Services

Transaction costs
& market data service

calculate transaction costs correctly and comprehensively

The PRIIPs and MiFID II regulations came into effect across all EU member states in January 2018. Their aim is to make it easier for investors to understand and compare investment products. According to the requirements of ESMA, all costs and fees that arise in connection with fund transactions must be shown in absolute terms and as a percentage. all costs and fees pertinent to fund transactions should be expressed in both absolute and percentage terms using defined templates. These transaction costs should either be reported as an average from the last three years (ex-ante) or the last year (ex-post).

The “arrival price” methodology, also known as the “slippage cost” methodology, is recommended for calculating transaction costs. This methodology comprises two approaches:

Full PRIIPs approach The full PRIIPs methodology is based on the client’s transaction data and focuses largely on the intraday prices of liquid assets. Sourcing accurate and reliable intraday prices requires a robust market data solution.

New PRIIPs approach This methodology is also based on the client’s transaction data; this time focusing on assets for which no intraday market prices are available, or where the available mid-prices are inaccurate. In such cases, the recommended practice employs average spreads to calculate transaction costs.

With the arep platform and our managed services you can calculate transaction costs using different methods in parallel.

Transaction cost calculation as per requirement of regulations (PRIIPs, MIFiD II, UK Disclosure, RG97 etc.) for young or ageing funds
Estimation of transaction costs for new products
Look-through for fund of funds calculation
Faster calculation: focus on exceptions instead of reviewing every transaction
Use your existing data for output and distribution
Stay on top of things using the arep dashboard
Access to prices and fair value calculations of leading market data suppliers
Control all transactions with a web-based SaaService solution
Enhanced visualization with a comprehensive dashboard solution to obtain in transaction cost domain

what you’ll need: an accurate and comprehensive market data solution

Determining arrival prices is essential for the regulatory valuation of transactions and positions as well as for the calculation of transaction costs in the context of EPT, EMT, DCPT, RG97 and ICT reporting.Identifying correct market prices or basis points is a real challenge and is essential for the distribution of financial products.

Our market data service offers our clients a comprehensive way to source arrival prices from a panel of renowned vendors. From December 2021 it will no longer be possible to estimate transaction costs using AFG tables. It is important, therefore, to find a robust data solution as soon as possible.

The arep solution offers a wide array of facilities under a single touch point, for a seamless and hassle-free regulatory experience:

You can use the standardised arep template or the internally-customised data format
You can select one or more vendors (e.g. Refinitiv, IHS Markit) or use verified basis points to determine arrival prices using your own waterfall strategy
You can use standardised or individual fall-back rules for missing or false data
You can assess data quality according to your own criteria