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    ESAs Statement on Application of Scope of PRIIPs Regulation to Bonds

    October 24, 2019

    ESAs issued a supervisory statement to promote consistent application, by national competent authorities, of the scope of the regulation for packaged retail and insurance-based investment products (PRIIPs Regulation) to bond markets. The supervisory statement seeks to mitigate the risk of divergent application, by national competent authorities, for determining the type of bonds for which it is necessary to draw up a Key Information Document (KID). The Annex to the statement provides guidance on the practical application of the provisions determining the scope of the PRIIPs Regulation.

    In the view of ESAs, uncertainty over application of the PRIIPs Regulation to bonds has led to negative consequences for functioning of bond markets and for access to these markets by retail investors. There are also risks of divergent applications, by national competent authorities, with negative consequences for achieving uniform levels of retail investor protection and a level playing field among product manufacturers and distributors within the EU. To promote a consistent application of the scope of the PRIIPs Regulation to bond markets, ESAs recommend that national competent authorities apply the guidance set out in the Annex to the statement when supervising compliance with the requirements in Chapter I of the PRIIPs Regulation. To fully address the risk of divergent applications by national competent authorities, ESAs recommend that during the upcoming review of the PRIIPs Regulation, the co-legislators introduce amendments to the Regulation to more precisely specify which financial instruments fall within the scope of the regulation. The overall objective of this statement is to achieve a high, effective, and consistent level of regulation and national supervision while promoting a level playing field and the protection of retail investors. 

     

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    Keywords: Europe, EU, Insurance, Banking, Securities, PRIIPs, PRIIPs Regulation, Bonds, KID, Supervisory Statement, ESAs

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