Understand Research Fees
As a part of MiFID II, investment managers are required to unbundle costs traditionally associated with trades. This requires you to separate research fees and commissions on all trades. Investment managers are responsible for reimbursing research fees back to the fund. Although the MiFID II regulation is an EU requirement, US fund managers that deal with EU counterparties or have offices based in Europe need to comply with the rule. As such, many US fund companies unbundle costs on trades as well.
Define Research Fees for Trades
You can apply research fees to all open and close equity and fixed income type transactions. If you unbundle research fees from ordinary commission fees, the system does not include the research fees as part of the cost of the trade. Instead it considers them reimbursable fees to the fund. If you specify a value for the Research Fee field, when you process the trade, Eagle Accounting generates a posting for a receivable that the system ultimately settles against cash once the investment manager reimburses the fund. Research costs do not affect the cost of the trade, but the system stores them as part of the trade details of the transaction. The receivable ledger posting does not reflect the security/asset from the transaction. However, in order to identify the trade/transaction associated with receivable posting, the Ledger Note field (tag 1308) displays the primary asset id of the security along with trade ticket number (tag 761 from the trade.
The following equity and fixed income trade panels allow you to define research fees using the following related fields.
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WRITERS NOTE: insert from other page BT says that the actual research fee amounts are not known at the time of the trade posting. And you thus need to make adjustments .Confirm. |
Settle Research Fees
When you define a research fee for a trade, the system creates a cash row for the research fee, as well as a cash row for the trade. Settlement occurs when the research fees are reimbursed back to the fund. Settlement of the research fee can occur independent of trade settlement and is not associated with a specific security. The receivable is offset by cash.
You can settle the research fee in several ways. For example, you can settle the research fee cash row separately using the manual cash settlement process with the Run Multiple Settlements panel.You can use this option to settle the fees on a different date than the trade date.
You can settle the research fee cash row using the auto settlement process or the contract cash process. These options allow you to settle the fee at the same time as the trade. For example, you can use the Add Cash Contribution panels or the Run Contract Cash panel.
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WRITERS NOTE: there is an example in the BRD.Detailed Requirements section. Include it? |
Adjust Research Fees
When you book a trade, you do not always know the actual research fee amount at the time the trade posts. When you know the actual research fee amount, you can adjust the research fee.
You can make adjustments to research fee amounts by either cancelling and rebooking the trade or by using receivable/payable events to adjust the Receivable for Other Fees ledger account.
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WRITERS NOTE: do adjustments mean a change to the trade research fee amount after the trade is booked? Or are we saying that you leave the trade alone and adjust the receivable only? MISCINC trn debiting or crediting a receivable or debiting realized gain loss? Explain the workflow.How/when does the fund manager reimburse the fund in Eagle Accounting? Does the Adjusting occur before the settling? Are we talking about using the Misc Income/Expense panels? |
Research Fees and STAR to PACE Direct
If you use Eagle Accounting along with Eagle Performance and use STAR to PACE Direct, STAR to PACE Direct uses the STAR_PERF_FLOW code category values during processing. A STAR_PERF_FLOW code applies to the RESEARCH_FEES event. For more information, see . About STAR_PERF_FLOW Code Values.
Report on Research Fees
The results for the following reports reflect research fees:
- Trade Activity report
- Trial Balance report
- Ledger Subledger Reconciliation report