ESA Joint Committee · priips-54 Final

For a PRIIP with an MRM of 6, the aggregate SRI will always be 6. Therefore, is it still necessary to assess the credit risk for a PRIIP with an MRM of 6?

Regulation
PRIIPs
Answered
2017-07-04
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

For a PRIIP with an MRM of 6, the aggregate SRI will always be 6. Therefore, is it still necessary to assess the credit risk for a PRIIP with an MRM of 6?

Answer

The CRM may only adjust the MRM upwards for the SRI. Therefore, if the MRM is 6, the SRI would be 6 as well since the credit risk scale is 1 to 6. Therefore, where the MRM is 6, the CRM has no impact on the SRI based on the aggregated table. However, in terms of the presentation of the SRI, the manufacturer shall include a brief explanation of the classification of the product in the narrative explanation. That explanation may differ depending on the CRM. Therefore, the CRM still needs to be calculated when the MRM is 6. In addition, whilst a credit risk assessment is not required for a PRIIP with an MRM of 7 (in accordance with Annex II, Part 2, Point 30), for the same reasons, the PRIIP manufacturer should still be aware of the credit risk in this case, and where there is material credit risk it may be a good practice for a credit risk assessment to be performed.
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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