The Tipping Point

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Calastone is committed to 100% STP for 100% of the global funds market.

These are the slides from our recent London event which was attended by 140 fund managers, distributors and TPAs.

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The Tipping Point

  1. 1. The Tipping Point 5th May 2010 The Great Hall, The Institute of Chartered Accountants London
  2. 2. Agenda 9.00 am Kevin Lee, CEO: 100% STP for 100% of the market in 2010 9.30 am Dan Llewellyn, Head of Market Innovation Re-writing the rulebook on Settlement, Re-registrations and Reconciliations 10 am Coffee break and networking 10.30 am The Business Case for STP : Panel discussion and Q&A Moderator: Edward James, Head of Operations, Octopus Investments Panelists: Christopher James, Director, Institutional Services, Cofunds Andrew Smith, COO, Nucleus Ivan Goldsmith, Head of Retail Administration, Axa-Framlington Kevin Lee, CEO Calastone Dan Llewellyn, Director of Market Innovation, Calastone 11am Finish Strictly Confidential Copyright Calastone 2010 2
  3. 3. Why The Tipping Point? Strictly Confidential Copyright Calastone 2010 3
  4. 4. Faxes = Risk and Cost Strictly Confidential Copyright Calastone 2010 4
  5. 5. Challenges for the Industry 80% of fund processing costs are caused by 20% of the market. Calastone s commitment to a single pipe for the whole of market includes that 20%. Strictly Confidential Copyright Calastone 2010
  6. 6. What s New? The Catcher s Mitt (live demo) First 150 messages free for smaller fund managers Reconciliations & Settlement Free hosting of BIC Codes for all distributors and fund providers Strictly Confidential Copyright Calastone 2010 6
  7. 7. Transparent Tariff Underlying Principle : who benefits - pays Main Benefit Fund Provider Distributor Order Routing Fund Provider £2.70 - £1.50 Free of Charge Settlement Service Equal 25p 25p/50p* Payment Service Equal 10p 10p SWIFT BIC Hosting Equal Free of Charge Free of Charge Re-registrations/Transfers Distributor Free of Charge T.B.C. For Distributor clients not using Calastone Strictly Confidential Copyright Calastone 2010 7
  8. 8. Calastone Pricing Model Order Routing Price ranges f rom £2.70 to £1.50 per order Discount base on cum ulative volume regardless of client size Volume is never reset, so the price is guaranteed to reduce over tim e This will lead to a price of £1.50 an order for all clients eventually No additional annual fees, joining fees or hidden costs Strictly Confidential Copyright Calastone 2010 8
  9. 9. Calastone client network Our flexible technology means that we can connect distributors with fund providers anywhere in the world. Norway UK & Ireland Luxembourg France US (via Sungard) Hong Kong Taipei Key Live South Africa Roadmap 2010/11 Australia 9
  10. 10. Execution Management System (EMS) You can follow an order from purchase through settlement: www.calastone.com/videoinfo.aspx Strictly Confidential Copyright Calastone 2010 10
  11. 11. Live Demo
  12. 12. Order processing via EMS for boutique/offshore FMs 1. FundManagers (or TAs) can accept/reject and price orders 2 (a) If the order is good, they accept and a confirm is sent to the distributor. 3. The order is priced later that day. 2 (b) Orders can be 80% of costs are caused by 20% of the market. rejected directly by the fund manager (or We have a solution f or the 20%. 12 TA)
  13. 13. Post-Trade Solutions: Our Objective To provide pre and post trade solutions to the mutual funds market that promote: User choice models Global interoperability Industry partnership relationships Reduced STP costs that benefit the whole market Clear and transparent tariff structures Strictly Confidential Copyright Calastone 2010 13
  14. 14. Proven Delivery Calastone Settlement offering announced 16th Nov Backed by major Industry players across the market Cofunds, FNZ, Nucleus IFDS, Capita Schroders, Hendersons, Gartmore Considerable second wave support Strictly Confidential Copyright Calastone 2010 14
  15. 15. Proven Delivery Calastone Settlement offering announced 16th Nov Backed by major Industry players across the market Cofunds, FNZ, Nucleus IFDS, Capita Schroders, Hendersons, Gartmore Considerable second wave support Live 22nd March 2010 Strictly Confidential Copyright Calastone 2010
  16. 16. Calastone Modularised Automation Calastone Service Modules Fund Manager Third Party D Distributor A Re-Registration Administrator A Module Fund Third Party Manager Administrator B E Reconciliation Distributor B Module Fund Third Party Manager Income Administrator C F Distributor C payments and ETV s Fund Fund Manager A Manager Order Router G Distributor D Module Fund Manager B Fund Manager Settlement H Module Strictly Confidential Copyright Calastone 2010 16
  17. 17. Modularised Approach to STP Automated settlement is now available via Calastone with additional post trade services going live during 2010: Mutual fund settlement instruction matching and net settlement - Live Net settlement payment facility via SWIFT Re-registration, wrapped, unwrapped, nominee to nominee and own name Reconciliations, statement of holdings, transactions and valuations Income payment instruction with electronic tax information Corporate event information Strictly Confidential Copyright Calastone 2010 17
  18. 18. Mutual Fund Settlement via Calastone Primary market settlement module provides: Mutual fund settlement instruction matching Automatic calculation of net settlement position between buy and seller Net settlement payment facility via SW IFT Visibility of settlement exceptions via unmatched reporting Open architecture in re connectivity and message standards Full range of STP options from ISO messaging to File upload Market wide standardisation of settlement process Multi currency / Multi domicile Strictly Confidential Copyright Calastone 2010 18
  19. 19. Calastone Settlement Phase 1 Distributors Your format 5. Net Settlement 4.Client 6. Settlement 1. Order requirement sent settlement Confirmation instruction to distributor Input Order Calastone Mutual Fund Trade matcher and Settlement Net Router Calculator 2. Business Accept 4.Client 5. Net Settlement 6. Settlement Optional 3. Price Confirmation settlement requirement sent to Confirmation Register Status Input distributor Your format Fund Provider / Third Party Administrator Strictly Confidential Copyright Calastone 2010 19
  20. 20. Calastone Settlement phase 2 Distributors Bank Distributors 4.Client 5. Settlement 6. Settlement 1. Order settlement requirement sent to Confirmation instruction Input distributor Calastone Settlement Order Calastone Settlement Payment Payment Trade matching Router and Payment System instruction Net settlement calculator generation 2. 3. Price 4.Client 5. Settlement 6. Settlement Registered Business Confirmation settlement requirement sent to Confirmation Message Accept Input Provider Fund Provider / Third Party Administrator Fund Providers Bank Order Routing Settlement and Matching Hub Payment hub Client driven payment instruction And confirmation Strictly Confidential Copyright Calastone 2010 Payment occurs outside of Calastone Network 20
  21. 21. EMS Screen new settlement option Strictly Confidential Copyright Calastone 2010 Confirm settlement positions via EMS 21
  22. 22. Tariff Structure Phase 1 Fair and transparent tariff structure for all participants: Fund Providers 25p per trade settlement instruction Distributors Schedule 1 - 50p per trade settlement instruction Schedule 2 - 25p per trade settlement instruction when using Calastone order routing No membership fees or hidden costs Strictly Confidential Copyright Calastone 2010 22
  23. 23. Tariff Structure Phase 2 Integrated payment service using Calastone SWIFT connectivity: Fund Providers 10p per SW IFT ISO payment Distributors 10p per SW IFT ISO payment Added benefits Free hosting of client BICs Reduced number of payments Access to Calastone EMS payment screens in order to view, release, authorise and track payments Ability to see if counterparty have released their payments Future proofed technology re ISO20022 and Single Euro Payments Area (SEPA) No additional Calastone membership fees (SWIFT costs not included 8eur cents on shore 23eur cents off shore ) Strictly Confidential Copyright Calastone 2010 23
  24. 24. Calastone Re -registration Pilot Platform /Distributor 1 (Ceding Nominee) YOUR FORMAT 1. Info 2. Info Y 3. Instruct 4. Confirmation 1. Transfer out 2. Transfer out conf Request response O 1. Transfer out U R 2. Transfer out conf Fund Manager / Calastone Core ISO20022 Translation Engine 3. Transfer in conf F TPA O R 1. Info 2. Info 3. Instruct 4. Confirmation request response M 3. Transfer in conf A YOUR FORMAT T Platform 2/Distributor (Acquiring Nominee) Wrapper Transfer Asset Transfer Strictly Confidential Copyright Calastone 2010 24
  25. 25. Calastone Reconciliations Module Distributor 1 Fund Manager A Y Y O O Distributor 2 U U Fund Manager B R R Calastone Core ISO20022 Distributor 3 F Reconciliation Translation F Fund Manager C O Engine O R R Distributor 4 M M TPA 1 A A T T Distributor 5 TPA 2 Strictly Confidential Copyright Calastone 2010 25
  26. 26. Benefits § Need for automation and STP solutions in different areas of the mutual funds market § Platforms, retail distributors and fund managers all have different wants and priorities § Calastone STP modules enable market participants to develop and adopt solutions in line with their own development priorities § Calastone s core translation service will normalise all market input into ISO20022 so that participants do not have to incur back office development costs § Development of Calastone s STP modules are in line w ith agreed M utual Fund UK and Global Market Practise § By adopting Calastone STP modules market participants will be able to future proof their technology spend regarding message standards and interoperability . § Clear and transparent tariff structures Strictly Confidential Copyright Calastone 2010 26
  27. 27. Summary The Catcher s Mitt Free to all fund managers - Providing 100% ST P for distributors First 150 messages Free for smaller fund managers every month - No barriers to entry Reconciliations Free to all fund managers - Providing 100% c overage with one connection for the distributor Settlement Primary market service no technology requirements available to all - Nett payments, Group 1 & 2. Free hosting of BIC Codes for all distributors and fund providers - 100 % STP for distributors - Global reach for all Strictly Confidential Copyright Calastone 2010 27
  28. 28. Panel discussion Strictly Confidential Copyright Calastone 2010 28
  29. 29. Contacts Kevin Lee, CEO Ken Tregidgo, Director of Business Development Dan Llewellyn, Director of Market Innovation Alexander Hofmann, Sales Director Sebastien Chaker, MD Luxembourg Main: +44 (0)20 7367 5900 King s House 6th Floor 36-37 King Street London EC2V 8BB www.calastone.com Strictly Confidential Copyright Calastone 2010 29

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