The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Translation Fears Mount Over KIID Documents

Legal, translation and reporting specialists have voiced fears over the burden for fund promoters under UCITS IV.

Among the important legal, workflow and production challenges in meeting the KIID (Key Investor Information Documents) requirements to be implemented in July, fund managers that wish to ‘passport’ UCITS funds into other EU states will have to translate KIIDs into the local language of each country where the fund is sold.

Brooke Christian of leading translation provider TransPerfect said: “The translation service will be under enormous pressure so efficiency and convenience in this area will be critical. Currently, the original text has to be sent to translators and on return the results delivered to the end document. Any changes to the original text then has to be resent, re-returned, re-delivered to the end document and so on. This is necessarily slow and with so many moving parts, it will inevitably be error-prone and therefore risky.”

Estimating and planning for document volumes will therefore be crucial to product promoters. For example, a promoter or distributor wanting to market a UCITS in its domestic market and five other EU markets with different local languages must plan for up to 6 languages x potentially 4 updates per year x the number of share classes of the fund – just to present one fund in all the EU countries for which it has a ‘passport’. If the funds each had three share classes, a promoter distributing 20 funds could be looking at 1440 KIIDs per year (6 x 4 x 3 x 20).

The issue is more than just one of volumes. Overlooking the translation of other marketing documents will also carry liability risks.

“It is all too easy for firms to focus only on the translation requirements of the KIID whilst neglecting to make an informed decision about whether it might be preferable to translate the prospectus and other documents into the investor’s language. There is a clear opportunity here for distributors and promoters to avoid any possible pitfalls by taking a more pragmatic perspective,” said Harald Glander, partner at UK law firm Simmons & Simmons.

Aside from the translation issues, from July the Synthetic Risk Reward Indicator (SRRI) will be the sole indicator of investment risk to the investor. It is based on volatility that in turn is based on historical data. “Bearing in mind the words of the wealth warning that ‘past performance is no guarantee of future results’, the regulators and industry generally should be calling for indicators of current and likely future conditions of the UCITS. The investor would surely be far better served by this approach,” said Abbey Shasore, CEO of reporting specialist Factbook.

Related content

WEBINAR

Upcoming Webinar: Adverse media screening – how to cut exposure to criminal activity, from money laundering to human trafficking

Date: 23 September 2021 Time: 10:00am ET / 3:00pm London / 4:00pm CET Duration: 50 minutes Screening for adverse media coverage of counterparties presents an incredible opportunity for financial institutions to limit risk exposures and identify bad actors early. It is required by regulations such as the EU’s sixth Anti-Money Laundering Directive (AML 6), and...

BLOG

Unifying Client Data to Accelerate Insights and Deliver Better Experiences

As they switch focus from addressing regulatory imperatives to producing superior client outcomes, buy-side firms have an opportunity to leverage internal and external data sets to deliver unique and timely investment research and analysis in support of rapid innovation and compelling new product offerings. But faced with ongoing business challenges in the form of margin...

EVENT

RegTech Summit New York City

Now in its 5th year, the RegTech Summit in NYC explores how the North American financial services industry can leverage technology to drive innovation, cut costs and support regulatory change.

GUIDE

ESG Handbook 2021

A-Team Group’s ESG Handbook 2021 is a ‘must read’ for all capital markets participants, data vendors and solutions providers involved in Environmental, Social and Governance (ESG) investing and product development. It includes extensive coverage of all elements of ESG, from an initial definition and why ESG is important, to existing and emerging regulations, data challenges...