The European Association of Co-operative Banks (EACB) welcomes the opportunity to contribute to the Joint Technical Discussion Paper on Risk, Performance Scenarios and Cost Disclosures in Key Information Documents for Packaged Retail and Insurance-based Investment Products (PRIIPs), as co-operative banks are amongst the major distributors of a large variety of retail investment products.
In this Technical Discussion Paper (TDP) the ESAs discuss - in very comprehensive and detailed manner- the different methods of calculation of risks, performance scenarios and costs. However, we fear that – from a retail investor protection perspective- the theoretical analysis of the possibilities, their practical implementation and the potential benefits are not always well balanced. At various points the ESAs themselves point to the disadvantages of certain approaches. In particular, we oppose a probabilistic representation of different scenarios. Also we want to suggest an overall less complex approach. We doubt that some of the options discussed both in terms of the calculation of risks, as well as scenarios would be understandable for the investor. Moreover, consistency with the information required under MiFID II is to be sought.
Furthermore,iIts seems that the ESAs have not yet taken into account the specificities of OTC derivatives as the suggested approaches are not suitable for OTC derivatives contracts.
We would like to once again point out that -in our view- OTC derivative transactions entered into for hedging purposes, especially in the context of interest rate and currency management, in line with normal banking practice (especially with corporate clients), do not fall under the PRIIPs Regulation.
For further information on this topic or to read the consultation paper, please download the PDF.