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  "documentTitle": "Banking and capital markets trends 2020: Laying the foundations for growth",
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  "notes": "Part of a series of slides on regulation; specifically focuses on the 'Costs and charges' pillar of MiFID II.",
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      "text": "Costs and charges",
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      "text": "Firms not taking a holistic approach to developing methodologies for costs disclosure, reflecting MiFID II requirements but also related obligations under the PRIIPs (packaged retail and insurance-based investment products) regulation and UCITS (the undertaking of the collective investment in transferable securities) directive. Methodologies for calculating and disclosing transaction costs are likely to face ongoing regulatory scrutiny. Difficulties to disclose costs and charges on a transaction by transaction basis for wholesale clients.",
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      "text": "Assess whether the firm’s staff have been adequately trained to understand the cost and charges requirements. Controls and processes to enable the firm to rapidly provide an itemised breakdown of transaction costs. Controls and processes in place to obtain and verify data elements from third parties. Transparency of communication to clients. System controls to support the capture and communication of accurate and complete data.",
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      "text": "The Markets in Financial Instruments Directive (MiFID II) MiFID II enhanced and widened the scope of MiFID. It strengthened both investor protection regimes and market structure rules. It introduced new product governance rules and extended existing reporting regimes.",
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      "text": "MiFID II requires firms to provide disclosure of costs and charges to enable clients to make more informed decisions. The new rules require disclosure on ex-ante and ex-post information on all costs charged by the firm for the investment service or ancillary service provided, and all costs and charges associated with manufacturing and managing of financial instruments.",
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      "text": "The FCA published supervisory findings on investment firms in the retail sector in February 2019. This highlighted concerns with how asset managers are communicating their disclosures and calculate and disclose transaction costs. The effectiveness of disclosure of costs and charges provisions in wholesale markets is also under scrutiny. ESMA issued a call for evidence in the summer 2019 to determine whether amendments should be considered.",
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      "text": "Many areas of the regulation led to deep changes in the market, for the buy-side and sell side alike. Key areas of concern include new research unbundling requirements, the impact of cost disclosure, transaction reporting and market structure. The calibration of pre- and post- trade transparency requirements has been heavily debated, and there is renewed interest in the impact of trading obligations in light of Brexit.",
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      "text": "The FCA has been focusing its supervisory efforts on research unbundling, costs and charges, payment for order flow (which links to rules on conflicts of interest, best execution and inducements). It is also expected to increase focus on best execution.",
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