Deloitte comments on the ESA’s final draft Regulatory Technical Standards (RTS) on PRIIPs
18 April 2016
Mark Ward, head of investment management at Deloitte UK, said:
“Many industry participants expected either a delay or a simplification of the final requirements. Whilst the final draft RTS contained neither, the new rules go a long way to provide simple and comparable information on investment products. They also include a new approach for risk, performance and cost disclosures. These new approaches add complexity to the preparation of the KIDs and, when combined with the short time-frame to comply by 1 January 2017, present a more challenging landscape for banks, insurers and asset managers.”
Chris Farkas, co-head of investment management managed services at Deloitte, said:
“Whilst the final draft RTS will still need to go through the European Commission and European Parliament and Council before adoption, it is clear at this stage that firms need to begin planning their approach to the timely and accurate assembly of each PRIIP, including:
- Risk models to calculate the Market Risk Measure (MRM) for the Summary Risk Indicator (SRI) which require one of two quantitative market risk methodologies, namely Cornish-Fisher expansion and Bootstrapped VaR.
- A robust method of calculating performance scenarios – the RTS defines interim periods and prescribes a methodology to arrive at future values which are linked to the above MRM calculation.
- A system of monitoring significant changes then republishing the KID for those PRIIPs continuously available for sale.
- Template creation, narratives, document production and translation workflow and assembly.
Notes to editors
Deloitte PRIIPs managed service addresses the requirements released by the ESA's in the draft technical standards. Firms now require a solution to calculate future values for performance scenarios as well as complex market risk methodologies (including VaR) calculations.
Our managed service is part of a wider regulatory and investor reporting managed service. For PRIIPs we offer a complete and modular service to satisfy regulatory requirements. Firms may choose to outsource a part or whole of the following end to end tasks associated with producing a PRIIPs KID
- Template creation, provision of draft narratives for approval
- Definition and proposals for product specific methodologies and data sources for:
- Performance scenario
- Costs – Reduction in Yield (RIY)
- Document creation and workflow management
- Hosting either on client systems or by Deloitte, with full audit trail and archiving for 10 years
- Events monitoring, including corporate actions, barrier breaches and risk rating changes
- Provision of market data and related management
- Annual update management
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
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