The European Commission announced today that it will formally move to postpone the entry in force of the PRIIPs Regulation by 12 months. The Commission will propose a new amending Regulation, with a changed date of application. The delay will only be formalized if the new Level 1 law is adopted by the European Parliament and European Council within the next month, as new laws must be published in the official journal of the EU at least 20 days before they can enter in force.
Given that neither Parliament nor the Council have previously requested amendments to the Level 1 law, it would be expected that both institutions expedite the amendment’s progress through the legislative process within the next month.
Assuming that both bodies respond swiftly to the proposal, the new date of application will be 31 December 2017, meaning that PRIIPs will apply simultaneously with MiFID II. Otherwise, the original Level 1 law will enter in force on 31 December 2016 without supporting Level 2 technical standards.
As a further step, the European Commission has stated that it will now work with the three European Supervisory Authorities (ESAs) to resubmit the revised Level 2 Regulatory Technical Standards (RTS). In particular, it has requested the ESAs to make targeted changes in certain areas (i.e. multi-option products, performance scenarios, comprehension alert and presentation of insurance related costs).
The expected 12 month delay gives firms more time to get ready for the complicated demands of the regulation. Additionally, the realignment of the PRIIPs and MiFID II timetables makes a more strategic approach to investor protection compliance possible. Many aspects of dealing with PRIIPS-KIDs will be relevant to MiFID II. Some MiFID II challenges, like the two-way exchange of information required between manufacturers and distributors, can also be partly addressed by PRIIPs preparation.
By coordinating the interfaces, connectivity and strategic partners required for both regulations at once, firms will be able to discover synergies in compliance requirements and reduce the internal resources required to meet them.
Phil Lynch, Head Markets, Products & Strategy at SIX Financial Information said, “More clarity about the PRIIPs implementation timetable is welcome news to the industry. However, there is still a lot for the financial industry to do as they prepare for PRIIPs and MiFID II simultaneously. With the timetables for both regulations now realigned and the fact that many aspects overlap, firms have the opportunity to look at compliance projects more strategically. SIX supports this approach with an industry utility that has been expressly designed to accommodate the long-term obligations of investor protection legislation. The flexible system allows SIX to contribute to the compliance value chain by offering key aspects of the connectivity and entitlements that will be required for compliance across a range of investor protection regulations now and in the future.”
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