How should the estimated client research charge disclosure be presented for the purposes of Article 13(1)(c)(i)?

Answer 11

Before providing an investment service, investment firms intending to use an RPA to pay for investment research should provide clients with two separate pieces of information:

(i) the amount that the IF has budgeted for research; and

(ii) the estimated amount that can be expected to be paid out of the assets of the individual client.

ESMA considers that (i) should reflect the monetary amount of the budget set for a given group of portfolios, strategies or funds that are expected to benefit from such research (see Q&A1), to which their individual research charges will contribute.

In relation to (ii), it is ESMA’s view that this should be considered in light of the wider MiFID II costs and charges provisions, in particular Recital 80 and Article 50(2) of the MiFID II Delegated Regulation. Consistently with this, ESMA considers that the estimated client research charge should be presented as a single estimate figure, and disclosed in both a percentage (or basis points) format and as a cash amount.