What is the Cost Transparency Standard (CTS)?
Cost Transparency in the United Kingdom
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The Cost Transparency Initiative (CTI) was introduced by the Financial Conduct Authority (FCA) in the United Kingdom in 2018.
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The CTI was based on recommendations from The Institutional Disclosure Working Group (IDWG) set up by the FCA and chaired by a leading professor of finance, Professor Chris Sier.
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Cost Transparency Initiative (CTI) Templates, authored by Professor Sier, were then introduced to enable asset owners or their advisors to require asset managers employed to provide completed CTI templates.
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The CTI templates include all cost information in a standard and prescribed format and at specific client and mandate level.
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Asset managers faced regulatory penalties for failing to provide data or for wilful misrepresentation.
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The primary objective of the Cost Transparency Initiative (CTI) was to enable asset owners and their advisors to assess whether they are receiving value for money on mandates held by managers employed, and for asset managers to understand whether they are delivering competitive outcomes and value for money for clients.
Other Value for Money Initiatives
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In addition to the Cost Transparency Initiative (CTI), a number of Value for Money (VfM) initiatives have been introduced by regulators in both the United Kingdom and the European Union.
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These include Value Assessments and Consumer Duty in the United Kingdom, and the IOPR II Critical Review Directive within the European Union.
Cost Transparency in Ireland
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Following the successful model of the Cost Transparency Initiative (CTI) in the United Kingdom, the Irish pensions regulator, The Pensions Authority, has announced the introduction of the Cost Transparency Standard (CTS) in Ireland with the full authority of the Department of Social Protection. Click here to read the announcement.
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Institutional asset owners will participate in the programme and require asset managers employed to complete CTS Templates for every mandate placed with them.
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While compliance with the Cost Transparency Standard (CTS) will be voluntary, The Pensions Authority has made it clear that it expects asset owners to participate and that it will move to formal legislation to mandate participation if necessary.
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The Irish Association of Pension Funds (IAPF) will manage the introduction and implementation of the Cost Transparency Standard (CTS) and will provide access to all information resources including the prescribed CTS Templates.
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Asset owners register with the IAPF for the Cost Transparency Standard (CTS) at iapf.ie/cts.
ClearGlass Ireland - Supporting Asset Owners with the
Cost Transparency Standard (CTS)
In response to demand from asset owners and their advisors for support in participation with the Cost Transparency Initiative (CTI), Professor Sier
established ClearGlass Analytics as a kind of industry utility.
Since its establishment in the United Kingdom in 2019, ClearGlass has supported over 850 institutional asset owners in the UK with AuM in excess of €1.5 trillion, and worked with over 530 asset managers to obtain and verify completed CTI templates on behalf of their clients. ClearGlass also generates market analytics across 46 different investment strategies showing asset owners whether they are obtaining value for money on mandates placed with asset managers, and showing asset managers whether they are delivering competitive outcomes and value for money for clients.
Following the model in the United Kingdom, ClearGlass Analytics is replicating the industry utility model in Ireland. ClearGlass Ireland, based in Dublin, will
support institutional asset owners and their advisors, as well as asset managers operating in the Irish market
36k+
Mandates
assessed across 46 investment strategies
530+
Asset Managers
trust ClearGlass with their data
850+
Pension Schemes
have used ClearGlass to measure and manage their investment costs
10+
Advisors
have used ClearGlass to offer greater transparency to their clients
CTS Cost Transparency Report
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ClearGlass collects CTS templates from all asset managers holding mandates from an asset owner.
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The CTS data provided by managers is rigorously reviewed and verified by the ClearGlass quality control team.
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A CTS Cost Transparency Report is then generated for the asset owner.
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The CTS Cost Transparency Report contains a full breakdown of client and mandate specific costs and performance for each of the mandates included in a portfolio.
CTS Value for Money Report
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The CTS Value for Money Report contains a summary of mandate specific ongoing charges and performance delivered by a manager, benchmarked against the market.
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The benchmarking is based on investment strategy, the mandate size, and whether the mandate is pooled or segregated.
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Close attention is paid to all of these factors to ensure like-for-like comparisons.
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CTS Value for Money Reports are also IORP II Critical Review Directive
compliant.
The Cost Transparency Standard (CTS) Templates
These are the regulator prescribed Cost Transparency Standard (CTS) Templates which asset managers are required to complete on request by their institutional clients or their representatives.
Asset Managers are required to complete Cost Transparency Standard (CTS) Templates accurately and within the timelines set out for submission.
Glossary Of Terms & FAQ
The Cost Transparency Standard (CTS) Process
CTS Comprehensive Benchmarking Report
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CTS Comprehensive Benchmarking Reports are generated by investment strategy.
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A report contains a full breakdown of all mandate specific costs and performance delivered by a manager, for all of the mandates included in an investment portfolio in a given investment strategy, and benchmarked against the market.
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The benchmarking is based on the investment strategy, the mandate sizes, and whether the mandates are pooled or segregated.
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Close attention is paid to all of these factors to ensure like-for-like comparisons.
