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17 December 2014
New York
Reporter Stephanie Palmer

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Spaulding Group lays down benchmark cost guidelines

The Spaulding Group has released a set of custodian guidelines for transparency in benchmark cost, partnering up with three custodian banks; BNY Mellon, State Street and Northern Trust.

The guidelines have been developed with the goal of improving transparency around embedded fees for benchmark data, clarifying the details behind fees and enabling investors to make informed decisions.

Key principles include taking benchmark data in to account, as well as index provider listing fees and the resources for collecting and processing files. Companies should also offer free customised benchmark cost analysis, if a client requests it.

As the environment for licensing the use of benchmark data is becoming increasingly complex, the cost of data is rising.

Samir Pandiri, executive vice president and CEO of asset servicing at BNY Mellon, said: “Providing transparency to our clients will help them understand the associated costs of their benchmark selection decisions which are required to monitor and analyse their investment portfolios.”

Brian Downer, senior vice president and head of Global Product and Platform Solutions within State Street Global Services, added: “We are focused on ensuring that clients have access to the tools necessary to make informed decisions.”

“This initiative will help our clients better understand the costs associated with benchmark data and its impact on their portfolio.”

Fiona Horsewill, global head of product and strategy at Northern Trust, said: “Enhancing transparency on fees for benchmark data is an integral part of our commitment to client service.”

“Every basis point counts, particularly in an increasingly competitive investment management marketplace and the guidelines will enhance our clients’ ability to capture investment opportunities while managing risks and costs.”

In conjunction with the guidelines, Nasdaq has agreed to license its Nasdaq Global Index Family to custodians that agree to these principles, at no additional cost.

David Spaulding, founder and CEO of The Spaulding Group, said: “The ever-increasing cost of benchmark data has been an issue that has grown in importance every year. It has been a major theme of our Performance Measurement Forums and a hot topic of discussion at our annual Performance Measurement, Attribution and Risk conferences and in our surveys.”

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