The EU PRIIPs Regulation will be implemented on 1 January 2017. The Regulation requires a short form Key Information Document (KID) to be published and provided to investors whenever a packaged retail investment or insurance-based product is "made available" to retail investors (based on the MiFID "retail client" and IMD "customer" definitions). In-scope products include many securities, deposits, derivatives, insurance and non-UCITS fund products. In-scope products will be those that offer the retail investor exposure to an underlying asset or reference basis. Obligations fall on both the entity which "manufactures" the product and any entity selling or advising on it. It is expected that it will cover both primary and secondary market sales.
There is no grandfathering for existing products that continue to be "made available" and the KID is subject to frequent review and revision requirements. There is significant concern within the industry that implementation is being rushed before there is full clarity on a number of key aspects of scope and the content requirements for the KID. Some market participants may have insufficient time to put in place the systems necessary to support compliance.
The review and republication requirement is likely to mean that many retail structured product manufacturers require an IT-based automated solution to ensure compliance.
All of Allen & Overy's European offices are closely involved in advising clients on compliance with the regime. They are also monitoring the implementation measures in their respective jurisdictions. If you think you may be affected please contact any of Andrew Sulston, Martin Scharnke, Nick Evans or Christian Klöpfer.