Ucits Distribution in Asia                             Kristen Schneider                              October 17, 2011
Contents 1   Background 2   Opportunity in Asia 3    Main Issues for Asset Managers 4    Show Stoppers 5   Opportunities f...
Background UCITS = The Undertakings for Collective Investment in Transferable Securities Directives Original UCITS Direc...
Opportunity in AsiaWorld Population by Continent          Worldwide Investment Fund                                       ...
Market Landscape – Cross Border Distribution in Asia       Registration       Total                      % of Total       ...
Asian Overview – Different Maturity Levels               Emerging      •   Wealth increasing rapidly                Japan ...
Main Issues for Asset Managers – Distribution in Asia   Admin &            Taxation           Information        Operation...
Show Stoppers   Changing                               ManualRegulatory Rules   +                     Processing          ...
Opportunities for Third Party Service Providers• Provide a funds platform that offers a single point of contact into a hug...
Future Developments UCITS IV Directive approved by European Parliament and the Council of the European Union in  2009; to...
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Bnp Paribas Securities Services October 17 2011 Ucits Distribution In Asia

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Promoting UCITS in Asia

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Bnp Paribas Securities Services October 17 2011 Ucits Distribution In Asia

  1. 1. Ucits Distribution in Asia Kristen Schneider October 17, 2011
  2. 2. Contents 1 Background 2 Opportunity in Asia 3 Main Issues for Asset Managers 4 Show Stoppers 5 Opportunities for Third Party Service Providers 6 Future Developments 2
  3. 3. Background UCITS = The Undertakings for Collective Investment in Transferable Securities Directives Original UCITS Directive adopted in 1985, was to allow for open-ended funds investing in transferable securities to be subject to the same regulation in every Member State, i.e., funds authorized in one Member State could be sold to the public in each Member State without further authorization, thereby furthering the EU’s goal of a single market for financial services in Europe. Aim is that with a larger market the economies of scale will reduce costs for investment managers which can be passed on to consumers UCITS brand is recognized as the only truly globally distributed investment product due to: – Stability and regulatory regime of UCITS – Levels of consumer protection – Flexibility and adaptability of the fund – Perceived “neutrality” of the Luxembourg based funds Since 2000, the average number of countries of UCITS distribution by the top 50 fund promoters has grown from 12 to 20 countries – a 70% increase. 3
  4. 4. Opportunity in AsiaWorld Population by Continent Worldwide Investment Fund Industry Total Net Assets USA Europe Australia Asia Africa Brazil Japan Canada Europe North America China Others South America Oceania Antarctica Source: Wikipedia Source: EFAMA September 2011 September 2010 4
  5. 5. Market Landscape – Cross Border Distribution in Asia Registration Total % of Total Distribution Markets/Region Australia 54 0.09% Cook Islands 1 0.002% Hong Kong 1,227 2% Japan 88 0.1% Korea 251 0.4% Macau 904 1.5% Singapore 2,056 3.4% Taiwan 850 1.4% Total Asia Pacific 5,431 9% Europe 52,694 86% Middle East 816 1% Americas 2,113 3% Africa 227 0.03% TOTAL 61,281 100% Source: Lipper Hindsight and Pwc analysis September 30, 2010 5
  6. 6. Asian Overview – Different Maturity Levels Emerging • Wealth increasing rapidly Japan Singapore Hong • Heavily populated countries Kong • Developing capital markets • Currency inconvertibility • Entrepreneurs have ability to invest abroad Taiwan Mature Indonesia • High wealth density Developing • Highly developed capital South markets Korea • Established base of wealth and • Complex wealth management strengthening capital markets needs • Selectively restrictive regulations China • More experienced investors India • Emergence of 2nd generation HNWIs • HNWIs seek wealth accumulation onshore and wealth preservation offshoreLeast Mature Most Mature Source: HSBC 6
  7. 7. Main Issues for Asset Managers – Distribution in Asia Admin & Taxation Information Operational Agreement & Regulatory Access Workflow Trailer Fee Requirements Management Complexity• Fragmented • Asset • No pan- • Growing cross- • Fund market where Managers European border distribution each must ensure fund database business and largely jurisdiction compliance to provide open controlled by has different with all fiscal reliable and architecture retail banks investment obligations in updated trend increases which have fund countries information operational little incentive regulatory where they increases complexity to automate regime, distribute their operational • Manual • Distribution culture, products risk processes and networks are language, lack of increasingly industry stage standardization complex• Different reporting requirements• No formal ties between regional regulators 7
  8. 8. Show Stoppers Changing ManualRegulatory Rules + Processing  Process automation and standardization of cross- border fund processing needed to manage increasing volumes and minimize risk  Principal obstacle to automation = difficulty and cost of implementation  Asset managers must persuade distributors, in particular small and medium sized ones, to automate processes. However, progress is likely to be slow, especially in Asia. 8
  9. 9. Opportunities for Third Party Service Providers• Provide a funds platform that offers a single point of contact into a huge funds universe, handling all relevant communication electronically and, given scale benefits, at comparatively low cost – Minimize data fragmentation as asset management companie engages with multiple administrators across multiple jurisdictions – Automating processing allows for managing high trading activity from Asian retail investors and seasonality of mutual fund business• Managing client service needs across time zone differences – Processing client instructions from markets around the world and ensuring that distributors remain abreast of fund cut-off times 9
  10. 10. Future Developments UCITS IV Directive approved by European Parliament and the Council of the European Union in 2009; to be implemented in 2011. This will update the UCITS III Directives by introducing the following changes: – Notification Procedure – Key Investor Information (KII) – Adapted Framework for Mergers – Master-feeder Structures – Cooperation between Member State Supervisory Authorities – Management Company Passport Development of Asian Funds Passport? 10

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