Knowledge Base
Communicate pricing, costs, and distributor remuneration to clients
Which cost categories must be distinguished in the standardized presentation format under Delegated Regulation 2017/565?
The standardized presentation format must distinguish several cost categories. Costs related to investment services include one-off entry and exit fees, ongoing management fees, transaction fees, and performance-related ancillary costs. Costs related to financial instruments include structuring fees, ongoing product management fees, and internal transaction costs.
What information must be provided regarding inducements received by distributors?
Information on inducements must include their existence, nature, and, if possible, their amount or calculation method. This information must be communicated to the client in advance and may be included in the same document that presents the costs borne directly by the client.
What elements must be included in the cumulative impact of fees on returns under the standardized format?
The cumulative impact of fees on returns must be illustrated in absolute amounts and as a percentage. It must include different holding period scenarios based on product type. For example, for a share purchase, the simulation must indicate brokerage fees, applicable taxes, and their effect on returns if the investment is held for the recommended period.
What document must be provided to retail clients before each transaction under Article 24(4) of MiFID II?
Under Article 24(4) of MiFID II, retail clients must receive a cost estimate before each transaction. This estimate must be communicated in good time before the service is provided and may be based on actual costs or a reasonable estimate.
The AMF recommends that information on inducements be communicated through a separate document from the one presenting the costs borne directly by the client.
The AMF recommends that information on inducements be communicated through the same document that presents the costs borne directly by the client. This allows for greater transparency and better understanding by the client.
Ex-post reporting must include only the direct fees paid by the client.
Ex-post reporting must include both direct fees paid by the client and indirect fees deducted from the value of the instruments. It must be presented as a total absolute amount and as a percentage of the average portfolio value held.
Ex-ante disclosure
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Ex-ante disclosure is the information provided to clients before the service is delivered. It covers all costs and charges related to investment services and financial instruments, and must be expressed in absolute amounts and as a percentage.
Categorize items by dragging them to the appropriate zones
Items to categorize:
Direct fees
Indirect fees
Direct fees are those paid directly by the client, while indirect fees are deducted from the value of the instruments. This distinction is important for ex-post reporting.