Question ID: 3102 & PRIIPS 180
Regulation Reference: (EU) 2017/653 - PRIIPs Delegated Regulation for key information document
Topic: Key information document (KID)
Article: Annex IV version 01/01/2023, point 20
Status: Rejected
Date of submission: 06 Jun 2024
Question
I have two questions regarding point 20 of Annex IV version 01/01/2023 in Commission Delegated Regulation (EU) 2017/653 of 8 March 2017: The stress scenario value shown shall not be better than the value of the unfavorable scenario. (1) Is it correct that this point applies first from 1 January 2023? (2) If so, are KIDs created before that date covered by any corresponding rule? For example, can a stress scenario for a KID created in 2018 show a better (higher) value during 2020 than the value of the unfavourable scenario? If a stress scenario for a KID created in 2018 cannot show a better (higher) value during 2020 than the value of the unfavourable scenario, where is this regulated?
Background of the question
Understanding and knowledge
EIOPA answer
- Yes, this provision applies from 1 January 2023.
- As indicated in Annex IV, point 2 of the original PRIIPs Delegated Regulation, applicable on 1 January 2018 (Commission Delegated Regulation (EU) 2017/653), the stress scenario intended to “set out significant unfavourable impacts of the product not covered in the unfavourable scenario”. In other words, the stress scenario was always intended to show a value lower than the unfavourable scenario, i.e. to reflect adverse market circumstances that might not be covered sufficiently by the unfavourable scenario. Following the implementation of the PRIIPs rules in January 2018, it was identified that in a limited number of very specific circumstances, the prescribed calculation methods for the stress and unfavourable scenarios might result in the stress scenario showing a better result than the unfavourable scenario in the KID. Based on this, when reviewing the rules in Commission Delegated Regulation (EU) 2017/653, the ESAs proposed to introduce an explicit rule (now in Annex IV, point 20 of the revised PRIIPs Delegated Regulation, applicable from 1 January 2023) to ensure that in all cases the stress scenario would not show a better value than the unfavourable scenario.