCITS to PRIIPs regime is effective as of 1 July 2022, asset managers will need to prepare another annual revision of the UCITS KIID in Jan/Feb 2022, in conjunction with the preparations needed in order to be ready to create PRIIPs KIDs by 1 July 2022.
Asset managers must therefore prepare for a migration of regulatory pre-contractual UCITS KIIDs to PRIIP KIDs. For managers of UCITS funds, the move to PRIIPs represents a significant challenge. The switch will bring high levels of complexity, in terms of data gathering, as well as data calculation and disclosure and will be related to an increase in workloads and costs.
What will happen to the UCITS-KIID?
UCITS-KIIDs will still be required for EU funds distributing in the UK until December 2026 and they will be required, as is the case today, for share classes sold to professional investors in the EU.
How can Waystone help?
Waystone can assist with the calculation and monitoring of data, document production as well as the disclosure of performance data on the Waystone website. In practice, this may include:
- The calculation of past performances, performance scenarios, the SRI and transaction costs
- The calculation of the performance fee data (the PRIIP requirement demands an average of past performance fees)
- The disclosure and calculation of charges data, for example, the Reduction in Yield calculation
- The monitoring of the SRI and the performance scenario data
- Monthly performance scenario calculation, updates and publication on the website
- Calendar year performance calculation and updates on the website, including charts and disclaimers
- The setting-up of the PRIIPs to comply with the regulation and any follow up on regulatory changes.
Asset managers are required to provide:
- 10 to 15 years of historical NAV or proxy data. The exact length is dependent on the share class launch date and on the Recommended Holding Period (RHP)
- As of 1 January 2022, asset managers will be required to begin storing the implicit transaction costs (the arrival prices). This data will be used by Waystone for the transaction cost calculation as of 1 January 2025.
For more information, please reach out to your usual Waystone representative or contact us below