EU vote formally delays PRIIPs until 2018

The European Parliament voted today to accept a motion to delay PRIIPs for 12 months, completing the legal process just in time to put a formal delay into effect. The new date of application for PRIIPs will now be 31 December 2017. This means that PRIIPs and MiFID II will arrive at the same time, giving firms an opportunity to look strategically at the connections and data required for compliance.

The vote formalizes the Commission’s 9 November announcement that PRIIPs would be delayed until 2018. Attention has now turned to ongoing work on the Level 2 RTS. The Commission has already submitted redrafted RTS to address the points that led to Parliament’s rejection of the whole package in September. These related to performance scenarios and costs, the treatment of multi-option products (MOPs) and comprehension alerts.

The European Supervisory Authorities (ESAs) were asked to respond with a formal opinion and suggest amendments within six weeks. The Commission must then adopt the reworked RTS, before publishing the new rules to a three month scrutiny period in early 2017.

All this leaves the financial industry with an uncertain waiting period. The delay realigns PRIIP to the same timetable as MiFID II. If reworked RTS are agreed within Q1 of 2017, the industry will have a maximum of 9 months to get ready for a regulation where the devil is in the detail and preparations can’t be concluded without finalized RTS. Any delay shortens the preparation period still further and all the while, firms must prepare for MiFID II regardless. This will make 2017 a busy year for compliance.

The combination of MiFID II and PRIIPs offers potential for a more strategic approach, however. Several aspects overlap, particularly with regard to establishing connections between manufacturers and distributors. Coordinating interfaces, connections and strategic partners would make it easier to discover synergies in compliance requirements. By adopting strategic solutions, firms could reduce the internal resources needed to tackle both regulations at once.

Background legal context

The European Commission proposed a 12 month delay to the PRIIPs Regulation on 9 November, citing a need for more legal certainty and more time for firms to prepare for the rules. The financial industry welcomed the announcement but the Commission’s announcement did not amount to a legal delay.

For the delay to become official, the proposal to postpone the date also had to be formally accepted by the European Parliament and Council. These institutions therefore had to complete the formal legal process in just a couple of weeks, an unusually tight timeframe compared to the normal three months or more usually reserved for a legislative procedure.

This vote marks the end of the formal legal process, as Council has already indicated that it will not object to or amend the Commission's proposed date change. The Parliament vote follows a recommendation from the Economic and Monetary Affairs (ECON) committee to adopt an amending Regulation with a new date of application. Parliament’s plenary vote to delay PRIIPs until 31 December 2017 completes the legal procedure just in time to put a formal delay into effect.

 

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