ESMA_QA_1802
Status: ✅ Answer Published
Link to ESMA Q&A tool: https://www.esma.europa.eu/publications-data/questions-answers/1802
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: Reporting to clients
Subject Matter: Post-sale reporting
Question
Submission Date: 16 December 2016
When fulfilling the obligation to report on a portfolio depreciating by the 10% threshold, does the firm need to report if a portfolio value drops by more than 10% as a result of the client making cash withdrawals?
ESMA Answer
Answer Date: 16-12-2016
[ESMA 35-43 349 MiFID II Q&As on Investor protection Ch. 8, question 2] The obligation is to report if the overall value of a portfolio, as evaluated at the beginning of each reporting period (usually every three months), depreciates by 10% and thereafter at multiples of 10%. When cash withdrawals are made from a portfolio, the value of the managed financial instrument or funds is reduced by the amount of the client money transferred; but the overall value of the portfolio, as evaluated at the beginning of the previous reporting period, includes the value of the cash withdrawn. So, if clients withdraw cash from a portfolio, until a periodic statement is provided that discounts the cash withdrawn, when calculating the overall value of a portfolio, to see whether the 10% thresholds are exceeded, a firm will need to take this cash into account by adding its value to the value of remaining financial instruments or funds in the portfolio.
This document was automatically extracted from the ESMA EMIR Q&A database.