The following retail products are defined as a PRIIP:
Scope of Product Types
UCITS
Structured deposits (but not deposits linked solely to interest rates)
Financial products with capital and/or return guarantees
All investment funds, whether closed ended or open ended
Derivative instruments (including options, futures and contracts for difference)
Unit linked life insurance
Certain pension products
The 4 PRIIPs Categories
For the purposes of determining the MRM, PRIIPs are divided into four categories, based on the structural features of the PRIIP.
This is described below:
UCITS and AIFs
By way of summary, UCITS and AIFs will typically be:
If the pay-off of the UCI is linear,
• It would be classified as Category 2 provided there is enough data available for the calculation
• If there is no data, it would be Category 1.If the pay-off is not linear (for example a structured UCITS),
• It would be a Category 3 product, provided the data history requirements are met.
This is summarised in the table below:
| Sufficient historical data available? | Investors can lose more than they invested** | Priced less regularly than monthly*** | Is structured Product? | Is leveraged | Leveraged at constant multiples? | PRIIIPs category |
|---|---|---|---|---|---|---|
| No | 1 | |||||
| Yes | 1 | |||||
| Yes | 1 | |||||
| Yes | No | No | No | 2 | ||
| Yes | No | No | Yes | Yes | 2 | |
| Yes | No | No | Yes | No | 3 | |
| Yes | No | Yes | Yes/No | Yes/No | 3 |
** A UCITS cannot be structured in a way that investor can lose more than invested
*** A UCITS must be priced at least twice per month.