provided investment service(s). Switching costs (costs that can be incurred by investors by switching from one investment firm to another investment firm). On-going charges related to the provision of an investment service All on-going costs and charges paid to investment firms for their services provided to the client. Management fees, advisory fees, Custodian fees. All costs related to transactions initiated in the course of the provision of an investment service All costs and charges that are related to transactions performed by the investment firm or other parties. Broker commissions (costs that are charged by investment firms for the execution of orders), entry- and exit charges paid to the fund manager, platform fees, mark ups (embedded in the transaction price), stamp duty, transactions tax Foreign exchange costs. Any charges that are related to ancillary services Any costs and charges that are related to ancillary services that are not included in the costs mentioned above. Research costs. Custody costs. Incidental costs Performance fees Table 1 of Annex II of MiFID Delegated Regulation Investment Product Costs All costs and associated charges related to the financial instrument that should form part of the amount to be disclosed. Cost items should be aggregated as per the first column in Table 2 Annex II of the MIFID II Delegated Regulation, which is set out below. This table refers to both Ex-Ante and Ex-Post disclosures. Table 2 Cost items to be disclosed Description Examples One-off charges All costs and charges (included in the price or in addition to the price of the financial instrument) paid to product suppliers at the beginning or at the end of the investment in the financial instrument. Front-loaded management fee Structuring fee (fees charged by manufacturers of structured investment products for structuring the products. They may cover a broader range of services provided by the manufacturer) Distribution fee.
Example Breakdown of detailed costs and charges for a “fund” The table below provides an example of how a variety of types of charges can be classified, i.e., Service cost or product cost. These are based on TISA assumptions. Example Breakdown of detailed costs and charges for a “fund” Charge Type TISA Classification Charges related to investment service One-off Fees/Costs Service Costs – One-off charges Administration Fees/Costs Service Costs – One-off charges Initial Advice Fee Service Costs – One-off charges Initial Discussion Fee Service Costs – One-off charges Deposit fees Service Costs – One-off charges termination fees Service Costs – One-off charges Transaction Fees/Costs Service Costs – Transaction Costs FX Forward Costs Service Costs – Transaction Costs FX Spot Costs Service Costs – Transaction Costs Interest Rate Swap Costs Product Costs – Transaction Costs Platform Fee Service Costs – Transaction Costs On-going Fees/Costs Service Costs – Ongoing Costs ISA Administration Fee Service Costs – Ongoing Costs Management Fee Service Costs – Ongoing Costs Ongoing Advice Fee Service Costs – Ongoing Costs Leveraged Lending Cost Service Costs – Ongoing Costs Tax Reporting Fee Service Costs – Ongoing Costs Trust Fee Service Costs – Ongoing Costs Ancillary Costs Service Costs – Ancillary Costs Custody Fee Service Costs – Ancillary Costs Research Costs Service Costs – Ancillary Costs Incidental Costs Service Costs – Incidental Costs Performance Fees Service Costs – Incidental Costs Charges related to financial instrument One-off Fees/Costs Product Costs – One-off Costs Fund Initial Charge Product Costs – One-off Costs Fund Redemption Charge Product Costs – One-off Costs Fund Switching Charge Product Costs – One-off Costs Transaction Fees/Costs Product Costs – Transaction Costs Market Commission Product Costs – Transaction Costs Exchange Fees Product Costs – Transaction Costs
Clearing Charges Product Costs – Transaction Costs Futures clearing Product Costs – Transaction Costs Exchange Clearing Product Costs – Transaction Costs Exchange Execution Product Costs – Transaction Costs PTM Levy Product Costs – Transaction Costs Fund Dilution Levy Product Costs – Transaction Costs Implicit Spread Costs Product Costs – Transaction Costs Stamp Duty Product Costs – Transaction Costs On-going Fees/Costs Product Costs – Ongoing Costs Audit Fees Product Costs – Ongoing Costs Custodian Fees Product Costs – Ongoing Costs Directors Fees Product Costs – Ongoing Costs Formation Fees Product Costs – Ongoing Costs Guarantor Fees Product Costs – Ongoing Costs Legal Fees Product Costs – Ongoing Costs Management Fees Product Costs – Ongoing Costs Other Fees Product Costs – Ongoing Costs Registration Fees Product Costs – Ongoing Costs Risk Transfer Fees Product Costs – Ongoing Costs Service Manager Fees Product Costs – Ongoing Costs Sub Registrar Fees Product Costs – Ongoing Costs Trading Interest Fees Product Costs – Ongoing Costs Trading Stock Borrow Fees Product Costs – Ongoing Costs Trading Swap Financing Fees Product Costs – Ongoing Costs Trading Other Fees Product Costs – Ongoing Costs Research costs Product Costs – Ongoing Costs Incidental Costs Product Costs – Incidental Costs Performance Fees Product Costs – Incidental Costs Carried interest Product Costs – Incidental Costs Calculation of end investor costs for Ex-Ante and Ex-Post disclosure This section aims to provide guidance on the best practice for the calculation of the end investors’ costs that need to be displayed in both the pre-sale and annual report that a distributor is required to supply under MiFID II.