MiFID II FAQs Fr Advisers, Discretinary Prtfli Managers and Prduct Prviders Praemium Administratin Limited Praemium Administratin Ltd is authrised and regulated by the Financial Cnduct Authrity under reference 463566
Cntents Summary 4 Frequently Asked Questins (FAQs) 4 Hw is Praemium addressing their MiFID II bligatins?... 4 Hw has Praemium defined distributrs and manufacturers under the MiFID II regulatin?... 4 Hw is Praemium handling best executin?... 6 Hw is Praemium prpsing t prvide infrmatin n csts and charges?... 6 What will Praemium d abut prduct gvernance?... 6 Hw will Praemium handle transactin reprting?... 7 Hw will Praemium handle regular client reprting?... 7 Hw will Praemium reprt the 10% drp in value?... 7
Summary MiFID II (The Markets in Financial Instruments and Derivatives II) is EU-wide legislatin that is due t cme int effect n 3rd January 2018. As a UK FCA-regulated investment business, Praemium Administratin Limited (PAL) is bliged t cmply with the regulatin. The spirit f the legislatin is t imprve custmer utcmes by ensuring that cmpanies manufacture and distribute financial prducts in a clear and transparent manner. This dcument is designed t set ut the way in which PAL will deliver its bligatins under the legislatin, taking int accunt the requirements f ur client firms, whether they are advisers, Discretinary Prtfli Managers r a cmbinatin f the tw. This is based n all the infrmatin available t us n the Directive, FCA plicies, best practice guides and legal advice as at 15 th Nvember 2017, and is subject t change. Frequently Asked Questins (FAQs) Hw is Praemium addressing their MiFID II bligatins? PAL has established a MiFID II special prject t ensure we are fully cmpliant by the date MiFID II cmes int effect. The prject is spnsred by CEO Michael Ohanessian and managed by key members f the Senir Management Team. We are currently wrking with ur lawyers t prvide updated legal agreements fr Adviser and Discretinary Prtfli Manager firms and expect t send these ut by the end f Nvember 2017. The changes t ur terms and cnditins will set ut clearly ur bligatins under MiFID II and emphasise the rles f advisers and Discretinary Prtfli Managers in relatin t the platfrm. Fr any questins n MiFID II and Praemium please email us at mifid2@praemium.cm Hw has Praemium defined Distributrs and Manufacturers under the MiFID II regulatin? Praemium has made the fllwing determinatins when defining distributrs and manufacturers: Praemium: deemed t be an intermediate distributr in MiFID II terms because we are a platfrm that ffers mdels managed by Discretinary Prtfli Managers, and advisers are able t select the mst suitable mdel/s fr their underlying investrs. Adviser firms: deemed t be end distributrs as they are engaging directly with investrs. Fund huses fr managed funds: deemed t be prduct manufacturers (prducts are defined as financial instruments). Frm Praemium s pint f view, there are n manufacturers fr direct stcks r bnds. Discretinary Prtfli Managers (DPMs): deemed t be distributrs. Our services as intermediate distributr: Select Service this service is fr adviser firms wh d nt have their wn discretinary permissins. The adviser firm can select a Discretinary Prtfli Manager (r managers) wh is a DPM. Direct Service this service is fr adviser firms wh als have their discretinary permissins and can therefre act as bth financial adviser and Discretinary Prtfli Manager fr their wn direct clients.
Distributrs & Manufacturers - Select Service Distributrs & Manufacturers Direct Service
Hw is Praemium handling Best Executin? We will be publishing an updated versin f ur Best Executin Plicy n www.praemium.c.uk t cnfirm ur cmpliance with the regulatin. Hw is Praemium prpsing t prvide infrmatin n Csts and Charges? Fr Ex-Ante reprting n the estimated csts/charges we intend t prvide infrmatin as fllws: Ttal service cst One-ff charges Onging charges Transactin charges Ancillary service charges Incidental charges Ttal prduct cst One-ff charges Onging charges Transactin charges Incidental charges Third-party charges The ttal f the prduct cst and the third-party charges will be displayed as a ttal aggregated cst. (VAT will nt be identified separately.) This infrmatin will then be used t prvide infrmatin n what yu might get back in year 1 and subsequent years, based n: n charges, after charges and the cumulative effect f csts and charges n returns. The data will be shwn in currency amunts (,$ r ) and in percentage terms. The charges will be detailed as part f the accunt setup prcess via the new adviser prtal. The adviser prtal is designed t make accunt pening n the platfrm much faster, aviding duble entering infrmatin and with a much mre user-friendly interface. Advisers will als be able t create new illustratins in adviser prtal (available in pdf frmat) fr any mdel changes that may cause a significant change t the csts and charges frm the riginal illustratin. We will be rlling ut adviser prtal t all ur adviser firms by the end f December 2017. Fr Ex-Pst reprting n the actual csts and charges, we intend t cnfirm the actual charges deducted frm the accunt ver the previus year. This will be prvided in cnjunctin with the regular client reprting (see Hw will Praemium handle regular client reprting fr mre infrmatin). What will Praemium d abut Prduct Gvernance? Praemium Administratin Limited is nt a manufacturer r end distributr under the MiFID II regulatin and therefre this area f the regulatin has limited impact n the platfrm: All investrs are defined as retail investrs and are advised by financial advisers wh are regulated in the cuntry in which they are prviding advice. The Discretinary Prtfli Managers (DPMs) are charged with selecting funds that are suitable fr retail advised clients. Since the funds are selected by the DPMs there is n requirement fr Praemium t prvide fund factsheets r Key Investr Infrmatin Dcuments (KIIDs). The majrity f the financial instruments held n the platfrm are either daily dealing funds, direct stcks
and bnds, r Exchange Traded Funds (ETFs), and s wuld fall int the categry f nn-cmplex instruments. Where investment trusts are selected by a DPM, it is up t the DPM t determine their suitability fr retail advised investrs. Given the abve, we will nt initially be passing any infrmatin t advisers n the target market (since it is already clearly defined as advised retail ) and we will nt be passing any summary infrmatin t prduct manufacturers, i.e. fund huses. Hw will Praemium handle Transactin Reprting? PAL will be prviding the required transactin reprting n all transactins accrding t the regulatins. We have btained Legal Entity Identifiers (LEIs) frm ur client firms and have sme utstanding requests fr accunts that are trusts r cmpanies. If we have requested an LEI frm yu fr ne f these accunt types, please ensure that yu send us the number as sn as pssible and n later than December 15, 2017. All new trust and cmpany accunts will need t prvide an LEI n accunt set up. Yu will be able t prvide this t us via an input field n the adviser prtal. Hw will Praemium handle regular client reprting? We will be increasing the frequency f reprting frm 6 mnthly t quarterly in arrears and will send ut reprts within 25 business days f the end f the calendar quarter. We are currently reviewing the best methd f delivery fr reprts, with ur default psitin being via the Praemium Investr Prtal. An email will be sent t the adviser and underlying investr t prmpt them t lg in t btain their reprt. We will mnitr access t the investr prtal: if the investr has nt lgged in during the quarter, we will send ut their reprt by pst. We are able t send quarterly reprts t adviser firms instead f making them directly available t the investr. We are seeking feedback frm ur adviser firms n which rute they wuld prefer. Quarterly reprting will be cmpliant with the regulatin, i.e. prviding details n incme and charges. One reprt per year will als include the ex-pst reprting n charges. Client reprting type Qtr 1 Qtr 2 Qtr 3 Qtr 4 Quarterly Perid end date 31 Mar 2018 30 Jun 2018 30 Sep 2018 31 Dec 2018 Reprts despatched by 31 Apr 2018 31 Jul 2018 31 Oct 2018 31 Jan 2018 Ex-pst (frm 2019) Anniversary end date up t 31 Mar 2019 30 Jun 2019 30 Sep 2019 31 Dec 2019 Annual reprt 31 Apr 2019 31 Jul 2019 31 Oct 2019 31 Jan 2020 Hw will Praemium reprt the 10% drp in value? MiFID II will require firms t meet additinal reprting bligatins t ntify clients when the verall value f their prtfli, relative t its value at the beginning f each reprting perid, depreciates by 10% and multiples f 10% thereafter ( depreciatin reprting ) within 24 hurs. Where an adviser uses a third party DPM, the DPM has the respnsibility fr this cmmunicatin. Hwever, we
recgnise that DPMs running mdel prtflis n a platfrm d nt typically have the client data. Therefre we expect they will lk t delegate this t adviser firms whilst using the platfrm t facilitate the infrmatin. At Praemium we have taken n bard feedback frm ur adviser firms that as they have the key relatinships with custmers they will require the infrmatin s that they can infrm and manage the cnversatins with their custmers with regards t the fall in value f their prtfli. Where a prtfli drps by 10% in value during a reprting perid (calendar quarter), Praemium will send email ntificatins t bth the adviser and t the DPM whse mdels have been affected. The methd used is as fllws: Beginning f the quarter is the starting perid, e.g. April 1 st. Perfrmance is calculated n a time-weighted basis. If accunt perfrmance shws a drp f mre than 10% frm April 1 st, a ntificatin is triggered. Praemium will cnduct a preliminary check t ensure that the drp is genuine, after which the ntificatin will g ut that a drp has ccurred. If accunt perfrmance drps by 20% frm April 1 st, anther ntificatin is sent t ntify the adviser f a secnd 10% drp. The measurement is always taken frm the beginning f the first day f the quarter. At the beginning f the next quarter n July 1 st, the perfrmance calculatin resets fr that quarter. Disclaimer The abve infrmatin is fr use by ur Adviser, Discretinary Prtfli Manager and prduct prvider firms nly. This guidance is prvided at a general level nly, t help prvide backgrund infrmatin abut the changes being made by Praemium Administratin Limited and hw Praemium will interact as a Platfrm service prvider This infrmatin is nt intended as advice abut the MIFID II regulatry changes. Fr this we recmmend that each rganisatin shuld seek their wn legal advice. Please refer t the FCA MiFID II guidance and plicy statements fr the UK. We welcme yur feedback and if yu have any further questins please cntact us at mifid2@praemium.cm