Do Callable Corporate Bonds Constitute PRIPs? The Application of Regulation (EU) No 1286/2014 of the European Parliament and of the Council 'on Key Information Documents for Packaged Retail and Insurance-based Investment Products (PRIIPs)' in Relation to Callable Corporate Bonds

Abstract

This article addresses the issue concerning the application of Regulation (EU) 1286/2014 of the European Parliament and of the Council of 26 November 2014 “on key information documents for packaged retail and insurance based investment products (PRIIPs)” in relation to callable corporate bonds. On the basis of a literal interpretation of the relevant articles and recitals of that Regulation and taking also into account all other related official documents published before its adoption, the author comes to the conclusion that callable corporate bonds do not constitute packaged retail investment products (PRIPs) and hence the Regulation does not apply to them. The article is structured in five Sections: (a) Section 1 presents the objective of the PRIIPs Regulation and its relationship to other legal acts constituting sources of EU financial law. (b) The definition of the term PRIIPs and the scope of application of the PRIIPs Regulation are discussed in Section 2. (c) Section 3 focuses on the three (3) conditions for a product to be considered as a packaged retail investment product (PRIP) under the Regulation. (d) The specific issue relating to the treatment of ‘complex products’ under the new Markets in Financial Instruments Directive (MiFID II) and the PRIIPs Regulation is the subject matter of Section 4. (e) Finally, Section 5 contains the author’s conclusions.