EUROPEAN UNION: ESAs Urge the European Commission to Clarify the Scope of the PRIIPs Regulation

Monday June 10 2019

On 7th June 2019, the European Supervisory Authorities (ESAs) had written to the European Commission regarding the application of the scope of the Packaged Retail and Insurance-based Investment Products Regulation 1286/2014 (PRIIPs Regulation).

Uncertainty as to the scope of the Regulation has led to negative consequences for the functioning of financial markets and access to these markets by retail investors.

In the letter, the ESAs had called upon the European Commission as a matter of urgency to provide detailed public guidance on which types of products, and in particular bonds, fall within the scope of the Regulation.

To support this, the ESAs analysed the application of the scope to some main types and features of bonds.

The ESAs are currently working with NCAs to monitor the implementation of the PRIIPs Regulation. Concerns have been raised by both market participants and NCAs that in the absence of guidance on the application of the scope of the Regulation, product manufacturers are no longer making certain products available to retail investors in case they are deemed to fall within the scope of the Regulation.

The ESAs have urged the Commission to provide detailed public guidance as a matter of urgency on which types of products, and in particular bonds, fall within the scope of the Regulation. This would allow market participants to take an informed decision as to whether or not there is a need to draw up a PRIIPs KID.

To support this, the ESAs have prepared an analysis of the application of the scope to some of the main types or features of bonds and have asked the Commission to confirm if they agree with this analysis.

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