1. Scope of the RPA and Placement Within the Organisation

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  1. The RPA will encompass all external inputs which qualify as research as defined in Recital 28 of the Delegated Acts, and which are paid for by clients through fees paid alongside any execution fees, direct fees or charges to the fund in which they are invested.
  2. The asset manager’s CIO’s office will maintain awareness and oversight of the RPA, with direct day-to-day responsibility for the RPA’s administration held by a combination of Head of Research, COO, Head of Compliance, Research Business Manager and Market Data Manager, with the exact make up representative of the size and complexity of each asset management firm. Representatives responsible will meet monthly as the RPA Committee to assess the proper functioning of the RPA in terms of:
    •      Budgeting
    •      Accurate client allocation and reporting of research charges
    •      Client fairness[1]
    •      Research valuation
    •      Research procurement and monitoring
    •      Separation from execution relationships and services
    •      Policy and implementation regarding shortfalls or surpluses in funds compared to original budget
    •      Third Party RPA administration – oversight, efficiency, counterparty risk
  3. Heads of Dealing may or may not be on RPA Committee but will be provided with the information necessary to administrate CSA balances. While their advice and input will be valuable in the setting up of the RPA structure, this involvement may be separated from the continuing administration of the RPA.
  4. The RPA may, but is not compelled to, encompass research covering all asset classes, sectors and geography.
  5. Asset managers may choose to use either CSAs or the “Accounting Method” to fund an RPA.
    •      Under the accounting method research charges will be agreed with clients, and then deducted from the fund on an accrual basis and transferred to the RPA.
    •      Under the CSA (Commission Sharing Agreement ) method the research charge is collected alongside a transaction commission.
  6. These best practices should also apply for non EU-firms executing orders and managing money for their EU-clients, or executing in dual-listed financial instruments. Common standards will apply across MiFID individual portfolio management and non-MiFID collective portfolio management.
  7. Asset management firms may decide that some of their research acquisition should remain outside an RPA structure, in which case the entirety of that external research provision will be paid for with the asset manager’s own resources.

[1] Ensuring some clients are not paying unduly for external research which other clients benefit from without contributing to its cost. (See 5. i, ii, iii)

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