RESEARCH & FEES
RECORD KEEPING
✔✔Firms providing execution and research services need to price each service separately .
✔✔Research payment accounts should only be funded by a specific research charge to the client .
✔✔Client charges should be based on budgets set by the investment firm .
✔✔Client charges for research should not be linked to the volume and value of transactions .
✔✔Firms should draw up a governance document , which outlines specific requirements on research spending .
✔✔Reports from third parties , paid for by a corporate issuer to promote new issuances are permitted as a minor non-monetary benefit . This needs to be disclosed to clients .
✔✔Third parties may not allocate “ valuable ” resources to an investment firm for research purposes .
✔✔Records must be available at any time to show the exact assets held on behalf of clients , in specific client accounts .
✔✔Records must be accurate , documenting specific financial instruments and funds held , with a complete audit trail .
✔✔Firms must have regular reconciliations between internal accounts and third parties managing client funds .
✔✔Client funds must be held separately from those of the investment firm .
✔✔Client funds held by a third party must be easily identifiable from the financial instruments belonging to the investment firm .
✔✔Firms must put in place adequate organisational arrangements to minimise the risk of the loss to the client .
✔✔Information on client assets and client investments in financial instruments must be immediately available to regulators and insolvency practitioners on request .
✔✔Records should include internal accounts , documents about where client funds are held , details of accounts with third parties , details of companies conducting outsourced activities . Contact details for individuals handling client accounts at third party companies , should also be included .
✔✔Firms must not use financial instruments on behalf of clients in a country that does not regulate the safekeeping of assets .
✔✔Client funds have to be deposited with a central bank , credit institution , authorised bank or recognised money market fund .
✔✔Clients must give consent to have their funds placed in a money market fund .
✔✔Only 20 % of client funds can be placed with subsidiaries of the same financial group .
✔✔One individual should be appointed with overall responsibility for compliance obligations relating to client assets .
✔✔External auditors should review the systems and procedures in place at least once a year .
16 | THE TRADE MiFID II HANDBOOK www . thetradenews . com