ESA Joint Committee · priips-41 Final

Could you confirm if products with recurring premiums are to be modelled as Category 2 PRIIPs or Category 3 PRIIPs?

Regulation
PRIIPs
Answered
2023-12-05
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

Could you confirm if products with recurring premiums are to be modelled as Category 2 PRIIPs or Category 3 PRIIPs?

Answer

Our opinion is that they should be modelled as category 3 because their performance does not depend only on the performance of the underlying at RHP. However, in the case in which a manufacturer shall produce KIDs for PRIIPs available as both single and recurring premium versions, it may lead to KIDs that are not comparable, mainly given to modelling assumptions (for example, the different lengths of the data series for Category 2 and 3 PRIIPs). The classification of a PRIIP as Category 2 or 3 concerns only the linearity, or not, of its expected pay- off, which will hold irrespective of the way in which investment in the product is made by the retail investor. Consequently, where a product is, or would be, a Category 2 PRIIP when a single premium or investment is made, it should also be considered as a Category 2 PRIIP when a regular premium or investment is made.
View original on ESA Joint Committee (EBA, ESMA, EIOPA) ↗

This Q&A is published by ESA Joint Committee (EBA, ESMA, EIOPA) and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

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