This guide describes how to get started with the MiFID II (called M2 hereafter) application and the integration with BFS and Bricknode Broker.
Step 1
Start by making the configuration settings in your instance of Bricknode Broker to connect that application to M2 which is described here Settings in System Data .
This application solves the following problems:
Financial intermediaries (securities firms/distributors) has to supply end customers with information about how much costs has been incurred for each of their fund holdings and structured products holdings. Both with regards to how much has been applied by the intermediary in relation to the specific holding and also from within the producer of the financial instrument.
They also have to show how much general costs that have been incurred like account fees, admin fees etc. They also need to show the returns that has been received before fees and after fees. We call this problem costs and charges (Ex Post).
In addition to how much costs has actually been incurred the intermediary has to show the customer for each instrument how much costs that will potentially be incurred for the coming period. We call this problem costs and charges (Ex Ante).
Financial intermediaries has to classify their customers according to their knowledge and fit in relation to the products that are offered so the customer is not allowed to invest in something that they are not fit to invest in. We call this problem target market.
To solve both problems we need to receive information from the producer of the financial instruments and we get this from what is called “EMT-files”. The EMT file contains one row per financial instrument.
The various properties contain information regarding how much costs has been incurred within the producer, both as so called OneOff items which trigger on entries and exits into the instrument and also OnGoing costs which contain annual management fees and other management related fees that the producer incurs in order to deliver the instrument.
Before starting the processes below all the customer data and all instrument data must be pushed from BFS into this application which is done from System Settings → Other settings and MiFID II - Customer Protection in BFS. There is one button for sending customers to M2 (which is this application) and also one button for sending instruments. There is a duplicate check so there will be no duplicates created in this application.
So, the issuers of the financial products deliver EMT files (which may be aggregated by suppliers like MFEX and then forwarded on to the intermediaries) which is imported to this application. The content in the EMT files rarely change so when conducting calculations of costs and charges for the end customers the last EMT file import data is used.
Broker Ex Posts
Within costs and charges the intermediary also has to show how much kickback that might have been received by the intermediary and to know this a file can be imported to this application in the section called Broker Ex Posts where the csv file has to have the following columns with these exact headers and being delimited by semicolon:
ISIN | The ISIN code of the financial instrument. |
DistributorKickBack | The percentage kickback received by the intermediary in decimal format. This means that 0.5 % should be inputted like 0.005. |
AdvisorKickBack | The percentage kickback received by the financial advisor from the intermediary as a total value of the fund fee. If the advisor received half of the kickback from the distributor from what the distributor received from the producer in the prior column it would mean 0.25 % and should be entered like 0.0025. |
PeriodStartDate | This is the start date from when this kickback schedule should be active and the application will use the schedule for the correct period in the calculation of cost and charges. |
PeriodEndDate | This is the end date from when this kickback schedule should be active and the application will use the schedule for the correct period in the calculation of cost and charges. |
Example file to use as a template:
| View file | ||
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| Info |
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See the section Distributors producer cost if you have a need to show this data too. |
Another prerequisite to starting the calculations is that the relevant transaction types from BFS has to be imported. Since custom transaction types may be used this step should be conducted together with Bricknode staff.
Once these steps are done we can start the synchronization of data from BFS into this application which is done from the section called Ex Post Calculations.
The synchronization process loops through each day in BFS and collects all positions in financial instruments for that balance date in the Trade dimension of BFS and also all transactions that has been conducted in BFS and that match the transaction types that we imported earlier.
Once the synchronization is done we can go on to the calculation.
The calculation job is triggered from the Ex Post Calculations page.
Once the job is done the fee report page in BFS will show the updated data.
The M2 application can also deliver data through its REST API and also receive data that way if you would like to implement this functionality in your own applications too.
ExAnte information can be delivered as soon as the EMT-file is imported because no data has to be calculated. This is done via the REST API of M2 and is shown by the GUI’s of Bricknode Broker.
BFS collects this information and displays as a section for each financial instrument that is viewed.
Target market
Pages for working with target market for customers are iFramed into BFS and can also be accessed via API directly. See more about this in the user documentation MiFID II - Customer Protection