Are you ready for “MiFID II ex-post reporting ?”
If you work in the Financial banking sector you know for sure that one of the key challenges of this first quarter of 2019 is to provide clients with the so called “ex-post reporting”.
Where do we stand today?
To recap quickly MiFID II requires to send an ex-post reporting to any client who has held at least one MiFID investment product during the last calendar year. For the first time, financial institutions will have to disclose all costs and charges paid by clients for their investments and the impact of those costs and charges on the return of investment (i.e. performance).
While this could sound crystal clear, the legal requirements and ESMA provided limited guidelines on how to structure this reporting.
What we know for sure:
Costs and charges can be aggregated, and they have to be indicated in cash amount and in percentage.
An illustration showing the effect of the overall costs and changes on the performance is a requirement.
An itemized breakdown of costs and charges has to be provided, should the client request it.
The reporting has to occur at least annually.
Because the devil is in the detail, here starts the carousels for questions:
Aggregated by instrument or by client relationship?
Which taxes in scope of the reporting?
Although not in MiFID scope, do I include financial insurances as some competitors might do?
If the relationship ends in the course of the year when do I have to issue my report?
How should the illustration look like?
…
MiFID II purpose, sadly, not met:
Because so many details have been left to the industry’s own interpretation, financial institutions have developed their own best report.
Since each financial institution has its own interpretation, each will deliver reports with different data in it, meaning the clients won’t be able to compare costs, charges and impact on performance across different providers. That being the purpose of the directive, I guess we can conclude it failed to reach her objective.
How to remediate this?
In the coming weeks, ESMA will provide the sector with new guidelines or Q&A on cost and charges disclosures for which institutions have been eagerly waiting.
Why eagerly?
Because those guidelines will give an idea on the necessary efforts to “re-work” the existing reporting. Because, of course, it will be necessary to be fully compliant.
How can we help you?
DynaFin has regulatory experience, MiFID experts and has been supporting its clients over the last years in their ex-post reporting implementation.
We can assist you in extracting the data from different systems/files and integrate in your system.
We can help you setting up with your calculation tools (assets under management, costs and charges, impact on performance…).
We can help you with the definition of reporting templates.
Please do not hesitate to contact us:
Monica Bernal / Business Manager Regulatory
monica.bernal@dynafin.be / +32 (0) 473.89.36.22
Jean-François Pilliard /Director
jean-francois.pilliard@dynafin.be /+32 (0) 477 27 40 96
