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07 July 2010

CESR advises the European Commission on Key Investor Information Document


The Commission has indicated that it sees the methodologies on the risk and reward indicator and the ongoing charges figure as being more appropriately adopted via binding technical standards by the new European Securities and Markets Authority rather than as level 2 implementing measures.

CESR delivered its advice to the European Commission on the format and content of Key Information Document disclosures in October 2009. That advice was supplemented by two detailed technical methodologies on the risk and reward indicator and the ongoing charges figure that were delivered in December 2009. The Commission has indicated that it sees these methodologies as being more appropriately adopted via binding technical standards by the new European Securities and Markets Authority (ESMA) rather than as level 2 implementing measures. During the period leading up to the establishment of ESMA, CESR has agreed to adopt the methodologies as level 3 guidelines in order to provide clarity to the industry in implementing the new package of UCITS requirements.

The methodology for calculation of the ongoing charges figure set out in these guidelines applies to all UCITS and aims at ensuring a harmonised approach to the calculation of this figure, thereby enabling investors to compare UCITS more easily. The methodology identifies clearly which items should be included in the ongoing charges figure. There is a presumption that all costs borne by the fund must be taken into account unless they are explicitly excluded, while performance-related fees and transaction costs are among the costs excluded from the calculation (as are entry and exit charges borne by the investor). An ex-post calculation based on audited accounts should be used wherever possible. The methodology also takes account of the adaptation necessary in the case of new funds, or where there is a significant change to the costs of an existing fund.


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© CESR - Committee of European Securities Regulators

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