Cross-Border Distribution of UCITS

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2011

CHALLENGES & OPPORTUNITIES

This calculation can be made as follows: • Daily average holdings over a defined period or end of period holdings, • On the basis of trade date or settlement date.

Trailer fee calculation methods Once the holdings are determined, various calculation methods can be applied for trailer fees, including elements such as: • Calculation rate: Real rate or rate based on a percentage of the management fee, • Calculation basis: Presence or absence of ranges with thresholds, • Calculation frequency: Monthly, quarterly or yearly. Process management Beyond the holdings and trailer fee calculation methods, you should not ignore the complex- ity of the process management, depending on the various requirements of the management company such as: • The calculation frequency, • The deadline required for reporting delivery, • The obligation to carry out reconciliations with many players, namely ICSDs and custodians, in order to obtain accurate positions before calculating trailer fees, • The demand for transmitting an estimated calculation of trailer fees to centralising agents, It is worthwhile mentioning that the points expressed above become more difficult to man- age when there is increasing complexity in the distribution network the management company wishes to set up, namely: • The number of distributors, • The number of levels of distribution, • The frequency, extent and dissemination of the distribution network modifications, as trailer fee calculation should take any update during the calculation period into account. Reporting Finally, it is a real challenge for management companies to obtain a quality report in terms of comprehensiveness, clarity and accuracy, as these reports constitute the core basis on which intermediaries are remunerated. Hence they are a prerequisite to remunerate intermediaries in an efficient way. From a commercial point of view, quality reports can be used as dashboards, enabling manage- ment companies to adapt and optimise their distribution networks according to the perform- ance of the various distributors. transfer agents, clearers or even account keepers (bank statements), etc., • The payment of trailer fees to distributors to finalise the whole process.

3.5

3.5.4

Recent initiatives to improve fund sales agreements

If the calculation formulae to be used cannot be harmonised as these are a matter for mar- ket competition, on the contrary, the context and format of the distribution agreements can be harmonised. Several initiatives have emerged to improve fund sales agreements in the past years.

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