Mifid II  

Priips and Mifid II: The similarities and differences

This article is part of
Summer Investment Monitor 2017

Priips and Mifid II: The similarities and differences

Mifid II and the packaged retail and insurance-based investment products (Priips) regulation both come into force next January. The Priips regulation states that “this regulation is complementary to measures on distribution in [Mifid II]”, so it would be reasonable to expect a high degree of consistency.

Progress on Priips has been stop-start, with firms originally rushing to try to meet the deadline of the end of 2016, followed by the late announcement of a year’s delay. But with the live dates for Priips and Mifid II aligned once more, they are sometimes lumped together. However, they should not be confused, so we need to know what the similarities and differences between them are.


Both require pre-sale disclosure “in good time” before the sale of a product, fund or service. This will normally be generic, through the key investor document (Kid) or the Mifid II ex-ante disclosure, with the latter including a forecast of the distributor’s costs. 

For a discretionary manager providing a bespoke service, this ex-ante disclosure will need to be tailored to the client. 

Ucits funds are out of scope of Priips until the end of 2019, when they will issue Priips Kids. But, with both Priips and Mifid II, they have been unofficially brought into scope through the back door, as Ucits managers will need to supply data to Priip manufacturers or distributors for them to produce Kids or client reports.


The most obvious difference between the two pieces of legislation is that Priips applies to funds and products marketed to retail investors and is about producing and issuing a generic pre-sale document, similar in principle to a Ucits key investor information document (Kiid). 

Mifid II is more extensive, includes individual investors and institutions, and covers the services provided around the products, such as distribution/advice, discretionary management, trading, research and ongoing reporting. 

Despite a reference in the Priips regulatory technical standards (RTS) to informing existing clients when a Kiid is updated, the Kid is a pre-sale document. Mifid II, on the other hand, places an ongoing responsibility on advisers and distributors, from pre-sale cost projections to quarterly valuations and annual client-specific costs and charges reports.

The Mifid II post-sale reporting requirements include notifying discretionary clients if the value of their portfolio has fallen by 10 per cent since the last scheduled valuation.

An important difference, at least for fund groups, is the calculation of transaction costs incurred by funds, which need to be disclosed on both Kids and Mifid II client reports. In short, the Priips calculation includes the impact of any price moves between an order being given to the broker and being fulfilled – something explicitly excluded from Mifid II.

One small consolation for Ucits managers is that they are being allowed to use the less onerous Mifid II transaction cost calculation where their funds are available through Priips.

While the burden of Priips on distributors is similar to that of Ucits – making sure investors receive a generic pre-sale disclosure document – Mifid II involves more work. Client reports, both pre- and post-sale, need additionally to disclose the costs of services such as platforms, advice and discretionary management.