Challenges of the KIIDs
The investment fund industry is facing a significant challenge to ensure the smooth production of the KIID including but not limited to: data flows, service models and control environments, IT systems and staff training.
KIIDs are subject to revision when material changes occur with an annual update within 35 business days after 31 December, regardless of the UCITS’ year end.
This annual update will increase the workload of the already stretched resources in legal, compliance, risk, fund accounting, sales and marketing, especially during the first quarter of the year. Hence, to ensure compliance, UCITS must start working on introducing new processes and procedures immediately to ensure readiness.
UCITS must also decide whether to produce a KIID for each available share class or whether a representative share class is available. This decision will have a significant impact on the production and dissemination requirements.
Automation will be key as the implied volumes for medium and large UCITS managers will mean KIID production will become impractical to deal with on a manual basis in the longer term.
- Consistency with fund prospectus
- Use of non-technical language
- Implementation of data flows with involved counterparties
- Availability of data
- Allocation of resources and scalability
- Signposting of content in other documents
- Coordination of material changes and regular revisions
- SRRI criticality
- Limited to two pages of A4
- Follow pre-defined form, headings and content
- High volume of documents to produce – necessary technical and human resources assessment
- Translation issues
- Strong IT infrastructure required to manage all specificities
- Decide on KII share class
- Independent review of SRRI
- Impact on service model and controls environment as new internal processes are required
- Large number of documents to multiple recipients with possible synergies
- Submission to foreign regulatory authorities depending on cross border registrations
- Consider automated solutions
- Durable medium vs website
- Timely dissemination with multiple instances
- Terms of grandfathering clause
- Request CSSF approval
- Maintenance of website and databases