New industry standards for institutional investment cost data | Cost Transparency Initiative 15 October 2019

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Jason Bingham

Managing Director, Product Development

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What is Cost Transparency Initiative (CTI)?

The Institutional Disclosure Working Group (IDWG), a working group formed by the Financial Conduct Authority to address cost information reporting to investors, has launched a new industry standard to allow reporting of costs and charges in a standardised format. The standard known as the Cost Transparency Initiative applies to both funds and segregated mandates whose institutional investors require the use of the following CTI templates:

  • User summary template
  • Main account level template
  • Private equity sub-template
  • Separate physical asset template
  • Separate ancillary services template

When is it effective?

The use of CTI templates is voluntary, however new signatories to the Code of Transparency for Local Government Pension Scheme (LGPS) asset managers (the “Code”) will be expected to use the CTI template immediately since its release on 21 May 2019. This has created pressure on alternative asset managers as some pension funds may require the use of CTI templates as a condition for their investment.

How will managers be affected?

The CTI template includes more detailed cost disclosures than required in the MIFID’s EMT template or the LGPS template. With the introduction of CTI templates, signatories to the Code on or before 21 May 2019 may still continue to use the LGPS template for a maximum 12-month period after which the CTI template must be used. Given this change, we recommend asset managers consider the use of CTI templates across their fund mandates and start mapping their costs using integrated system reporting.  

The period covered by the CTI template is on a yearly basis and asset managers who signed up with the Code are expected to report against December 2019 and April 2020 year-ends.

What guidance is available?

The CTI templates are available for free download here. The website provides a step-by-step guide, explanation of the data that investors can expect to receive and illustrative examples of typical content of the CTI templates.

How SANNE can help?

SANNE is a specialist global provider of outsourced corporate and fund administration, reporting and fiduciary services. As leaders in alternative asset administration, SANNE deliver tailored fiduciary and invest in technology solutions designed to meet the needs of our clients.

We can assist in automated preparation of the CTI template for your funds or segregated portfolios. SANNE has developed flexible investor reporting capabilities based on our experience with ILPA template, EPT, EMT and MIFID II costs and charges reporting. Since the launch of the CTI templates, SANNE has leveraged on the existing system functionalities to generate the CTI template automatically for each investor which makes it more efficient for our clients to adhere to this new cost reporting requirement.

If you have any queries, please speak to Jason Bingham, Managing Director, Product Development and Marian Suguitan
Director, Private Debt & Capital Markets.