The Cyprus Securities and Exchange Commission ('CySEC') has issued a notification to entities it regulates regarding Regulation (EU) No 1286/2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs). The Regulation entered into force on 1 January 2018 and is directly applicable throughout the EU.
The Regulation defines a PRIIP as a packaged retail investment product or insurance-based investment product. Packaged retail investment products are investments of any legal form in respect of which the amount repayable to the retail investor is subject to fluctuations because of exposure to reference values or to the performance of one or more assets which are not directly purchased by the retail investor. An insurance-based investment product is an insurance product which offers a maturity or surrender value which is directly or indirectly exposed to market fluctuations.
The designated competent authorities in Cyprus for PRIIP manufacturers and distributors, namely CySEC, the Central Bank of Cyprus and the Superintendent of Insurance, have adopted Commission Delegated Regulation (EU) 2017/653 of 8 March 2017 which establishes regulatory technical standards for the presentation, content, review and revision of key information documents and the conditions for fulfilling the requirement to provide such documents, the guidelines on the application of the Regulation adopted by the European Commission in July 2017 and the Questions and Answers and Flow diagrams for the risk and reward calculations for the implementation of the Regulation and the Delegated Regulation published by the three European Supervisory Authorities.
The Regulation introduces a standardised key investor document ('KID') to be compiled by the manufacturer of the PRIIP on the basis of uniform rules and provided to potential retail investors. The purpose of the KID is to help retail investors to compare different PRIIPs on a consistent basis, with a uniform order of items and format. The Delegated Regulation sets out the standardised template and content to be included.
A KID does not have to be produced if the product is not sold to retail investors. There is a transitional period of five years for UCITS. This transitional period also applies to units of non-UCITS funds when a member state applies rules on the format and content of the KID, as laid down in Articles 78 to 81 of Directive 2009/65/EC, to such funds.
Open ended Alternative Investment Funds ('AIFs') which market their units or shares to retail investors are required to compile a KID in accordance with Article 36 (3) (c) of the Alternative Investment Funds Law 2018.
Although the Regulation is directly applicable, member states and the designated competent authorities have the discretion to decide upon certain operational matters. Under these discretions the Cyprus authorities have determined that the KID may be written in Greek or in English, and that advance notification of the KID for PRIIPs marketed in Cyprus is not required.
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