Update on European MiFID Template (EMT) 3.0

By Aleksandar Kozacenko

Why is there a new EMT template and who will be affected with this update?

European MiFID Template (EMT) is a MiFID information exchange template jointly designed by product manufacturers (i.e. asset managers) and distributors as part of FinDatEx’s MiFID working group. Since January 2018, EMT has been successfully used to standardize the flow of information on target market, distribution strategy and costs & charges between product manufacturers and distributors.

The European Fund and Asset Management Association (EFAMA) continued gathering feedback from the industry, intending to remove any ambiguities present in the original EMT 1.0 template (which is still being used). Based on the feedback collected, new EMT 3.0 was created and officially endorsed in December 2019 by FinDatEx and members of the FinDatEx Steering Group.

Members of FinDatEx Steering Group include: European Fund and Asset Management Association (EFAMA), the European Banking Federation (EBF), Insurance Europe, the European Savings and Retail Banking Group (ESBG), the European Association of Cooperative Banks (EACB), the European Structured Investment Products Association (EUSIPA) and the European Association of Public Banks (EAPB).

Based on the EMT 3.0 update especially to the fields relating to the target market and distribution strategy product manufacturer will need to carefully consider their product categorization. On the other side, distributors are now expected to report sales outside the positive target market or within the negative target market. Any such instances should be justified by the individual facts and the reasons for the deviation should be documented.

Is there a transition period between the two EMT templates?

Transition period will finish on 10 December 2020 after which product manufacturers can provide their distributors with only EMT 3.0 template.

ACOLIN’s survey of distribution partners shows that distributors are in the process of analyzing the implementation of EMT 3.0 and, at least at the moment, have no intention yet to request the delivery of the new template until the end of the transition period. To meet different distributors’ requirements, ACOLIN recommends starting to disseminate both EMT 1.0 and EMT 3.0 throughout the entire transition phase, until all selected distributors have switched to the new version.

Significant number of distributors use Openfunds standard (www. openfunds.org) for data validation and delivery of static and regulatory data. Openfunds is currently in the process of aligning itself, as close as possible, to existing ESMA standard. The new Openfunds data catalogue v1.26, which is about to be launched, will contain all EMT 3.0 fields and incorporate any existing field changes.

For product distribution in Germany, MiFID data needs to be mapped, delivered and successfully imported into WM Daten database in either of the two templates:

  • WM Daten EMT template
  • 3 German templates (ZMF, KTF and JV)

What are the differences between EMT 1.0 and EMT 3.0 templates?

There are several differences between the EMT 1.0 and EMT 3.0 templates. These differences will need to be reviewed and understood, as they can have a significant impact on the quantity and quality of MiFID data being disseminated to your selected audience i.e:

  • Number of the fields has been increased from 66 in EMT 1.0 to 94 fields in EMT 3.0
  • More than 30 new fields have been added throughout the template (EMT Data Set Information section fields, fields added to further explain the product and identify the manufacture)
  • Certain fields have been discontinued, had their names or field type changed, or both
  • EMT 3.0 allows for individual section updates as each section now contains a record date: Target Market Data, Ex Post Costs and Ex Ante Costs
  • All ongoing ex-ante and ex-post costs must be reported in annualized terms regardless of the existence, even if the reporting period is shorter
  • Use of value “99.99” has now been discontinued
  • New ESG field has been added to show if the product is compatible with clients who have an ESG preference
  • Specific country fields have been added i.e. for Italy and UK

What to consider in MiFID Dissemination?

Dissemination of MiFID (EMT) data is often underestimated in terms of complexity as frequency and delivery can vary from one recipient to another:

  • There can be multiple Formats (XLS, CSV, XML, Openfunds)
  • Output can have either one ISINs or multiple ISIN in the same output
  • Frequency can be either recurring (i.e. daily, weekly, monthly) or Ad-hoc (based on material change)
  • Delivery can be via E-mail, External sFTP or a Custom API all defined by the recipient destination

As such, asset managers need to carefully consider their EMT dissemination and deliver correct, complete and up to date data to their selected list of recipients.

Are you ready for EMT 3.0 template and this update?

To successfully implement EMT 3.0 following questions should be considered by asset managers:

  • Have we received a copy of endorsed EMT 3.0?
  • Who internally or externally is reviewing EMT 3.0 on our behalf?
  • Are we aware of the changes introduced in EMT 3.0?
  • Have we checked Target Market Definitions and adjusted them to EMT 3.0 specification?
  • Are we aware of new data points present in EMT 3.0 and how these are supposed to be used?
  • Can we produce EMT 3.0 in various formats (CSV, XLSX)?
  • Can we disseminate the same ISIN in EMT 1.0 and EMT 3.0 to our distributors?
  • How frequently and in which format our distributors like to receive EMT data?
  • For German distribution, are we able to successfully convert EMT 3.0 into WM Daten format(s)?

The above are just a few questions which should assist you in getting EMT 3.0 implemented.

How can ACOLIN help?

ACOLIN is the only globally active service provider of cross-border fund distribution services that operates independently of banks. The comprehensive range of services offered by ACOLIN enables internationally active asset managers and fund companies to gain swift and straightforward access to the most important global financial markets in the EU, Switzerland and Latin America. Headquartered in Zurich, ACOLIN has subsidiaries and branches in Belgrade, Dublin, Frankfurt, Geneva, Constance, London, Milan and Madrid.

Worldwide, ACOLIN services over 600 asset managers and 1800 funds from over 30 jurisdictions with its comprehensive tailormade distribution solutions, encompassing: Representation Services, Distribution Network Management (DNM), Global Fund Registration, Online Publications, Tied Agent Service and GDPR Representation.

As part of ACOLIN Distribution Network Management (DNM) service, our clients have access to ACOLIN extensive expertise in global product distribution and to ACOLIN highly valued Data Management team. ACOLIN Data Management includes the collection, validation, processing, and dissemination of static (master) and regulatory (MiFID and PRIIPs) fund information on behalf of our clients to their selected list of Distribution Partners.

ACOLIN EMT 3.0 service offering includes:

  • Review and consultation of populated EMT 3.0
  • Validation of EMT 3.0 and production of validation report
  • Creation of EMT 3.0 out of ACOLIN Regulatory Template (ART)
  • Mapping and delivery of EMT 3.0 to WM Daten
  • Dissemination of EMT 3.0 to selected list of recipients

In case you are interested in any of the above services, or if you have any questions/comments, please do not hesitate to get in touch with us.

About the Author

Aleksandar Kozacenko is Member of the Group Executive Committee and Head Data Strategy & Governance at ACOLIN. His role is focused on data strategy & quality, establishment of operational procedures and representation of ACOLIN at industry bodies and events.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.