PRIIPS: A New Data Challenge for the Buy-Side

From January 1, 2018 The EU’s Packaged Retail Investment and Insurance Products (PRIIPs) Regulation will apply across the bloc. The Regulation, which has been in the works for the best part of ten years, aims to bring new levels of transparency to Europe’s €10 trillion PRIIPS market. It will do so by helping retail investors better understand and compare the key features of various PRIIPS  including risks, rewards and costs, by providing access to Key Information Documents (KIDs).

The scope of the PRIIPs Regulation is broad, affecting organizations that manufacture, advise on or sell PRIIPs in the EU; financial advisors, fund managers, insurance companies, investment firms, retail investment product providers and credit institutions. As a result, PRIIPs joins a range of other EU regulations, including the Benchmarks Regulation and Market Abuse Regulation, that are forcing buy-side firms to rethink their approaches to data management and regulatory compliance.

With the PRIIPs Regulation’s January deadline fast approaching, the race is on for firms to be ready to prepare accurate, quality-assured KIDs. Firms unable to do so face the prospect of having their PRIIPs suspended or prohibited from being marketed, as well as fines of up to €5 million, or up to 3% of its total annual turnover. Individuals, meanwhile, could be fined up to €70,000 in the case of a compliance breach.

As firms prepare their compliance systems and processes for PRIIPs, one of the biggest challenges will lie in the collection and aggregation of data required for use in KDIs. With just weeks to go before the Regulation applies, firms will by now be hard pressed to put in place the internal processes needed to source, quality-control and distribute PRIIPs data.

The good news for firms affected by the Regulation is that the market is responding to this challenge, with firms such as RIMES providing access to cloud-based managed data services. Instead of having to build their own compliance solution, firms can benefit from proven PRIIPs data management services that come at the low cost points associated with cloud services.

Next year will be a make or break year for the compliance functions of many buy-side firms as they respond to PRIIPs, BMR and MAR and prepare for the upcoming MiFID II Regulation. Managed data services will prove critical to firms during this time, providing an agile and cost-effective means of adapting to a fast-changing regulatory environment.

To receive information about RIMES’ managed data services for PRIIPs compliance, please contact us.

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