How do the EMT and DCPT templates compare to the CTI framework?

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Moving on from the exploration of the relationship between MiFID II and the CTI framework featured in the previous post, this post introduces two new templates – the European MiFID Template (EMT) and the DC Workplace Pension Template (DCPT), as well as highlight the similarities and differences amongst these in relation to both the CTI Machine Readable and Main Account template.

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What is the EMT?

The European MiFID template (EMT) is another industry agreed information exchange template, created by the Financial Data Exchange Group (FinDatEX), to collect costs data. It is split into the following sections:

1. EMT Data Set Information
2. Target Market Section
3. Costs & Charges Ex-Ante Section
4. Costs & Charges Ex-Post Section

The first section reports similar information to the ‘Account Information’ section of the CTI template, as evidenced in Figure 1 below. Similarly, the fourth section of the EMT reports some of the costs and charges found in the CTI, though where the CTI reports ‘parent’ cells and their ‘child’ costs at a far more granular level, the EMT only reports totals of costs and charges.

However, the ‘Target Market Section’ is unique to the EMT. In this section, the manufacturer assesses the following items: Investor Type; Knowledge and/or Experience; Client Ability to Bear Losses; Risk Tolerance; Client Objective & Needs and Distribution Strategy. These are answered through a mixture of mostly ‘yes/no/neutral’ responses, though ‘1-7 or empty’ responses are used in some cases to, for example, show the relative risk tolerance of clients for respective structured securities or funds.

In addition, the ‘Costs & Charges Ex-Ante’ section is unique to the EMT template. To recap, ex-ante refers to reporting estimated costs for the next year whilst ex-post refers to reporting costs incurred in past years.

Due to this, the EMT is not exclusively used to report costs and charges data to current investors, but also provides crucial information that can help future investors decide if a fund is suitable for them to invest in or not.

Click here to view the full EMT template.

What is the DCPT?

The DCPT template was created by the ABI and IA, following rules that came into force in early 2015, imposing that IGCs or trustees of DC Workplace pension schemes request and report on the level of changes and transaction costs of their schemes. The DCPT is split into the following sections:

1. General portfolio information
2. Obtaining information
3. Transaction Costs
4. Administration charges
5. Other relevant information

Like both the ‘Account information’ section of the CTI and the ‘EMT Data Set Information’ section, the first section of the DCPT reports very similar information. Within the transaction costs section, the DCPT again reports similar information to the CTI in terms of the name of the cost items, but different in terms of the granularity.

Where the DCPT reports general transaction costs for the fund, the CTI reports costs that are client specific due to the fact that the CTI focuses on reporting to pension fund trustees, whereas the DCPT is about ensuring the flow of information from asset managers to pension scheme operators.

Click here to view the full DCPT template.

Figure 1. – How does the EMT and DCPT map to the CTI Machine Readable?

Item IDField NameItem IDField NameItem IDField Name
1)00010CTI Portfolio Identifying Data00010Financial Instrument Identifying Data00010Portfolio Identifying Data
2)00020CTI Type of Identification Code for the Fund Share or Portfolio00020Type of Identification Code for the Financial Instrument00020Type of Identification Code for the Fund Share or Portfolio
3)00030CTI Portfolio Name00030Financial Instrument Name00030Portfolio Name
4)00040CTI Portfolio Issuer Name00040Portfolio Issuer Name
5)00050CTI Start of Period00050Start of Period
6)00060CTI End of Period00060End of Period
7)3010CTI Total Transaction Costs8070Financial Instrument Transaction Costs ex post2020Transaction Costs for Buy and Sell Transactions
8)4010CTI Ongoing Charges8030Financial Instrument Ongoing Costs ex post
9)5010CTI Incidental Costs8080 (v1)Financial Instrument Incidental Costs ex post
10)6010CTI Lending and Borrowing Costs2030Transaction Costs for Lending and Borrowing Costs
11)7010CTI Property Expenses3020Costs Other than Transaction Costs

In summary, both the CTI Main Account and CTI Machine Readable templates report ex-post costs and charges data at the highest granularity. However, the EMT allows manufacturers to report target market information, as well as ex-ante costs to their distributors, whilst the DCPT primarily focuses on reporting transaction costs and administration changes to pension scheme operators.