The right insights, right now

Access the latest news, analysis and trends impacting your business.

About Broadridge

Quarterly Regulatory Update June 2022

In this series of quarterly updates, we focus on the key regulatory changes that are contained within the congested EU and UK regulatory pipeline for the fund industry.

quarterly_bodycopy  Fig_1

No sign of regulatory respite

Despite the added impact of current market turmoil, there appears to be no let-up in the deluge of regulatory interaction, new market initiatives and business change, and we expect to see more of the same leading into the second half of the year!

In this regulatory update newsletter, we will look at where ESG is now, get to grips with the new European ESG Template (EET), and consider what is coming down the line for PRIIPs.

quarterly_bodycopy  Fig_2

ESG: Where are we now?

The world of ESG never stands still and the potential to be left behind is real. In the first quarter we saw the release of the European ESG Template (EET), introducing a model for ESG data reporting to the market. Both client and regulator expectations are mounting, with a particular focus on the transparency of firms offering ESG-focused solutions and products.


In Europe, we have already seen firms grappling to meet the ESG criteria of Articles 8 and 9 from the Sustainable Finance Disclosure Regulation (SFDR). Data remains a challenge and firms are beginning to err on the side of caution rather than being bullish around their ESG capabilities. SFDR Level 2 RTS comes into effect on 1st January 2023. Firms will have to ensure they can provide the right data for pre-contractual and periodic reporting, and evidence their adherence to Principle Adverse Impacts (PAIs), which helps quantitively back the claims on entity and products’ sustainable characteristics.


In the UK, we still await the much-anticipated Sustainable Disclosure Requirements (SDR) legislation, with a proposed implementation of 31st December 2022. This tight timeline will require focus from UK firms once they are given the green light. The market is watching for exactly how products will be disclosed and how far they will align or diverge from the SFDR regulations.


It is worth noting the recent US Securities and Exchange Commission’s (SEC) fine levied at a U.S. Bank for greenwashing. The Bank was fined $1.5m for allegedly misstating and omitting information about ESG investments it managed for mutual funds. This is the first fine of its kind and may set the precedent. To ensure firms are aligned, the SEC further proposed two rule changes on 25th May to prevent misleading claims by U.S. funds on their ESG qualifications and increase disclosure requirements. The push for transparency on ESG matters is certainly intensifying within the US.

More to “E” than meets the eye?

It's not just the regulators that have been busy; we have also noted good progress with other international initiatives. A key focus is the Taskforce on Nature-related Financial Disclosures (TNFD). Most consider “Environment” in ESG to mean climate, but there is a much broader element - a focus on natural resources, pollution and waste, and environmental opportunities - which this framework addresses. March saw the launch of an 18-month process of consultation and development for the TNFD framework. The hope is to accelerate the framework’s development and steadily improve its relevance, usability and effectiveness before releasing final recommendations in Q3 2023. This is one to keep an eye on given that some metrics and data may be more difficult to quantify.

quarterly_bodycopy  Fig_3

EET: Have you hit the deadline?

March saw the official launch of the latest FinDatEx template, the European ESG Template (EET). The aim, like the rest of the suite of FinDatEx templates, is to simplify data exchange between product manufacturer and distributor. Whilst it is an industry initiative rather than a regulatory requirement, there is a strong expectation that the template will be adopted, beginning with the EET-light.

The EET-light is a smaller version of the full EET, requiring approximately 60 fields to be populated, compared to the full template of 580. Both versions should feel familiar (akin to the existing European MiFID Template (EMT) and European PRIIPs Template (EPT)), with standard manufacturer information required at the outset. The focus of the EET though is providing high level information on a product’s adherence to sustainability.

The EET-light helps product manufacturers ensure that those providing advice, namely under the Markets in Financial Instruments Directive (MiFID) and the Insurance Distribution Directive (IDD), present appropriate information about the sustainable characteristics of the product. There is a small but significant change to both MiFID and IDD, effective in August 2022, requiring advisers to understand and take into consideration their clients’ sustainability preferences through the suitability process. Without the required product level information to align portfolios to client sustainability preferences, products that do not provide an EET-light may be discounted by advisers and platforms, which in turn would likely impact fund flows.

quarterly_bodycopy  Fig_4

Is the industry ready for the EET-light?

The short answer is ‘maybe.’ Engaged product manufacturers have been deliberating how to create the EET-light for their product range for some time and were ready for the 1stJune deadline. Others adopted a more relaxed view, waiting to the last minute to meet the deadline, and a small number still plan to ‘wait and see’. Platforms are also taking a mixed approach to readiness, with a more significant push coming from the data providers and clients.

What are the key challenges? The EET-light in theory should be straightforward. Its similarity to the EMT and EPT helps, as around one third of the manufacturer and product information is consistent and simple to replicate. If the product is, or aligns to, an Article 6 product under SFDR, then there is little more to complete. More information is required (relating to sustainable characteristics and consideration of Principle Adverse Impacts) for Articles 8 and 9. A key consideration is revenue from sustainable investments or taxonomy-aligned investments – this requires focus and appropriate governance sign-off.

So, what’s next? In a sporting context, the EET-light is the warm-up and the full EET, expected to start distribution from October 2022 is the marathon. Careful planning is required to:

  • Ensure alignment of your products to the expected fields, both in terms of taxonomy and mapping
  • Identify data gaps and create a plan for how to close these
  • Create a robust, ongoing framework to deliver the EET on a regular basis
  • Consider the appropriate governance route for sign-off – there is reputational, commercial and regulatory risk to be considered

With various deadlines fast approaching, it is essential to be on the front foot!

On top of the proposed October deadline for the full EET there are other new regulations filtering through, due to go live at the end of this year and beginning of next. As mentioned, SFDR level 2 RTS is due on 1st January 2023 and the UK SDR legislation has a proposed implementation of 31st December 2022.

There should therefore be a real sense of urgency around planning for these regulations, there is no time for lethargy. Processes and data gathering will take time to refine, for example with regards to the full EET there is some latitude around the data input fields. Additionally, not only can the onboarding process be time consuming, but operationally it is also likely to take time to get things up and running from both an Asset Manager and Service Provider perspective.

If asset managers cannot prepare an EET by the deadline, the implications could be severe. Any product where there are client transparency concerns around ESG data may not be considered for distributor selection. This will most certainly impact on sales and marketing. It is therefore vital that asset managers ensure they have the correct processes in place to meet these upcoming regulations. It not just a regulatory requirement, but good business sense. Ultimately, it will literally pay to be organised.

Given the emerging regulation coming into effect, Broadridge Fund Communication Solutions is ready to support you with the composition, data mapping, validations, consistency, and distribution of your EET ESG data.

quarterly_bodycopy  Fig_5

PRIIPs: Further complication as the deadline approaches?

With the deluge of ESG initiatives in the market, it can be easy to forget that there are other initiatives that are also paramount. One example is the move to the PRIIPs KID in the EU and the UK.

In March we saw hopes from UCITS manufacturers dashed when the European Commission finally published confirmation that the UCITS exemption will cease on 31st December, requiring all EU UCITS to publish a PRIIPs KID from 1st January 2023.

We have subsequently seen the European authorities, namely the European Securities and Markets Authority (ESMA), publish technical advice which may alter the course, content, and look and feel of the PRIIPs KID and supporting documentation.

They have suggested the following key changes:

  • Harnessing the opportunities of digital disclosure, such as allowing information to be presented in a “layered” format
  • Allowing different approaches for different types of products to ensure the appropriate understanding of retail investors
  • Allowing more flexibility on the information provided in the performance section of the KID, including the indication of past performance
  • Introducing a new section in the KID to give prominence to sustainable objectives

Despite the potential for change there has currently been no change to the PRIIPs KID requirements for 1st January 2023, therefore focus should remain on the status quo.

So where does this leave us with PRIIPs? The answer is simple, aim for a hard start on 1st January 2023 but consider the ESMA expectations and ensure that a sensible and robust programme to deliver is in place. As for UK PRIIPs, the UK UCITS and NURS exemption are still valid until 2026, however all other in-scope products will need to adopt the UK PRIIPs KID by 1st January 2023.

quarterly_bodycopy  Fig_6

Available! Broadridge EET and PRIIPs KID Solutions

As you can see, there continues to be a deluge of regulatory changes and a number of unknowns. It is now more crucial than ever that firms keep abreast of these changes and prepare as early as possible for future requirements. Broadridge Fund Communication Solutions has extensive expertise in managing fund data and understands the challenges involved. We offer both EET and PRIIPs KID solutions, providing complete support for all aspects in the composition, maintenance and document distribution of both documents in all jurisdictions. Benefit from increased operational and cost efficiencies across your business with Broadridge Fund Communication Solutions as your single digital platform, supporting all your data, documents and regulatory reporting needs across the life cycle of funds.

Click here for more information

Let’s talk about what’s next for you

Our representatives and specialists are ready with the solutions you need to advance your business.

Want to speak with a sales representative?

Table Heading
+1 800 353 0103North America
+65 6438 1144APAC

Thank you.

Your sales rep submission has been received. One of our sales representatives will contact you soon.

Want to speak with a sales representative?

Table Heading
+1 800 353 0103North America
+65 6438 1144APAC