On 5 May 2025, the Joint Committee of the European Supervisory Authorities (ESAs) (that is, the EBA, EIOPA and ESMA) published an updated version of its Q&As (JC 2023 22) on the Regulation on key information document (KID) requirements for packaged retail and insurance-based investment products (PRIIPs) (1286/2014) (PRIIPs Regulation) and related delegated acts. The Q&As contain updates on the following.
Market risk assessment – MRM class determination.
The updated Q&A provides further details and clarifications in Question 9 regarding how the Market Risk Measure (MRM) class should be calculated, as well as the revisions that should be made to the Key Information Document (KID) if the MRM changes. These refinements aim to ensure more accurate and comparable MRM classifications, reducing variability in risk disclosures
Performance scenarios.
Several clarifications were introduced in Questions 24, 25 and 26 of the updated Q&A to improve the methodology for calculating performance scenarios, including:
Question 24
ESAs clarified the use of the 99th percentile for one year and the 95th percentile for other holding periods as part of the definition of and calculation method for inferring, the stressed volatility in Category 2 and 3 PRIIPs products.
Question 25
Further clarifications on calculation is performed for the intermediate holding periods, then the duration of the intermediate holding period should be used as the length of the fixed sub-interval (i.e. the sub-interval referred to in point 7(a) of Annex IV of the PRIIPs Delegated Regulation). This is also the case for the decreasing sub-interval (i.e. the sub-interval referred to in point 7(b) of Annex IV of the PRIIPs Regulation), but this is only relevant for intermediate holding periods that are longer than one year.
Question 26
The ESAs addressed the interpretation of the term “1 year” and ‘> 1 year’ in the context of the stress scenario table under paragraph 18 of Annex IV of the PRIIPs Delegated Regulation (Level 2), with more focus on the interpretation of the term “1 year” concluding that the table mentioned in point 18(a) of Annex IV of the PRIIPs Delegated Regulation should be used to calculate the formula described in point 18(c) of the same Annex, taking into account the holding period for which this calculation is intended, i.e. the recommended holding period and intermediate period(s) if any. The figures in the table for the label ‘1 year’ should be applied for the calculation of the stress scenario where the holding period is 1 year or less.
These clarifications will be particularly relevant for manufacturers of structured products and funds with flexible investment policies.
Calculation of the summary cost indicators.
With respect to cost disclosures, the Q&A also updates Question 6 on guidance on the calculation of the summary cost indicators referred in point 90 of Annex VI of the PRIIPs Regulation. In this regard, per the updated Q&As, entry costs should be included in the table(s) referred to in Article 5 of the PRIIPs Regulation that contain an indication of the total costs in monetary and percentage terms in the case that the retail investor invests, respectively EUR 10,000 (for all PRIIPs except regular premium insurance-based investment products), or EUR 1,000 yearly (for regular premium insurance-based investment products) during different holding periods, including the recommended holding period. These updates are intended to harmonise cost disclosure practices across the industry, enhancing comparability for retail investors.
Conclusion
These clarifications further refine the implementation of the PRIIPs Regulation, aiming to improve consistency, transparency, and comparability in risk, performance, and cost disclosures. Manufacturers and distributors of PRIIPs should review the updated Q&A in detail to ensure that their KIDs remain compliant, especially in the context of structured products, funds with limited performance histories, and products featuring early redemption options.
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