3.20.2 Front-end Fees and Trail Commission Payments

This topic explains the Front-end Fees and Trail Commission Payments.

For legacy business

In cases, where To Entity is Unitholder, investor may receive trailer commission in the form of Cash or reinvestment (into same fund) – This is only applicable when from Entity is M.

For Execution business

Front end fee:

Table 3-17 Case 1:

Load	From Entity	To Entity
L1	Unit Holder	AMC
L2	AMC	Broker/Agent

Table 3-18 Case 2:

Load	From Entity	To Entity
L1	Unit Holder	Broker
L2	Broker	AMC

Trailer Fee:

Table 3-19 Case 1:

Load	From Entity	To Entity
T1	AMC	Broker/Agent

Table 3-20 Case 2:

Load	From Entity	To Entity
T1	AMC	Broker/Agent
T2	Broker/Agent	Unit Holder

Table 3-21 Case 3:

Load	From Entity	To Entity
T1	AMC	Unit Holder

Table 3-22 Case 4:

Load	From Entity	To Entity
T1	AMC	Broker/Agent
T2	AMC	Unit Holder

Table 3-23 Case 5:

Load	From Entity	To Entity
T1	Unit Holder	Broker/Agent

In this case Unitholder can mention his preferred fund, and fee can be paid by redeeming units from this fund.

For Advisor Business

Front end fee:

Table 3-24 Case 1:

Load	From Entity	To Entity
L1	Unit Holder	AMC

Trailer Fee:

Table 3-25 Case 1:

Load	From Entity	To Entity
T1	AMC	Unit Holder

However the fee configurations are expected to be handled operationally by the business. Hence, for UK domiciled broker when the transaction category is Advised Business, you should not map any load which will have To Entity as Broker/Agent/Agency Branch/Account Officer/IFA.

Appropriate transaction categories will be mapped to enable system to skip transactions where the transaction category is Advised Business for trailer commissions when the To Entity is mapped as Broker/Agent/Agency Branch/Account Officer/IFA.

In case of Agent/Agency Branch /AO/IFA hierarchy, the system will compute Trailer commission based on the transaction category mapped for the hierarchy.

If the trailer commission computed for the hierarchy does not include Advised Business transactions, then commission shared among other entities (in the hierarchy below the entity for which trailer commission has been computed) will also not include the commission eligible due to Advised Business.

Post RDR, the system will setup the payment of front-end fees based on load ref type.

In fund load mapping/group load mapping and product load mapping screen, you can map the appropriate load ref type for applying desired fee rate.