Global Trustee and Fiduciary Services Bite-Sized Issue 4 2024

Global Trustee and Fiduciary Services Bite-Sized | Issue 4 | 2024 13 QUICK LINKS AIFMD BENCHMARK REGULATION CBDC COSTS & CHARGES CRYPTOASSETS CYBERSECURITY DIVERSITY & INCLUSION FINTECH IFD/IFR LIBOR TRANSITION MIFID II/MIFIR OPERATIONAL RESILIENCE PRIIPS RETAIL INVESTMENT STRATEGY SETTLEMENT SUSTAINABLE FINANCE/ESG UCITS ASIA LUXEMBOURG NORTH AMERICA UNITED KINGDOM II. ‘What is this product?’ section. Q7. What is the difference between a “benchmark” and a “proxy” within the meaning of the Delegated Regulation? If an AIF does not have a sufficient historical price time-series and the PRIIP manufacturer therefore calculates the MRM class and/or performance scenarios using the historical prices of a comparable AIF, is the other AIF a benchmark that must be disclosed in the section “What is this product?” of the key information document according to Article 2(2a) (d) of the Delegated Regulation? And in this case, is the past performance of the other AIF to be published on the website of the PRIIP manufacturer pursuant to Annex VIII, Point 11 of the Delegated Regulation? Q.8. The new wording in Article 2(2a)(b) of the ‘What is this product?’ section appears to duplicate the requirement already included in the RTS Article 6 (in the “How long should I hold it and can I take money out early?” section), specifically where Article 6(b) requires “a description of the disinvestment procedure and when disinvestment is possible”. Is it necessary to include the same (or broadly similar) wording in both places of the KID? Q9. Does point 5(b) of Article 2 of the RTS – ‘an indication of whether the PRIIP manufacturer is entitled to terminate the PRIIP unilaterally’ concern i) market circumstances or ii) client specific circumstances (in which case the product would end for this client alone) or both? III. Market Risk Assessment (Annex II, Part 1) A. Product categories. Q20. When sufficient history for the SRI calculation is not available to cover 5 years of data for a daily share class, can the PRIIP manufacturer decide to use a benchmark/proxy to cover up to 5 years of history or should this only be used for the minimum 2 years requirement? Similarly, if a daily share class has 3 years of history can a PRIIP manufacturer choose to include 2 years of benchmark/proxy data and base the calculation on a 5 year range? Q21. Could an artificially created “synthetic” proxy be considered an appropriate proxy in accordance with the PRIIPs RTS Annex II and Annex IV? V. Summary Risk Indicator (SRI) (Annex III). Q5. Is currency risk described by Risk Element C applicable to investment funds, or should currency risk generally be considered by wrapper products / multi-option products only? In case currency risk is applicable to investment funds, at which level shall currency risk be determined – the portfolio/subfund level or at the share class level – in relation to the currency of the investor in the EUmember state? VI. Performance Scenarios (Articles 3 and 8 and Annexes IV and V) Q23. Should a KID disclose cost information and scenario information about 1 year and half the RHP in case the investors may not be allowed to exit a PRIIP before the end of the RHP? VII. Past performance (Annex VIII) Q8. Taking into account Article 23(3) of Commission Regulation (EU) No. 583/2010, should the information on past performance in accordance with Article 8(3), first subparagraph of the PRIIPs Delegated Regulation be published no later than 35 business days after 31 December each year? XIII. Methodology for the calculation of costs. F. Presentation of costs (Annex VII). Q12. Should the costs disclosed in table 1 (cost over time) and table 2 (total cost) be aligned for year 1? Link to Updated Consolidated PRIIPs KID Q&A here RETAIL INVESTMENT STRATEGY ECONMEPs Vote to Boost Citizens’ Involvement in Financial Markets On 20March 2024, the Economic andMonetary Affairs Committee (ECON) of the European Parliament voted in favour of developing new rules to help retail customers invest in quality financial products, protect them frommisleading communication and biased advice. ECONMEPs agreed on a text that changes several directives, with an overall aim to reinforce investor protection rules.