Fund firms urged to combine Priips and MiFID II implementation

RegulationsAsset managers have been warned that failing to spot where fund regulations overlap with regulations for other kinds of investment products could lead to spiraling costs.

There are “significant” areas where documentation requirements in the Markets in Financial Instruments Directive (MiFID II) overlap with those in regulations for packaged retail and insurance-based investment products, or ‘Priips’, says BNY Mellon.

Paul North, a regional head of asset servicing product management at BNY Mellon, said that Priips regulation is not high on the list of priorities for asset managers and he warned that firms will miss opportunities for efficiencies as they implement MiFID II.

The documentation requirements for MiFID II and Priips overlap significantly, North said, and those asset managers who focus on their MiFID II programmes without considering changes required to the ‘key investor information documents’ (Kiids) under Priips could incur additional work and costs.

“For large firms the benefits gained from integrating Priips into MiFID II programmes may be considerable,” said North. “Asset managers face the additional burden of renegotiating distribution agreements under MiFID II. The cost of this work is considerable, and could spiral out of control if managers to do not combine Priips requirements with the work they are doing for MiFID II.”

The situation is made more pressing by regulatory uncertainty, as the deadline for the updated Priips Kiid documents is January 2018, but Priips regulatory technical standards are still to be finalised.

The lack of clarity is causing asset managers to push compliance programmes back, according to North.

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