MiFID II Investor Protection Client Reporting

How can Deloitte assist with the MiFID II Article 60 and 50 reporting obligation

What are Articles 50 and 60 in the context of MiFID II?

The Markets in Financial Instruments Directive (2004/39/EC) came into force on 3 January 2018. The objective of the directive is to ensure greater transparency within the industry, with the regulation introducing new reporting requirements for the industry participants.
Among different reporting requirements, MiFID II requires the provision of specific information on discretionary portfolio management activities carried out on behalf of investors and improved transparency on ex-post cost and charges.

What are the requirements of MiFID II Article 50 and Article 60?

Article 50, annual costs and charges report:

• MiFID II Article 50 (Article 24(4) of Directive 2014/65/EU) requires the provision of pre-contractual or post-contractual costs and charges information at service and product level.
• Specific disclosures of the Article 50 report include:
  • Costs and charges associated with Investment services of the investment firm and internal or external Financial instruments,
  • Third party payments received or paid during the provision of investment services,
  • Costs influencing the relative performance of financial entities,
  • Costs and charges related to ancillary services provided to the entity.

Article 60, periodic reporting on discretionary portfolio management activities:

• MiFID II Article 60 (Article 25(6) of Directive 2014/65/EU) requires the provision of a fair and balanced assessment of the activities undertaken by the investment firm on behalf of the investor over the reporting period.
• Specific disclosures of the Article 60 report include:
  • Portfolio valuation information, including among others the financial instrument type and market value,
  • Performance during the period under review,
  • Charges related to the discretionary portfolio management activities,
  • Details for corporate actions received by the entity during the reporting period,
  • Detailed transactions executed during the period.

 
What is the reporting timeline?

• Article 50 reporting is periodic however at least annually,
• Article 60 reporting is on a quarterly basis if the portfolio is unleveraged, otherwise on a monthly basis.

Who does this reporting obligation apply to?

• MiFID II Article 50 is applicable for any investor distribution strategy, i.e. execution only, advisory and discretionary portfolio management.
• MiFID II Article 60 is applicable to investment firms providing portfolio management service. The firm shall provide to the investor a periodic report unless such report has been provided by a third person.