26 October 2017

Calculating transaction costs and ongoing charges effectively

Simplify it, automate it, repurpose it!
It can be easy to feel bogged down with all the extra requirements that regulation has placed on the investment industry, but the key is to not see this as another mundane task that has to be done, but an opportunity to make your business work more efficiently.

Here we explain what you should be thinking about when calculating your transaction costs and ongoing charges.

Get your data format and content right – Output formats and transmission methods can vary quite a lot, depending on the recipient. Ensuring you are set up to fulfil all these different requirements to generate costs and charges disclosures for investment funds and segregated mandates, will make sure you’re compliant with the MIFID II Directive and PRIIPs Regulation.

Automate it – Why do something manually that can be done via an automated system? Establish an automatic pull of market data from a single reliable source, and find a solution that covers all asset classes and instruments. Don’t forget to take in to account exceptional transactions where cost information is not readily available, ensure your system can use benchmark data as a proxy to apply costs, or input costs directly based on information from your trading desks.

Have tolerance checks in place – Make sure that you have the capability to set levels of tolerance checks for each of your funds or segregated mandates.

Implement robust security – You must have complete oversight of all cost and charge calculations at a fund and transaction level, and be able to apply a controlled sign-off process before the generation and despatch of your documents and templates.

Use it for multiple purposes – If done right you can repurpose the automated calculation of transaction costs and ongoing charges for UCITS, PRIIPs, MiFID ex-Ante and MiFID ex-post. This is not only more cost effective and timely for your business but it will also make the dissemination of data to your distributors more efficient, helping them also stay compliant across multiple regulations.

Align systems and processes – If you establish one system and one process to automate calculations, exceptions follow up and validations for all the different regulatory calculation results, there will be no need for multiple vendors and extra manpower. That means cost savings, risk reduction, greater oversight and time efficiencies.

Our new digital platform solution
Regulation doesn’t have to be difficult, it can provide opportunities for your business to start doing things differently and operate better.

We have developed a sophisticated online digital platform, that is one of the first of its kind and can make your life a lot easier when dealing with transaction costs and ongoing charges.

It provides a solution for all the complexities mentioned above that is associated with costs and charges calculations and offers a reliable, precise and automated way of getting all your calculation outputs to the right destinations, in the right format and with 100% accuracy, quickly.

Not only this, our digital platform is scalable, which means you can integrate data containing as many rows as you need and it will check every single line, highlighting missing information and errors, clarifying which are mandatory to rectify and which are a basic clean up of your data. It will also calculate the total costs across all asset classes and implicit costs for all derivatives, taking into account different currencies and exchange rates, so that you don’t have to worry about doing this manually.

The security of your data is a priority of ours, and that is why our platform also allows clients to apply a four eyes control sign-off before the generation and despatch of European MiFID II Templates (EMTs), European PRIIP Templates (EPTs) and location variations), KIIDs and other output documents.

If you would like to know more about how KNEIP’s new digital platform can do all this for you and more, please contact our business development team.

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