A.    Delay and amendments to level 2 measures

On 9 November 2016, the EU Commission confirmed its agreement on the postponement of the application of the PRIIPs Regulation (i.e. Regulation 1286/2014 on key information documents ("KID") for packaged retail and insurance-based investment products ("PRIIPs")). According to the legislative proposal, the entities falling within the scope of the PRIIPs Regulation will have up to 1 January 2018 ("Deadline") to produce a PRIIPs KID.

The EU Commission also asked the European Supervisory Authorities ("ESAs") to review the regulatory technical standards ("RTS") in order essentially (i) to clarify the treatment of multi-options products (MOPs) and the methodology for the calculation of future performance scenarios and (ii) to provide guidance on the use of the comprehension alert.

The review and amendment of the RTS’s provisions on transaction costs and the possibility to include past performance information in the KID were also identified by the industry as crucial issues; however, the mandate to the ESAs does not include any reference to these two points. 

The revised RTS must be submitted to the EU Commission within 6 weeks (i.e. before 22 December 2016). The Commission expects the final RTS to be in place in the course of the first semester 2017 and apply as of 1 January 2018.

B.    Possibility for Luxembourg non-UCITS funds to benefit from the exemption and to publish UCITS KIIDs instead of PRIIPs KIDs

Article 32(2) of the PRIIPs Regulation aims at extending the benefit of the exemption provided for a UCITS fund to provide a PRIIPs KID until 31 December 2019 to certain non-UCITS funds offered to retail investors. It specifies that when a Member State applies rules on the format and content of the UCITS key investor information document ("UCITS KIID") to non-UCITS funds offered to retail investors, those non-UCITS funds benefit also from the exemption.

Based on the option given to non-UCITS undertakings for collective investment ("UCIs") to produce a UCITS KIID (1), it is expected that Luxembourg UCIs will benefit from the exemption mentioned above provided that (i) they publish a UCITS-KIID-like document for each retail share class issued and (ii) their prospectus/issuing documents refer to the availability to investors of the UCITS-KIID-like document upon request or on a website, to the extent that both (i) and (ii) are complied with before the Deadline.

This position, however, may not be shared by the competent authorities of the host Member State(s) where the Luxembourg UCIs are marketed.

(1) According to Article 161(1) of the UCI Law, “A UCI, other than a UCITS, is authorised to draw up a document containing key investor information, within the meaning of this law. In that case, the document in question must contain a clear statement that the UCI which draws up the key investor information is not a UCITS subject to Directive 2009/65/EC.”