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Wealth Management & Private Banking

Tuning up your business for PRIIPs regulation

Alberto Velasco

14 Dec 2017

The EU Regulation for PRIIPs (Packaged Retail Investment & Insurance Products) arrives on 1 January 2018. It requires those who produce or sell these investment products to provide investors with Key Information Documents (KIDs).

The partnership between Thomson Reuters and cleversoft will provide ease-of-use solutions to help our customers to deal with the PRIIPs.

Here, we provide answers about how to deal with the new regulations and tips on how these solutions will assist your organization and the needs of retail investors.

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What is a PRIIP?

A PRIIP is a two-term definition; it is a product that is one or both of the following:

  • A Packaged Retail Investment Product (PRIP)
  • An Insurance-based Investment Product (IIP)

What products fall in scope of the regulation?

  • Structured products
  • Derivative investments
  • Structured deposits
  • Investment funds
  • Insurance products
  • Life insurance products that hold an investment element

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What is the objective of this regulation?

Despite their potential benefits for retail investors, PRIIPs are often complicated and lacking in transparency.

The information that institutions make available to investors when selling these products can be overly complex. There is often too much jargon, and it can be difficult to compare different investment products.

Discover how the OTC KID-Generator from cleversoft could help you fulfill the regulatory requirements of PRIIP Regulation

Since institutions selling these products often also play a role in advising investors, conflicts of interest may arise, producing advice that may not be in the investor’s best interests.

The aim of the new regulation is to protect investors and to improve transparency in the investment markets. The Key Information Documents will provide standardized information about financial products to enable investors to better understand and compare investment products.

Who will be affected?

The regulation surrounding PRIIPS applies to all manufacturers and distributors or financial intermediaries who issue PRIIPs, which are invested in by retail clients. In other words, the regulation applies to institutions or persons who:

  1. Manufacturer PRIIPs. A PRIIP manufacturer (or any other person who changes an existing PRIIP, such as a distributor) is required to prepare a KID for each PRIIP that they produce and publish each KID on their website.
  2. Advise on or sell PRIIPs. A person who advises a retail investor on a PRIIP or who sells a PRIIP to a retail investor must provide the retail investor with a KID in good time before any transaction is concluded. In addition to advisers, this will affect intermediaries such as distributors.

In short, the regulation should apply to all those who manage and sell funds to retail investors.

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What are KIDs?

Key Information Documents (KIDs) should be a maximum of three pages and provide clear information on investment products.

KIDs should include the name of the product and identity of the producer; the type of investors for whom it is intended; the risk and reward profile of the product; the costs to investors; and information about how and to whom an investor can make a complaint should there be a problem.

The partnership between Thomson Reuters and Cleversoft helps both manufacturers and distributors of PRIIPs to comply with the PRIIPs regulations
The partnership between Thomson Reuters and cleversoft helps both manufacturers and distributors of PRIIPs to comply with the PRIIPs regulations

How our solutions can help PRIIPs manufacturers and distributors

The partnership between Thomson Reuters and cleversoft helps both manufacturers and distributors of PRIIPs.

  1. The RegDoc Repository, a solution for distributors

The RegDoc Repository solution helps those who sell, advise or distribute PRIIPs for structured products, exchange traded derivatives and OTC derivatives to easily retrieve the associated KIDs.

The solution aggregates multiple sources, including manufacturers, exchanges or specialized utility hubs from different regions, to ensure the most comprehensive coverage in the industry for these instruments.

The RegDoc Repository is available:

  • As an app on Eikon App Studio. The application helps you to access and download the right regulatory documents, providing you with the ease to retrieve as and when you require.
  • Via Thomson Reuters Knowledge Direct (TRKD) API. This helps to deliver regulatory documents to your retail investor clients via a data feed directly into your internal or external applications, websites and portals.
The RegDoc Repository and KID Generator solutions from Thomson Reuters and Cleversoft
The RegDoc Repository and KID Generator solutions from Thomson Reuters and cleversoft
  1. The OTC KID Generator for manufacturers

The OTC KID Generator is a seamless solution provided by cleversoft. It generates standardized KID templates on the fly, including calculated risk indicators and performance scenarios, to help you meet your organization´s specific needs.

The OTC KID Generator is available on the Eikon App Studio or as a standalone solution.

Meeting KID requirements and market challenges

By being part of the Thomson Reuters Partners Ecosystem, the PRIIPs solutions address challenges such as a regulatory compliance, faster time to market, ease of implementation and reduced number of vendors. This will ultimately result in cost savings for your organization and your customers.

Disclaimer: It is acknowledged that Thomson Reuters and cleversoft do not act as manufacturers, sellers or advisors in relation to Packaged Retail Investment Products (PRIIPs) or other financial products.

In addition, Thomson Reuters and cleversoft have no responsibility for ensuring that the produced / provided documents (such as KIDs according to PRIIPs EU Regulation No. 1286/2014) meet the requirements of the PRIIPs regulation and any associated rules.

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