ESMA_QA_1799
Status: ✅ Answer Published
Link to ESMA Q&A tool: https://www.esma.europa.eu/publications-data/questions-answers/1799
Regulatory Context
Regulation : MIF2
Level 1 Regulation: Markets in Financial Instruments Directive II (MiFID II) Directive 2014/65/EU- Investor Protection and Intermediaries
Level 2 Regulation: No information available
Level 3 Regulation: No information available
Topic: Inducements
Subject Matter: Inducements
Question
Submission Date: 04 April 2017
How should the estimated client research charge disclosure be presented for the purposes of Article 13(1)(c)(i)?
ESMA Answer
Answer Date: 04-04-2017
[ESMA 35-43-349 MiFID II Q&As on Investor protection Ch 7, question 11] Before providing an investment service, investment firms intending to use an RPA to pay for investment research should provide clients with two separate pieces of information:
the amount that the IF has budgeted for research; and the estimated amount that can be expected to be paid out of the assets of the individual client.
ESMA considers that (i) should reflect the monetary amount of the budget set for a given group of portfolios, strategies or funds that are expected to benefit from such research (see Q&A1), to which their individual research charges will contribute. In relation to (ii), it is ESMA’s view that this should be considered in light of the wider MiFID II costs and charges provisions, in particular Recital 80 and Article 50(2) of the MiFID II Delegated Regulation. Consistently with this, ESMA considers that the estimated client research charge should be presented as a single estimate figure, and disclosed in both a percentage (or basis points) format and as a cash amount. If a firm wishes to do so in order to provide a degree of certainty to investors, it can present (ii) as a maximum figure where they guarantee to their clients they will not pay more than that predetermined amount. However, figures presented as a range are not acceptable.
This document was automatically extracted from the ESMA EMIR Q&A database.