Transaction cost ‘chaos’

Changes to transaction cost disclosure brought in by the MiFID II capital market reforms in January have resulted in “organisational chaos” according to platform research firm Fundscape.

The firm accused regulators of an “utter disregard for common sense” and said the regulators gave fund managers two opposed calculation methodologies.

It said that regulators, authorised corporate directors (ACDs) and platforms had “let advisers and investors down badly”.

The introduction of transaction cost disclosure under MiFID II was intended to provide greater transparency.

But Fundscape said some platforms’ numbers quoted online did not tally with data providers’; other platforms’ online numbers did not tally with subsequent illustrations and some platforms, such as Transact, refused to use negative numbers.

Zero transaction fees should cause more shock than negative transaction fees, Fundscape said.

While every fund has trading activity through tax, liquidity and stock-broker commissions some boutique managers are not sure their ACDs have calculated the numbers correctly, since they know they cannot be zero.

Transaction charges are not hidden charges and high transaction costs do not equal bad funds, Fundscape stressed.

©2018 funds europe

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