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CESR Presents Examples of Formatting for UCITS Key Investor Information Documentation

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Earlier this year, the Committee of European Securities Regulators (CESR) published a series of consultation papers providing guidelines for the selection and presentation of data for the new Key Investor Information (KII) documents and this week, the regulator has published more related data requirements for these new UCITS documents. The CESR guidelines on the selection and presentation of performance scenarios for KII documents includes examples of how the data should be presented in order to ensure comparability between structured UCITS.

As with the earlier proposals, these guidelines will require firms to rework their data management systems workflow in order to encompass the new data sets. The move from the Simplified Prospectus to the KII documents for the marketing of UCITS funds will therefore require buy side firms making a significant investment in their data management workflows and data checking. CESR’s focus is on ensuring this documentation from asset managers is as accurate and consistent as possible and it is also seeking to make cross border operations much more efficient and transparent.

The CESR paper states: “The guidelines cover the factors to be taken into account when choosing the scenarios, such as the features of the formula and on the link between the market conditions and the outcome for the investor. There is also guidance on how the scenarios themselves should be presented, including on the choice between using tables or graphs. Finally, the annex contains examples of performance scenarios using a table or graph-based presentation.” The underlying and supporting data must therefore now be included in the documents sent out to the clients of these funds.

The logic is that the presentation of all this complex data in a more consumable format – such as tables or graphs – will help these investors to be better informed of the decisions they are making. CESR also indicates that the information must be “fair, clear and not misleading”, hence strict data quality markers will need to be reworked to take into account the new templates and presentation formats.

This is all part of the revised UCITS Directive, which is due to be implemented by all European member states by 1 July 2011. UCITS is designed to ensure that the underlying portfolio components of a regulated fund are risk transparent and liquid. The guidelines are also testament to why the buy side is so far ahead of the larger sell side players in the market with regards to data management. Regulators take matters of investor protection very seriously indeed.

Vendors such as SIX Telekurs and MoneyMate have been pitching their solutions at the market over the course of this year to meet these upcoming requirements, including vital data checking for compliance purposes. The market can expect to see much more of the same over 2011.

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