MiFID II Costs & Charges Workshop 4th September 2019 Jeffrey - PowerPoint PPT Presentation

MiFID II Costs & Charges Workshop 4th September 2019

Jeffrey Mushens Technical Policy Director, TISA

1. What is Costs & Charges? • What the Directive says • Who it affects • What it covers • When it has to be done • What has to be done www.tisa.uk.com 3

2. What the Directive says • Article 24(4) • The information about all costs and charges , including costs and charges in connection with the investment service and the financial instrument, which are not caused by the occurrence of underlying market risk, shall be aggregated to allow the client to understand the overall cost as well as the cumulative effect on return of the investment, and where the client so requests, an itemised breakdown shall be provided . Where applicable, such information shall be provided to the client on a regular basis, at least annually , during the life of the investment • Article 50 of the Delegated Regulation • The aggregated costs and charges shall be totalled and expressed both as a cash amount and as a percentage . www.tisa.uk.com 4

3. Who it affects • MiFID businesses • Some UCITS firms are not MiFID businesses, but their customers may be • Product manufacturers • Platforms • Advisers www.tisa.uk.com 5

4. What it covers • Pre sale disclosure (ex ante) • Post sale disclosure (at least annually), but • Portfolio management services clients at least quarterly (see Article 60 Delegated Regulation) • All costs www.tisa.uk.com 6

5. What are all costs? • See Appendix 1 www.tisa.uk.com 7

6. When it has to be done • ex ante - Appropriate information shall be provided in good time to clients or potential clients • ex post -such information shall be provided to the client on a regular basis, at least annually , during the life of the investment www.tisa.uk.com 8

7. What has to be done • All costs and charges , shall be aggregated • Cumulative effect on return of the investment where the client so requests, an itemised breakdown shall be provided . • At least annually • The aggregated costs and charges shall be totalled and expressed both as a cash amount and as a percentage . www.tisa.uk.com 9

8. Some current issues • Cumulative effect of charges on returns • Calculation of transaction costs • Arrival price methodology (implicit costs/slippage, half spread, etc) • Dilution levy • What happens when the fund manager is outside the EEA? • Property funds. • ESMA call for evidence. www.tisa.uk.com 10

THANK YOU TISA Dakota House, 25 Falcon Court Preston Farm Business Park STOCKTON-ON-TEES TS18 3TX www.tisa.uk.com 01642 666999 enquiries@tisa.uk.com