EMT adds seven fields in updated UK specific version

At a glance
 

FinDatEx has published version 4.2 of the European MiFID Template (EMT), introducing a new optional UK-specific section with seven additional fields.

Among them, six new fields aim to provide transparency on indirect costs for funds investing in underlying funds or real assets. This reflects the commitment to transparency championed by the Financial Conduct Authority (FCA) since its November 2023 statement.

Additionally, a seventh field indicates whether the fund produces client-facing disclosures for UK Sustainability Disclosure Requirements (SDR) regulation.

The EMT v4.2 will be necessary for UK distribution from 30 June 2024. After this date, version 4.1 will be discontinued, while both versions 4.2 and 4 will remain valid.
 

A closer look
 

General topics – Description of the additional fields

On 22 April 2024, FinDatEx published version 4.2 of the European MiFID Template (EMT), introducing a new optional UK-specific section with seven additional fields.

Among them, six new cost fields have been added to meet the FCA's expectations of sharing more granular cost information across the distribution chain, aiming to increase transparency for retail investors. This update does not alter the EMT fields of the previous version 4.1 but provides additional insights into the ongoing costs, both ex ante and ex post.

For funds investing in underlying funds, the new fields provide transparency on indirect ongoing costs, classified based on the nature of the underlying fund: open-ended or closed-ended.

On top of this, a new field specifically addresses costs associated with direct investments in real assets, such as real estate and infrastructure. This field encompasses the expenses related to holding, managing, operating, and maintaining real assets, which are already included in the ongoing charges.

The rationale for these changes stems from the FCA's November 2023 statement on cost disclosure by funds, which recognizes the benefits of disaggregating costs to increase transparency and provide more useful information to retail investors. As a result, the FCA intends to reassess the effectiveness of cost aggregation for investor decision-making.

Furthermore, the seventh new field has been added to indicate whether the fund produces client-facing disclosures for compliance with the UK SDR regulation.
 

Timeline on implementation of the EMT version 4.2

While the inclusion of new fields is not mandatory, it is standard practice for such industry templates to include optional fields that are specific to certain countries. However, it is highly recommended to complete them for funds distributed in the UK, as distributors will require them.

The EMT v4.2 will be necessary for UK distribution from 30 June 2024. After this date, version 4.1 will be discontinued, while both versions 4.2 and 4 will remain valid.

Would like to receive support from Deloitte to thoroughly analyze the potential impacts of the new EMT v4.2 fields? Don’t hesitate to reach out to us.