6. Payment / Funding

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  1. Each asset management firm will make all reasonable efforts to charge clients for research consistently across all funds, markets and jurisdictions.
  2. Each asset management firm may use a single RPA to govern the payments infrastructure and client allocations for external research. The detail of the RPA will be allocated at a client level.
  3. The RPA will make payments, either administered internally or through a third party RPA administrator. CSAs can be held with brokers but brokers will not be responsible for ensuring that the products and services that are paid for are within scope of the EU Delegated Acts or subsequent national regulations.
  4. With a CSA-funded RPA, commission payments to reach allocated payments to providers from each research budget will be administered through the order management system and/or any payment tools or processes that monitor which balances have hit their execution only level.
  5. If a trading counterparty does not hold an asset manager’s CSA then they will be trading at an execution-only rate.
  6. The total amount of research charge received in the RPA may not exceed the research budget but how that is administered in practice may vary. If asset managers wish to avoid varying commission rates as certain budgeted research charges have been collected, then commission recapture accounts can be used to hold surplus amounts and transfer back funds at regular intervals.
  7. If a research budget is facing a shortfall of funds it may be topped up by the asset management firms’ own resources. Asset management firms can concurrently process payments both from CSAs as well as from their own internal P&L, but will ensure clarity for investors regarding the legal status of each balance and where it is held.
  8. CSA broker selection will be based on the quality of execution provided by the broker, and not be impacted in anyway by the provision of research by the broker. Legal documentation will support all CSA brokerage relationships.
  9. Commission rates, and according CSA splits, will be formed to ensure fair and appropriate charge is applied to the funds. [Monthly]* CSA trade reconciliation processes will be established, and managed by an appointed employee/s. Payment instruction protocol will be established to ensure only authorised staff may instruct payments, using an auditable and robust workflow.
  10. Research charges deducted through a broker alongside transaction fees will be swept, where possible, daily to an RPA following the transaction – however T+2 will also be acceptable. Ring-fenced RPAs may be administered by the broker, third parties or the asset management firm itself. Use of RPA aggregation services in the event of the existence of multiple RPAs may be used to improve efficiency, oversight and control to the process, where applicable.

*awaiting final FCA guidance

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