Asset Servicing Times

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Asset Servicing Times

  1. 1. AST ISSUE037 WEDNESDAY ASSETSERVICINGTIMES 18.04.2012 assetservicingtimes.com CONTENTS Regional profile We examine the custody market in Cen- tral and Eastern Europe. page8 Jersey focus AST assembled a panel of experts to look at how Jersey plans to keep its sta- tus at the top of the market page12 Interview: SebastienLondon pension schemes set to Chaker Calastone’s Luxembourg head explainsjoin forces in cost cutting move the issues and solution surrounding au- tomated messaging within the fund dis- tribution marketLONDON 13.04.2012 page16London’s 32 councils are in talks to establish apooled pension fund, loosely based on the Ontario Ray Bloom, head of LGPS at Northern Trust said: “It is absolutely the time to push ahead and investigate new Regulation focus Linedata’s Noreen Crowe examines theMunicipal Employers Retirement System’s infra- methods such as the potential benefits of being part of impact that FATCA will have on firmsstructure vehicle ‘Borealis’. If the merging of the 34 a Common Investment Fund, which allows a number of both inside and outside the USschemes takes place, a new entity could see £30 bil- registered pension schemes to pool their investments.lion of assets available. Under this arrangement the pension schemes would not page22 need to merge, but could continue to operate separatelyAdvocates of the pooled fund state that by cutting and gain the many benefits of this arrangement includ- Asian fund administration ing improved governance and reduced costs. Our panel of experts debate the latestadministration costs of running separate schemes, a developments in the Asian funds market,combined fund could direct as much as 7.5 per cent “We are also working closely with the UK Treasury to and discuss how the market will growof assets, or £2.25 billion, into local projects. facilitate the set-up and operation of the new UK tax page24One concern, most particularly for custodians, is transparent fund (TTF) pooled investment vehicle.whether one company or several will act as custo-dian for the £30 billion of assets, and how that deci- “Through this, LGPSs should be able to generate actual People movession will be made. Currently Northern Trust and State savings, through reduced investment management fees Find out the latest hires, and who isStreet provide the lion’s share of custody for pension and provide smaller schemes with the opportunity for getting promoted within the industry.funds in the boroughs, with BNY Mellon, J.P. Mor- enhanced diversification and the ability to gain access page28gan, HSBC and BNP Paribas also offering services. to a broader range of asset classes.” Societe Generale wins Metropole Gestion mandate Northern Trust welcomes UK tax law Societe Generale Securities Services in Italy (SGSS S.p.A.) has been appoint- Northern Trust’s custody and fund administration services are ready for the ed by Metropole Gestion to act as its local transfer agent in Italy, providing it with launch of the new UK authorised tax transparent fund (TTF) vehicle, due to paying agent and investor relations management services. be effective around August 2012. readmore p3 readmore p3Ten markets, tencultures, one bank.
  2. 2. Many of the world’s leading asset management,life company, pension fund and financial services firmsturn to Milestone Group to unlock latent efficiency gainsin their middle and back office operations.Milestone Group’s unique pControl Fund Processingand Fund Distribution solutions help align operationalprecision with enterprise-wide efficiency gains.How do we do this? Our unique approach is builton technical innovation matched with lateral problemsolving. The keys to opening new ways of running yourfund are within reach.If you have complex fund processing or fund distributionchallenges and need a safe pair of hands, or wish to learnmore, give Milestone Group a call.Visit us at www.milestonegroup.com.au for our latestthinking or call +852 2293 2629.pControl® Fund Processing, Fund Oversight, Fund Distribution & pQuant® are registered trademarks of Milestone Group.© Copyright 2012 Milestone Group http://www.milestonegroup.com.au/index.php All Rights Reserved.
  3. 3. NewsInBriefSociete Generale wins MetropoleGestion mandateContinued from page 1SGSS in Italy offers securities services includ-ing clearing, custody and trustee services,fund administration, liquidity management andtransfer agent services.Metropole Gestion is an independent assetmanagement company based in Paris and spe-cialised in stock-picking (European equities,euro zone and Japanese equities) and bond-picking (euro zone bonds and convertibles).Northern Trust welcomes UKtax lawContinued from page 1First announced in the 2010 UK Budget, the UKtax transparent fund will enable fund managersand institutional investors to pool their assetsto achieve cost and administrative efficienciesthrough withholding tax treaties that exist be-tween countries in which investors are based,and those in which they invest.It is being established to ensure the UK cancompete with fund jurisdictions already offer-ing tax transparent fund structures, such asIreland, Luxembourg and The Netherlands,and becomes the location of choice for masterfeeder structures under UCITS IV. of 188 per cent, and net income of $461,000 for After the unit was formed by the acquisition of Om-“In order for the master-feeder provisions in the quarter ended 31 December 2011. nium LLC in July 2011, new Northern Trust mandatesUCITS IV to be attractive to investors on a include six new clients in the Asia-Pacific region.cross-border basis, the master fund needs to Cade Thompson, chief executive officer stated:be a tax-transparent vehicle,” said Aaron Overy, “The past two years have been a period of tran- Julius Wang, MD of Samena Asia Managersbusiness development, asset pooling and re- sition as we shifted our core business from a for Samena Capital, said of his firm’s admin-tirement solutions at Northern Trust. consumer financial services company to a dis- istrator: “The quality of the overall team and tressed asset services company. A large part of people in Hong Kong gave us confidence that“We believe the introduction of a tax transparent the fourth quarter success is due to growth in they could deliver top service levels for a widefund in the UK would become the natural choice the distressed asset verticals, primarily asset range of investment strategies. We have notfor asset managers already operating large UK management and portfolio advisory services, been disappointed.”fund ranges as well as support UK pension indicating the completion of that transition.”funds wishing to pool all their assets in the UK, Northern Trust now has more than $170 billionand helping life insurance companies mitigate Halo Companies is a publicly-traded, nation- in hedge fund assets under administration.the effects of the Solvency II directive.” wide distressed asset services company, pro-“In addition, we would expect interest from Eu- viding technology-driven asset management, CIBC Mellon wins Bloom fundsrope, Asia and US-based asset managers look- portfolio analytics, acquisition, repositioning and liquidation strategies for the private invest- asset servicing mandateing to operate a central platform in the UK for ment and mortgage servicing industry. CIBC Mellon will provide asset servicing solutionstheir global fund distribution needs,” he added. for the Bloom Income & Growth Canadian Fund,Good fortune for Halo Companies Northern Trust fund adminis- and the upcoming Bloom Select Income Fund. tration secures 22 clients CIBC Mellon will provide Bloom with custodyHalo Companies, which provides services for dis- services, securities lending, accounting servic-tressed assets, announced profitable fourth quar- Northern Trust’s hedge fund administration division es, and real-time access to investment informa-ter results, with revenue of $3.2 million, an increase has secured 22 client wins in the last seven months. tion via CIBC Mellon’s Workbench platform. 3 www.assetservicingtimes.com
  4. 4. NewsInBrief“We selected CIBC Mellon as our asset servicingprovider based on the impressive dedication toclient service permeating the company’s culture,”said Paul Bloom, president of Bloom InvestmentCounsel, Inc. “We have worked with many custo-dians and have found CIBC Mellon to be the bestat allowing us to focus on our goals.”CIBC Mellon now provides asset servicing formore $370 million of assets managed by Bloom.NYSE Liffe US to launch newrepo futuresNYSE Euronext will launch repo futures markettrading on 16 July, if it passes regulatory approval.Seeking to compete with CME, which is aim-ing to own a futures exchange in London, NYSEwill launch its repo futures trading through itsNYSE Liffe US that comply with the DepositoryTrust and Clearing Corporation’s (DTCC) trade-mark – GCF Repo Index.With Libor, a diurnal fixing of interbank overnightdollar lending rates, under scrutiny for manipu-lation, and benchmark rates offered by FederalReserve losing lustre following the transactiontax introduced by Federal Deposit InsuranceCorporation (FDIC), NYSE is optimistic aboutexploring the $400 billion GCF repo market.Thomas Callahan, chief executive of NYSELiffe US, said at an investor meeting earlier thismonth: “The two things that market participants German institutional investors willing The SICAV is managed by Contassur Assist-would usually look at in terms of a short-term ance Conseil, a subsidiary of Contassur, the lifebenchmark, fed funds and Libor, are both in to pay more for extra services insurance company that provides group insur-their own way broken right now,” he said. “The ance for the GDF Suez Group and companies in German institutional investors are willing to paymarket needs a new benchmark and we think the Belgian gas and electricity sector. more for services above and beyond that of athat this could be it.” standard custodian, according to BNY Mellon. The new partnership strengthens the links be-Para Advisors expands onshore rela- The survey, conducted by German consultancy tween Contassur and CACEIS, which already firms itechx Consulting and FAROS Consult- provides the safekeeping of the insurance com-tionship with Maples Fund Services ing, analysed investors’ latest demands for new pany’s assets in the form of mandates. products and services.Para Advisors, a hedge fund manager with ap-proximately US$200 million of assets under Oliver Draeger, senior investment consultant at Kaufman Rossin Fund Servicesmanagement, has expanded its relationshipwith Maples Fund Services to include adminis- FAROS, said: “ We can answer the initial ques- launches in Texas tion - are depotbanks at a ‘dead end’ - with atration for the firm’s onshore funds. definite ‘no’.”
 Kaufman Rossin Fund Services (KRFS) will open an office in Dallas in order to focus on ad-Maples Fund Services has served as adminis- ministration and relationship management for According to the survey, institutional investorstrator for Para’s offshore fund since early 2010, hedge funds, commodity pools, private equity are willing to pay separately for services suchbut Para had previously handled administration funds and family offices. as transaction cost analysis, performance man-for its US onshore funds internally. MaplesFS agement and risk measurement, but custodi-was awarded the onshore business to help Formerly vice president for Jefferies & Co.’s ans are not taking full advantage of availablePara stay ahead of growing industry needs for prime brokerage division in Dallas, James Davis opportunities to sell such new services on amore independence and transparency. will head the new office. stand-alone basis.“The expansion is a testament to our value ofindependence, client excellence, customised CACEIS new custodian for “Better serving the needs of our clients located in Texas and the Southwest is the primary reasonapproach, and our ability to service both on- Luxembourg SICAV Esperides for our expansion,” said Jorge de Cardenas, co-shore and offshore funds,” Toni Pinkerton, glo- founder and director of KRFS. “Our physical pres-bal head of Maples Fund Services said. Luxembourg SICAV Esperides has selected ence, along with the experience and leadership of CACEIS as the fund’s custodian, depositary James Davis, reinforces our commitment to servePara launched its flagship onshore fund in 1991. bank and its administrative agent. this leading alternative investment community.” 4 www.assetservicingtimes.com
  5. 5. Until you have the competitive edge you deserve. It’s not our leading-edge technology platforms that will give you the edge. (Although obviously they’ll help.) (Although that too is pretty important.) No. It’s none of these things. It’s one thing. Our commitment to relationships. At UBS, we listen. And we listen hard. You may manage traditional or alternative investments. No one will give you a more competitive edge. Enough of our words. We want to hear yours. E-mail us at fundservices@ubs.com or go to www.ubs.com/fundservices Top rated 2009–2011 in Global Custodian Hedge Fund Administration Survey We will not rest© UBS 2012. All rights reserved.
  6. 6. NewsInBriefBNP Paribas to provide hedge fund fer agent in Italy, providing it with paying agent The enlarged Vistra Netherlands company will and investor relations management services. be led by managing director Sjaak ten Hoveadministration for Anchor Risk Advisors and executive directors, Tako van Ginkel and Created in 1991, Financiere de l’Echiquier man- Jack Willems.BNP Paribas will provide Anchor Risk Advisors ages a small range of mutual funds invested inhedge fund administration services for its latest the main equities and bonds markets for private LCH.Clearnet to sell majority stakeinsurance-linked investment strategy. and professional investors. to London Stock ExchangeAnchor Risk Advisors, an investment managerfocused on the insurance-linked securities and Vistra looks to Netherlands with Shareholders of LCH.Clearnet supported itscatastrophe risk investment sector, are con- acquisition of FTC Trust plan to sell a majority stake to London Stocktinuing their relationship with BNP Paribas who Exchange Group for €463 million.have provided them with a range of fund ad- Vistra has expanded into the Netherlandsministration services over the years. through the acquisition of FTC Trust, bringing LCH.Clearnet said 94.4 per cent of votes cast Vistra staff numbers in the region to 60. by investors at a meeting in London today wereAndrew Dougherty, managing director and head in favor of the merger, with LSE reporting a 99.9of alternative & institutional solutions at BNP FTC Trust provides services including company per cent agreement to the deal.Paribas, said: “Our service model means that formation, management and domiciliation, andAnchor Risk Advisors has direct access to the corporate services. 
It is expected to be re- The clearing house attracted interest fromoperations and accounting specialists responsi- branded under the Vistra umbrella during the Nasdaq OMX Group (NDAQ) and NYSE Euron-ble for administering its funds at BNP Paribas.” second quarter of this year. ext (NYX) before agreeing to the LSE bid last Director of FTC Trust Jack Willems said: “Cli- month. The firms intend to complete the trans-Another mandate for Italian SocGen ents will be able to benefit greatly from the action by the fourth quarter.Securities Services broader range of services and on the ground presence in other key jurisdictions that Vistra NYSE Euronext, the owner of the New York can offer and at the same time, will find that Stock Exchange, has a stake of about 9.1 perSociete Generale Securities Services in Italy they are still dealing with their existing contacts cent in LCH.Clearnet and plans to stop using(SGSS) has been appointed by Financiere de in the new enlarged company, which will help the venue to clear European securities and de-l’Echiquier to act as an additional local trans- ensure business continuity.” rivatives in 2013. Handelsbanken Custody Services Stability in an evolving environment Find out more at our website: www.handelsbanken.com/custodyservices You can also contact our Relationship Management Department, phone: +46 8 701 29 88 or e-mail: custodyservices@handelsbanken.se 6 www.assetservicingtimes.com
  7. 7. Bottom line:2 @ Your securities services expert in Central and Eastern EuropeOur network is available for you in Central and Eastern Europe for your securities servicesbusiness. We bring you in-depth local experience and award winning international expertise.ING is your partner in Bulgaria, Czech Republic, Hungary, Poland, Romania, Russia, SlovakRepublic and Ukraine. For more information call Lilla Juranyi, Global Head of Investor Serviceson +31 20 563 6435 or e-mail: Lilla.Juranyi@mail.ing.nl.www.ingcommercialbanking.comING Commercial Banking is a marketing name of ING Bank N.V., registered by the Netherlands Authority for the Financial Markets (AFM). Copyright ING Commercial Banking (2010).
  8. 8. CountryFocusCentral and Eastern EuropeIt is impossible to stereotype - or even define - the CEE region, butthe financial crisis has led to leaner, meaner operationsGEORGINA LAVERS REPORTSA blanket statement about custody in central tional Monetary Fund and the European Union the regional level, CEE growth appears unlike-and Eastern Europe is no mean feat, con- arguably played an important role in protecting ly to reach pre-crisis levels in the foreseeablesidering the intensely heterogenic nature of the liquidity of CEE and CIS banking markets future, and will fall well below growth rates ofthe region. Custody provision in Serbia and and in helping national governments to devise other emerging markets. At the country level,Montenegro is almost non-existent, while just policy decisions that stabilised the economies the CEE states display wide variations in GDPacross the border, Hungary is recording aver- of the region. growth trajectories that demonstrate the region’sage daily trading turnover of €42.8 million: a increasing diversity.”veritable feast for custodian banks. Technol- However, the recovery that was expected hasogy in Ukraine still, as Matthew Grabois from not materialised. At the beginning of 2011, Katalin Bóta, deputy regional head of SecuritiesBNP Paribas admits, “has got some roadwork the European Bank for Reconstruction and Services for Austria & CEE Region at Deutscheto go”, while IT solutions in Austria are remark- Development (EBDR) predicted a growth rate Bank, comments: “There was a slight windowably mature. So how to characterise a region of 4.3 per cent for the 29 countries in Central when the Arab Spring started; because of riskthat consistently resists definition? and Eastern Europe over the year. However, considerations, they thought the focus may it now expects the combined gross domestic come back to Europe. But that was only a veryThe CEE region’s back story over the last 10 product of central and eastern Europe to grow slight chance. However, things are cyclical: Asiayears has been notably torrid. Significantly by just 1.4 per cent, down from 1.7 per cent in may have the upper hand now, but everythingimpacted during the 2008 crisis, international October 2011. is circular.”banks and their subsidiaries lent a helping handto all countries in the region as they prepared The World Bank’s October 2009 report on the Within the region, there seems to be a mixedto stand on their own two feet. The Vienna Ini- CEE countries, ‘From Stabilisation to Recov- outlook. The EBRD raised growth forecasts fortiative was launched in January 2009 to align ery’, seems accurate in its prediction of growth Latvia, Poland and the Slovak Republic, andthe activities of leading private sector financial to be: “feeble and uneven,” and a report by RSM left those for Estonia and Lithuania unchanged.institutions and support offered by the Interna- International was similarly gloomy, stating: “At Yet Hungary and Slovenia were forecast to 8
  9. 9. CountryFocuscontract by 1.5 and 1.1 per cent respectively, pearing and players coming. Along general lines the Baltics. Looking at the greater CEE, ING,with the ERBD stating that governmental do- the main competitors for Austria, Poland, Czech Unicredit, Citi, Deutsche and Raiffeisen havemestic policy mistakes in Hungary had un- Hungary and Turkey are definitely UniCredit, strong positions. The two flagship markets ofnerved investors. Citibank, and I would say ING but to a lesser CEE region are Russia and Poland, and also and lesser extent. I think its focus is different, Hungary and the Czech Republic.”The Russian and Ukraine economies are still because if I go down to Russia, Romania, Bul-expected to grow by 4.2 per cent and 2.5 per garia, historically ING is very strong. If you look Global head of custody at ING Commercialcent respectively in 2012, with the EBRD stat- at Poland, Czech Republic or Hungary, I would Banking Securities Services Lilla Juranyiing that countries further to the east of the euro say it is prominently Citibank, Unicredit and defines her company as a traditional custo-zone, which are less reliant on it as an export Deutsche, and if you go to Russia, it’s ING. But dian, but agrees with Katalin that the marketmarket and a source of credit, will suffer to a we must not forget about the local banks. DTP is changing:lesser extent. is very strong. It is very well-capitalised, and it has the liquidity.” “Currently the main traditional custodians in theAgainst this dynamic background, custodians CEE are ING, Citibank, UniCredit, Deutscheare continually looking at the growth of coun- The need for splitting the region into compo- Bank, and there are a few smaller custodiantries; deciding when to exit markets, when to nent parts is vital when defining competitors, as banks offering their services to special type ofenter - and when to expand. global head of sub-custody at SEB Ulf Norén clients, mainly local ones. What is interesting is notes. “SEB is a sub custodian in five CEE mar- that in the last two to three years we have also kets: Estonia, Latvia and Lithuania, which are seen a few providers who have stepped intoJockeying for front runner all EU Markets, plus Ukraine and Russia. From the CEE region on selective basis to establish our perspective, we need to separate the two. their operations in a few “strategic countries”.In terms of major players, Bóta asserts: “The Talking on the CEE as a whole, you have certain With the local custody business, J.P. Morganmarket is changing: there are players disap- areas where you find SEB is really big, like in decided to build a strategic full-scale 9
  10. 10. CountryFocuslocal operation, however they will not be a Cen- Grabois comments: “Global players are more But it does not mean fully harmonised financialtral & Eastern European multimarket service likely to open markets where they see immediate regulation in all the CEE countries. I’ve seen thisprovider. Within their strategy they identified a scale, and scale is important in our business. The as understandable, because the capital marketfew important markets all around the world: in regional providers need these markets for their legislation is related to several other laws andEastern Europe, it is Russia, and J.P.Morgan own scale, so pressure will continue in the region complex regulations including, but not limited toannounced that they intend to extend their local and consolidation is foreseeable. The require- civil law, law on taxation etc., and its complexitypresence there. This strategy of a global custo- ment for sub custody providers will continue from would be near-impossible to implement in a stan-dian is different than that of a multimarket local non-global SIFIs and SIFIs alike, but the global dardised way. On the other side I see operationalsub-custodian like ING, who has a much bigger revenues for the existing regional providers will processes being harmonised, and I believe thatmarket coverage – with the eight major markets be under pressure and SIFIs need to use other institutions that are offering custodian servicesin Central and Eastern Europe. ” SIFIs where big positions are held. This will have can offer a lot of standard service supporting their a dramatic effect on smaller markets but also cre- clients with the harmonised operations as muchThe Asian influence ate opportunities to consolidate there, and gain the requisite scale to continue to be a specialist as possible including reporting to clients as well as reporting to local authorities.”Europe is a mature market where investors for small markets. This will not come without in-have been, and will continue to look for oppor- vestment so those willing to invest will benefit.” The idea of similar regulation across the boardtunities. However, the fast inflow of money into is also difficult due to countries wanting to pro-Asia and Latin America are proving attractive to Noren agrees that further consolidation is possible tect their national identity. Says Bóta: “Theseasset managers. but argues that there is still a considerable time- countries will definitely keep their national fla- line until this takes place. “We will definitely see vour. They try to protect their markets.” MatthewCustodians have opposing views on the effect fewer, especially the smaller single market ones Grabois asserts that whilst larger, more devel-of Latin American and Asian markets on the will be subject to considerable pressure. Predict- oped countries are taking steps to standardiseCEE region. Says Katalin Bóta of Deutsche: “I ing outcomes is hard, because targets are moving regulation within their own country, harmonythink the focus in the whole custody business all the time. I think sub-custodians’ contribution to across the CEE will prove a challenge.is going away from CEE and everything goes the value chain will increase all the time; not leastto Asia. That’s one of the major obstacles. My from risk absorption and mitigation viewpoint.” “In December 2011, Russia passed the law forfeeling is for the time being, Central and East- one common CSD, which was a good step to-ern Europe is forgotten, and we’re considered Bóta adds that whilst there has been much wards harmonisation. Poland is also moving for-not that important because the balance is not talk of regional providers disappearing from ward with the nominee concept. Furthermore,there, with the only two countries of interest be- Deutsche, sub-custody remains a force to be there is also the Vienna Stock Exchange proj-ing Russia and Turkey.” reckoned with. “I participated in so many con- ect, pushing towards a single exchange market ferences where we discussed the possibility of with a common CCP model. Though cross-CEEGlobal sales and relationship manager at BNP single market providers disappearing. Tiny re- harmonisation is not yet a reality in the near fu-Paribas Securities Services Matthew Grabois gional providers disappearing, with only global ture, I believe it will also improve the overall costargues that the growing attractiveness of Latin providers surviving. Then again, how many situation, since systems and operational pro-America and Asia is beneficial to asset owners times after the crisis have we seen announce- cedures could be used across countries, thusin the CEE region. “Is the growth of Latin Amer- ments that this global provider is withdrawing streamlining overall set-ups.”ica and Asia a worry? Absolutely not. Asset from this location or that location? I would sayowners want growth and so the current growth that the function or role of sub-custodians might The disparity of legislation also means thatmarkets – Latin America and Asia included – are increase, and it’s going to be a reshuffling be- whilst non-EU member states have 900-oddattracting a proportion of the emerging markets tween the big providers. Don’t forget about the pages of Dodd-Frank to contend with, they willrisk based assets. More assets in general will Russians, either. They are starting to buy up be let off from regulation specifically targeted atbe allotted to growth markets including the CEE banks in Central and Eastern Europe: Poland, EU member states such as Basel III and KIIDs.and some of the pocket growth markets. I would the Czech Republic, Hungary - it’s a clear trend. “I cannot say 100 per cent, but the general viewsay that this attractiveness in the Asia and Latin It’s an absolutely changing landscape.” is that non-EU member states will benefit frommarkets will actually help the CEE as more at- not having to comply with this regulation,” says Bóta. Juranyi and Grabois both agree, but statetention will be paid to emerging markets in gen-eral. It’s like what you see in retail psychology; Regulation, legislation and that being a non-EU member means less pro-the opening of a Subway next to a McDonalds. harmonisation tection and a higher risk for investors.Competition is healthy. We’re always interested “There is no doubt that non-EU member states arein emerging markets and the growth of these The so-called ‘flood of regulation’ has become facing less development and organisational costs,”markets will only help the growth of the CEE.” a somewhat worn-out expression, but in cli- says Grabois. “However investors are most likelyNoren takes a more moderate view, acknowl- ché there is truth, as legislation from both the to look first at asset safety and for countries thatedging that SEB’s position as a sub-custodian EU and the US continues to impact on custo- have high risk mitigation and regulation – and thatmeans that Asian growth is not a hot topic. “It dians. Matthew Grabois states that UCITS V also applies in the rest of Europe.”is certainly an indication that Europe has to be in particular will give opportunities to playersaware of its attractiveness in comparison to the with large scale, and with global custodians A future hub?growing attractiveness of other areas. For us as taking liability through to the agent bank witha sub-custodian, that’s not something we worry regulations AIFM and UCITS V, there will be Unlike America, the UK and Asia, a future hub forabout in the medium time perspective.” profound changes as to how the providers investment into CEE countries looks unlikely. “Every choose and organise themselves. bank defines the CEE region differently”, says Bóta.The future of regional custody Yet, in terms of harmonised financial regulation, “We define it as the six locations that we operate in, so I would say that as a hubbing solution, Vienna the consensus seems to be that countries are would make sense. If we look at Turkey, however,Some bigger players in the custodial market in too disparate to offer any kind of congruence in as the gate to a different part of the region, Istanbulthe CEE region are close to offering a pan-Eu- the near future. could be a good solution. And also, you must con-ropean service, although in the smaller markets, sider if it is really necessary to create a hub.”will still require the services of sub-custodians. “To a certain extent harmonization has definitelyWhether the use of regional custodians will happened,” says Juranyi. “The CEE countries “Scale and the best IT will be the drivers,” concludeslessen as these bigger forces move into mar- are trying to harmonise and implement Euro- Grabois. “The market that innovates the fastest will win,kets, is a fiercely debated issue. pean legislation into their own local legislation. but the economy will also play a major role.” AST 10 www.assetservicingtimes.com
  11. 11. Ten markets, ten cultures,one bank.For further information please contact:Global Head of GTS Banks: Göran Fors, goran.fors@seb.seGlobal Head of Sub-Custody, GTS Banks: Ulf Norén, ulf.noren@seb.seGlobal Head of Client Relations and Sales, GTS Banks: Patrik Thiis, patrik.thiis@seb.se
  12. 12. JerseyFocus An island affair AST assembled a panel of experts to look at how Jersey plans to keep its status at the top of the marketAST: Despite economic conditions, Another set of factors is the infrastructure here, professional and institutional end of the market.Jersey has seen increasing levels which comprises major audit firms, law firms, There are fund regime options ranging from the tax advisers, banks and asset managers, and most highly regulated retail funds, through toof business in the alternative funds our 12,000 finance industry professionals. At the more lightly regulated fund regimes and unregu-sector during 2011, with recent fig- same time we are located in the right time zone lated funds for the most sophisticated investors:ures showing 2.5 per cent year on to service Far Eastern as well as European and Recognised Funds, Unclassified Funds, Privateyear growth in the net asset value of North American investors and their advisors. Jer- Funds, Expert Funds, Private Placement Funds sey’s infrastructure is therefore tried and tested. and Unregulated Funds.funds administered. What has madeJersey such a success story? As a centre for asset management andNick Solt: Jersey has a deep pool of talentwhen it comes to professional service providers servicing, Jersey is used by highlywith many organisations like ourselves providingvery specialist and bespoke services. Combine professional, sophisticated investorsthis with a strong reputation for robust regula-tion and you have a jurisdiction that instils a high supported by strong service providerslevel of confidence in investors and promoters. Phil McGowan, State StreetWhilst the global recession has been a difficulttime, recently we have seen renewed interest in Lastly, Jersey is adjusting well to the raft of new Jersey has built up particular expertise in alter-both private equity and real estate fund invest- regulation affecting the asset management sec- native, specialist and institutional funds, with ament and Jersey has created a funds regime to tor. We are well placed to deal with, for example, specific focus on private equity, hedge and realtake advantage of this. the requirements of AIFMD. In addition, Jersey estate asset classes. structures are well known and proven. In sum- Alongside are the long term strengths of the ju-Combining these green shoots of recovery in mary, Jersey presents an attractive package to risdiction. Located within the European time zonethe very areas in which Jersey has become a the global, professional and institutional invest- and through its unique constitutional position,market leader with the constantly adapting Jer- ment community. Jersey has been able to develop and enhance asey regulatory framework, has meant that we legal, regulatory and fiscal environment which hashave been able to continue to grow despite the Geoff Cook: In contrast to other centres that remain focused on specific niche activities or proved ideal for corporate clients including fundon-going economic challenges. single asset classes, Jersey’s overall competi- managers and lawyers structuring fund vehicles.Phil McGowan: A significant driver of the tive position is based on a balanced portfolio ap-growth in net asset values has been the quality proach, offering one of the widest ranges of fund The appeal of political and economic stabilityof the assets held here. As a centre for asset regimes and vehicles. should not be underestimated, nor the inherentmanagement and servicing, Jersey is used by skills that the jurisdiction’s workforce can call uponhighly professional, sophisticated investors sup- The emphasis in recent years has moved to- through decades of growth and diversification intoported by strong service providers. wards alternative investment funds and the more different aspects of financial services. 12 www.assetservicingtimes.com
  13. 13. JerseyFocusAST: Jersey is working to change its tion 270 of FSMA provides a procedure for the The knowledge required to deal with asset admin-perception from an offshore special- recognition of investment funds established in istration and data warehousing is abundant here. designated territories whose laws afford inves- More generally, Jersey has a very good story toist to a more diversified centre. Do tors in the UK protection at least equivalent to tell and there is an opportunity to publicise itsyou think perceptions are changing, that provided under FSMA. Jersey has obtained capabilities more widely to assist clients with theand if so, what implications might designated territory status under section 270 of regulatory changes that they are seeing.this have for your business and the FSMA and a number of recognised funds have been recognised by the Securities and Invest- Solt: FATCA is one of a number of international leg-attractiveness of the domicile? ment Board. islative and regulatory changes that will no doubt impact how funds services business operate.Solt: Jurisdictions such as Jersey are at risk of A recognised fund which qualifies under thebeing pigeon holed due to a general perception regulations made pursuant to the FSMA (Col- However, the reaction of the funds services in-that often groups all the jurisdictions that are lective Investment Schemes) (Designated Coun- dustry in Jersey to FATCA and other proposalclassed as part of the offshore industry together. tries and Territories) Order 2003 and is granted a changes such as AIFMD demonstrates we have Collective Investment Funds Certificate is freely the regulatory flexibility and high level expertiseThis means that Jersey must constantly adapt itself marketable in the UK and may offer its shares for to meet any challenge that is presented.to develop and provide a range of services that are direct subscription by the public in the UK. Jerseynot solely providing structures for what is seen as recognised funds may also be marketed to the At MSFA we have already established workingthe traditional remit of the offshore industry. public in a number of other territories, including parties looking at our approach to these chang- Australia, Belgium, Hong Kong, the Netherlands es to ensure we are compliant where necessaryJersey is working hard to change how it is per- and South Africa and provide investors with ac- and can maintain our high levels of service toceived both within the UK and globally, with cess to a statutory compensation scheme. our clients.Jersey Finance Ltd, several major law firms andother industry bodies establishing secondary of-fices in other, non-offshore, destinations suchas Abu Dhabi, Singapore and Mumbai. Jersey has obtained designated territory statusWhilst the changes in perception are only tak- under section 270 of the FSMA and a numbering effect slowly, we believe that once they areestablished it will mean a wider market and of recognised funds have been recognised byrange of services that are available, whichconsequently will strengthen Jersey’s financial the Securities and Investment Boardreputation and, of course, we see ourselves in Geoff Cook, Jersey Financea strong position to take advantage of the ex-pected resultant expansion. Solt: As a business, the areas that we provide Given that these changes are, perhaps, inevi-Cook: For Jersey one of the telling elements expertise in mean that we have not entered the table given the political pressures in the majorhas been the findings of the Global Financial UCITS arena. However, the fund regime in Jer- economic centres, we believe that these chang-Centres Index (GFCI), which releases rank- sey is such that it provides the framework that es should not be seen as a threat, but shouldings for jurisdictions every six months. In recent has enabled some of the larger organisations to be approached with a positive mind-set and bereports, In addition to being the top ranked off- embrace UCITS compliant funds. seen as an opportunity for Jersey to demon-shore jurisdiction, ranked at no 21, Jersey is the strate that it is a top notch funds centre.only offshore location with a top 10 position in With the constant review UCITS leading to theone of the specialist categories globally. prospect of further changes, we feel that the ability Cook: It is agreed that FATCA will have an impact of Jersey as a jurisdiction and the service provid- across international financial services generallyFor two successive reports, it has been in the ers individually to adapt to such shifts will continue and all locations will be affected. Jersey’s financetop 10 for private banking and wealth manage- to be important to maintain our competitiveness industry is fully engaged with the regulatory au-ment. In the funds arena, Jersey is competing when compared to other financial centres. thorities and government in assessing the poten-with jurisdictions regardless of whether they tial impact of the US regulation across all sectorsare onshore or offshore. I think these factors including funds. We have established a specificare significant in that they demonstrate its fre- AST: Will new regulations such as FATCA Working Party in order to support mem-quently not about being offshore, instead the FATCA will have an impact on Jersey, bers in dealing with the introduction of FATCA.criteria that international investors are looking and how will companies deal withfor are expertise within the jurisdiction, the qual- The FATCA provisions are in the form of guid-ity of the regulation, its reputation for corporate this changing regulatory landscape? ance, which make it clear that the US has takenoversight, the political and economic stability of into account representations from foreign gov-the location. McGowan: The wide range of new regulation af- ernments, of which Jersey was one, in seeking fecting our industry is certain to have an impact. to minimise the reporting burden.AST: How have funds established We are in constant dialogue with our clients to assist them to understand and deal with the de- That said, it is also important to note that not allunder the UCITS directive been em- mands that new regulations will place on them. financial institutions in Jersey will be engagingbraced within Jersey, and what’s in activities that are affected by FATCA or, if theynext for UCITS? Many of the forthcoming regulatory initiatives, are, some to only a rather limited extent. Since such as FATCA, AIFMD and Solvency II, will the FATCA provisions will apply to all jurisdic-Cook: Jersey does not offer retail UCITS funds demand enhanced compliance and reporting tions they should not adversely affect Jersey’s(the units in which can be marketed across Eu- needs. Larger asset servicers such as State competitive position.rope) The ability of offshore investment funds Street, which are experienced and skilled into offer shares directly to investors in the UK data management and reporting, are strongly Jersey also enjoys an excellent relationship withhas been restricted by the Financial Services placed to support clients as they navigate the the US. It has signed a TIEA with them as farand Markets Act 2000 (FSMA). However, sec- new environment. back as 2002 and has a Statement of Co-op- 13
  14. 14. JerseyFocuseration between the Jersey Financial Services The PPF regime is part of the on-going evolution- data processing and reporting capabilities. Cli-Commission and the four United States financial ary process of ensuring that Jersey’s fund regu- ents need to be able to identify quickly and withregulators) to formalise existing arrangements lations enable us to provide a competitive and a high degree of granularity exactly where theirfor cooperation and information sharing. (204) streamlined service and it contains facets such as exposures are so that they can react quickly the certification of the application by a regulated to the risks themselves as well as meeting theAST: How do you see the new Pri- service provider that will hopefully be expanded to regulatory reporting requirements.vate Placement funds regime af- other fund products as part of this process. International investors are tasked with having tofecting the industry? report to different regulators globally and they can AST: Taking into account the evolv- only do this to the extent required if they haveMcGowan: Against a background of increasing ing needs of international investors administrators who can help them do so. Larger,lead times for private placement funds in other and the changing nature of global more established administrators with strong trackjurisdictions, the new regime is an additional records are best placed to meet this need.competitive advantage that Jersey has to offer regulation, how do you see 2012professional, sophisticated investors. It helps panning out?sophisticated investors to quickly seize on in- In particular, clients who are launching newvestment opportunities when they arise and Solt: We believe that Jersey is in a strong posi- products need to be able to access supportmake the most of them. in carrying out rigorous due diligence. It ap- tion to continue to benefit as the green shoots of pears that investors are placing more money recovery, hopefully, continue to flourish. with fewer managers and performing deeperAlthough it’s early days yet, the new private due diligence on them, and transparency fromplacement funds regime is a great additional The continuing challenges in the financial those managers for being early investors in newstrength of Jersey’s. It was a good response to sector can also present opportunities for products and funds. We believe that the trendwhat the industry was looking for — something the sophisticated investor and we in Jersey towards outsourcing can only grow as regula-that was quicker, simpler, and also more cost are in a strong position to take advantage of tory pressures increase.effective to set up. this. For example, we have seen real estate funds successfully moving from direct real Cook: The outlook for alternatives in 2012 isCook: Similar in scope to Jersey’s existing estate investment into investing in real estate promising, particularly if you reflect on the statis-COBO (Control of Borrowing Order) private backed loans as a number of banks continue tics in 2011 which was a challenging year. At thefunds, the new Private Placement Fund offer- to divest themselves of parts of the real es- end of 2011, alternative funds business continueding further widens the choice available to inves- tate loan portfolios. to perform strongly, standing at £145 billion - overtors and is designed for ‘fast track’ approval, 75 per cent of the total. Hedge fund business inusually within three business days, providing As far as the changes in global regulation, these Jersey stands at just under £50 billion, and pri-the speed and certainty for investors that is be- should present an opportunity for the service vate equity funds at £39 billion – an eight per centcoming increasingly important in today’s mar- providers in Jersey to demonstrate their ability increase on the previous year and an impressiveket where arrangers need to react quickly to to provide the high quality of service within a 56 per cent increase on 2009. We believe Jer-new market opportunities. well regulated jurisdiction and ensure we are sey’s fund offering has been further enhanced in able to continue expand throughout 2012. 2012 and should encourage more growth.The regime, with its appropriate regulatoryoversight, is expected to be attractive acrossthe alternative asset classes, including real es-tate, private equity, mezzanine, cleantech andemerging market funds.The Private Placement Fund also is positioned Opportunities for the sophisticatedto support fund managers who do not want to investor and we in Jersey are in aoperate funds within the EU and the stringentrequirements of the AIFM Directive and the ad- strong position to take advantage of this.ditional costs of compliance that will inevitablyarise. Jersey’s Private Placement Fund regime Nick Solt, Moore Stephenswill provide fund managers with structuringopportunities to navigate an alternative routearound the Directive.For those specialist private funds which do notfall within the scope of the new Private Place- McGowan: There’s a lot of change and chal- The debate about regulation and changing inves-ment Fund offering, Jersey will continue to oper- lenge in prospect for 2012. This environment tor demands has actually presented specialistate its COBO regime. creates opportunities that it is important for us to jurisdictions like Jersey with an opportunity to en- be prepared for in order to provide solutions to hance their product range, provide more choice our clients. If we can help our clients to be suc- and safeguard their regulatory standards.Solt: The PPF regime is a positive move for the cessful in asset raising, asset management andindustry. This regime will allow us to compete delivering good returns to their investors thenwith, or even be ahead of, rival jurisdictions in we will all be successful. The global funds industry is seeing some realterms of our ability to set up fund structures shifts. However, if Jersey can continue toquickly and efficiently where required. The greater focus on transparency and report- demonstrate an acute understanding of the ing is driving innovation at the moment. Inves- key trends impacting the funds arena, retainIt will be of particular interest to fund promoters tors and asset managers are looking for ever- a commitment to innovation and maintain thewho wish to move quickly to take advantage of increasing amounts of data. Moreover, they regulatory conditions to support the needs ofan investment opportunity and who have a pool need this information increasingly quickly. Con- corporate and private investors, we will en-of sophisticated investors to whom they are able sequently, investment administrators need to be sure the long-term success of our growingto market their products. able to provide clients with industrial-strength funds sector. AST 14 www.assetservicingtimes.com
  15. 15. A Fresh Perspective.Experience the difference of a highly personalised exchange service with a pragmatic approach and swift, expert response. www.cisx.com
  16. 16. SebastienChakerAutomated messagingCalastone’s Luxembourg head explains the issues and solution surroundingautomated messaging within the fund distribution marketBEN WILKIE REPORTSAST: Can you tell me a little about in Luxembourg and Ireland. We opened our Lux- AST: What is holding back the moveCalastone - why it was formed, what embourg office in 2010 to cater for the European towards automation? market, and in 2011 we started to expand in Asia.it offers and who your clients are? Chaker: There has been a myth from the be- AST: How automated is communica- ginning of 2000 that all the players in the fundSebastien Chaker: Despite years of invest-ments in trying to automate fund orders, the tions in the mutual fund industry? industry would all invest in their IT infrastruc-levels of automation in the fund space remain ture in an attempt to move to a single standard.extremely low compared to what we see in the Chaker: There has been 10 years of intensive Many fund managers believed the SWIFT ISOequities space. We were convinced that existing effort and millions have been spent to automate standard would solve the problem and all theirsolutions to automate fund processing did not the space. ISO standards have been created, clients would move to it. But this didn’t happen.completely meet the needs of the industry. and ICSDs have moved into the market by us- Fund distributors have not been willing to invest ing the systems created for bonds and equity in their infrastructure to automate fund ordersWhat Calastone is doing can be compared to to go into the fund space. There are a number by developing new communication standardswhat a travel adaptor does for the international of industry groups who have recommended the solely used by the European fund industry.traveller - it provides a simple, reliable and cost- use of the ISO standards.effective way of electronically connecting fund It’s worth remembering that fund distributorsdistributors and fund managers irrespective of But the latest EFAMA-SWIFT survey on the lev- come from diverse types of organisation - theythe chosen standard used by other parties. el of automation of third party cross-border fund could be banks, brokerage firms, insurance orders shows that in the first half of 2011, the companies, pension firms or even specialisedCalastone was set up as a private company in rate of transactions that use the ISO standards fund platforms. They all have different busi-2007, and we started to operate the first trans- is still quite disappointing, at 37.8 per cent. The ness models, different levels of sophisticationactions in 2008. Our clients are fund manag- rest of the transactions are bilateral flat files and and different IT infrastructures - they do noters who operate across multiple jurisdictions there are still over six million faxes processed necessarily think of themselves as being partas well as fund distributors. Our services were by transfer agents in Luxembourg and Dublin. of the fund industry.initially focused solely on the UK fund market, The scary thing is that this number is increas-but by 2009 clients were pushing us into the ing each year, mainly because cross-border dis- Going back to the analogy of the electric adap-cross-border market. So we started offering the tribution continues to expand into new regions tor, you can see that countries or regions havesame model for cross-border funds domiciled and to new types of distributors. different voltages and frequencies around 16 www.assetservicingtimes.com
  17. 17. SebastienChakerthe world. But there’s very little debate about from cross-border funds rather than domestic which has a culture of zero defects, there’s nowhether or not to harmonise electrical sup- funds. Luxembourg and Dublin have been very tolerance of errors. And when you’re expandingplies, which is what the fund industry is trying successful in promoting UCITS funds across into other markets, particularly those where theto do. Even if the electrical suppliers were able the world – fund managers with UCITS products time difference is significant, doing everythingto agree on one global standard, which is un- that were initially set-up for distribution in a se- by fax can mean up to two days before the endlikely, just try and imagine the level of invest- lected number of European countries can very investor gets its trade confirmation.ment to change supplies in the countries that easily expand their distribution market acrossneed to adapt. But the main reason why there the globe as more Asian and Latin American AST: Are there particular types ofisn’t a debate is because there is a simple solu- countries adopt UCITS. funds that are seeing the benefitstion - plug adaptors. The impact of this is that distributors in new sooner than others?In the fund industry, we think we can solve the markets often have different operating models Chaker: In terms of cost reductions, retail fundsproblem and accelerate the automation take- and different IT infrastructures, so each time with high dealing volumes from multiple distributorsup by creating this interoperability. Everyone you increase distribution, transaction numbers tend to see the cost savings sooner. But the riskcan keep their own communication standards increase but the level of automation falls. reduction aspect is the key driver for institutional orand we can put the technology in the middle alternative funds - they have the high value tickets,to translate messages from various messaging Cost is one of the main drivers. Some clients where the financial risk of missing a dealing dead-protocols. The ability to communicate orders be- are reporting savings of up to 60 per cent line is much higher. And if you look at service levels,tween counterparties is not new, but the transla- when they move to automated messaging. So everyone benefits in the same way.tion capability is where we add the value. it’s a big driver, but it’s not the only one - scal- ability is vital. As firms expand into new mar- AST: Is there a difference when youAST: What is driving the move to- kets they would need to increase their staff if they kept everything manual, but having auto- implement the solution in new mar-wards automation in this sector - is mated processes make the whole expansion kets, compared to those that areit simply down to cost? much simpler. more established?Chaker: If we look at the UCITS industry we Another very important factor is service levels to Chaker: They have the ability to start buildingcan see there is a strong trend of growth coming distributors and this is particularly vital in Asia, automation more quickly, so in one sense it’s 17 www.assetservicingtimes.com
  18. 18. SebastienChakereasier. But often they don’t have the ability to ever, all the regulations imposed on fund manag- that our model is exportable in different markets.go onto the SWIFT network. Across Asia, there ers have a big impact on costs and as a result So we have already replicated the Australian ex-are fewer than 10 distributors with SWIFT fund fund managers have become much more cost- perience in Singapore, where people have beenmessaging capabilities. conscious. Automating is an easy way to reduce talking about automation for more than five the cost burden, thereby reducing funds TERs. years with very little achieved. In April we will have four of the largest local distributors runningAST: Who needs this automation? AST: Asia is a growth area for both a pilot with several large domestic and offshore the industry as a whole and for Ca- funds distributed in Singapore, and we will thenChaker: Fund managers are the ones that need roll out our network to all the major players inthe automation - it’s their industry. Fund distribu- lastone. How do you see the market the second part of the year.tors, be they banks or brokers, distribute funds in this region?as well as other financial products, so they don’tthink of it as their industry, they just want to have Chaker: What we have seen over the past three We’re currently setting up similar pilots in Tai-a cost efficient and secured way of processing to five years is a growing number of global fund wan and Hong Kong which we expect to start infund orders. The main costs of manual process- managers either setting up operations in the re- June. I think this proves our model is exportableing lies at the transfer agent level, they need to gion or expanding their presence there. But we - of course every market is different but becausecharge fund managers more for manual trans- now also see large Asian asset management we are interoperable, none of our clients needsactions. There’s one fund distributor we speak companies creating a UCITS product to exclu- to make significant IT investment to take advan-to who says that Asian distribution represents sively distribute back into Asia. tage of the benefits, which is a big difference20 per cent of its total fund holdings but these from the past and makes the whole process to The way we have been operating is by helping move to automation much quicker.distributors account for 50 per cent of its total fund managers to accelerate the automation oftransfer agency costs, simply because the lev- their European distributor base. As Asian flowsels of automation are not yet there. have rapidly grown, we have received an in- AST: How do you see the market de- creasing number of requests to provide a solu- veloping in the future? What is Ca-AST: What is driving the growth in tion in Asia. So this year we have put people oncross-border markets? the ground in Hong Kong to cover this region lastone doing to prepare for this? - essentially following the needs of our clients. Chaker: One trend of particular interest in ourChaker: The growth is coming from emerging When you look at the opportunities in the global space is the changing behaviour of investorsmarkets. At the moment, Asia is the biggest re- markets, for our clients Asia is the most impor- over the next 10-20 years. Current investorsgion for fund managers, but there is an increas- tant region in terms of manual transaction vol- come from the pre-internet days and still rely oning focus on Latin America. umes - at the moment there is very little adop- traditional advice channels - banks, financial ad- tion of automation and several of our clients visers and so on. What we see happening over have seen transaction levels double year on The way we have year for the past few years. the coming decade is the Facebook/Twitter gen- eration becoming the new clients of asset man- been operating is by We tend to work within the more mature mar- agers. This will mean a big change in behaviour kets in Asia, and there are two reasons for this. of clients in relation to professional advice - they helping fund managers Firstly, the likes of Vietnam, Thailand and Ma- are expected to be less reliant on financial inter- laysia are still relying mostly on domestic funds mediaries, to get information directly online from to accelerate the and there is still very little cross-border distri- product providers and to deal into funds online. bution. There’s also the issue of labour costs. automation of The increasing need for automation in Europe This would not be short of a revolution for the their European is generally down to the cost of labour. In Hong Kong, Singapore and Korea, labour costs are fund industry. Transaction volumes could in- crease significantly, payment mechanisms and distributor base still cheaper, but rapidly growing and also be- coming a significant expense for fund manag- investor servicing models would need to be re- engineered. Needless to say that if the major ers. In countries like Vietnam, labour costs re- players do not get the automation levels up to-Fund managers who set up a global distribution main very low, which means the cost of manual day, this could be a big missed opportunity forplatform in Luxembourg or Ireland, for example, processing is not yet a major issue. the industry. ASTbenefit from the economies of scale of hav-ing one fund range distributed globally. InitiallyUCITS were created for distribution in the Eu- AST: You already have a successfulropean market, and that remains about 60 per base in Australia - does this trans- late well for the rest of the Asian Calastone Transaction Network Luxembourgcent of where the assets are sourced from. Butthe rest of the world now often accounts for up market, or are the requirementsto 40 per cent of the assets, and that’s growing. very different?Most of the cross-border fund expansion comesfrom European funds looking outward – UCITS is Chaker: The Australian funds landscape is verycurrently the only true global fund product We don’t similar to that of the UK, with domestic fundssee many US, Asian or Latin American domestic mainly distributed through financial advisers. We set up a base in Australia in 2011 and in less Sebastien Chakerfunds sold on a global basis, it’s a one-way traffic. than nine months we’ve created a pilot group that includes one of the largest wrap platforms Managing directorAST: How much is changing regu- and several large domestic funds. We are nowlation altering the way fund manag- successfully expanding our network to otherers operate? major players in this market.Chaker: I don’t believe that regulation is a direct Although the regulations and dynamics are dif-driver for the automation of the business. How- ferent in every country, we have demonstrated 18 www.assetservicingtimes.com
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  20. 20. SponsoredFeatureAll exchangeThe chief executive of Channel Islands Stock Exchange explains thebenefits of listing on a recognised stock exchangeCISX FOCUSThere are three main benefits to be derived Now more than ever, it is particularly important ny. Of course the stock market mechanism canfrom listing securities on a recognised stock to restore public confidence in the financial mar- be use for other processes which require securi-exchange, of which the CISX is one such ex- kets and exchanges can play a significant part ties to be distributed, such as privatisations andchange within the European time zone: in restoring that confidence by maintaining high open market operations for a central bank.• Transparency standards for the conditions of listing and public• Marketability disclosure of information. In this regard, the ex-• The potential of enhanced liquidity. change’s expectations and that of any code of corporate governance converge: both are inter- There are manyTransparency underpins the expectations of ested in transparency and ensuring the equalityinvestors, regulatory bodies and market partici- of treatment of shareholders. reasons why apants in the post financial crisis environment. Asa result, over the past two or three years there The CISX Market Authority has always worked company may choosehas been greater focus on the transparency to ensure listed issuers understand fully the im- to list. Most often, thebenefits of listing, particularly on an internation- plications and practicalities of the listing rules,ally recognised stock exchange. A listing on any offering information and guidance through main reasons financialexchange should add value and enhance infor- workshops, seminars and conferences – formation flow to investors (and the public general- example, an upcoming workshop on due dili- institutions wishly) and it is the exchange’s role to facilitate this. gence by listed issuers post-listing. This educa- tional role has always been a key element of to list are to createThe exchange’s public disclosure regime is designed the exchange’s work, but in the aftermath of theto provide information flows not only to investors but financial crisis there is even greater emphasis a market valuecredit institutions that may also rely upon the listing on disclosure and transparency and the role ofstatus of securities. The CISX requires directors of listing in achieving these goals.listed companies, including investment funds, to ad- There are many reasons why a company mayhere to ongoing disclosure requirements in relation A stock exchange is traditionally the place where choose to list. Most often, the main reasons fi-to corporate actions, trading activity and adherence companies go to raise capital. It has a further nancial institutions wish to list are to create ato the Model Code. At the heart of the disclosure re- function of enabling the shares which represent market value, to provide investors with an exitgime is the need to ensure that directors of listed is- ownership of a company to change hands at a route, to extend their product’s visibility, to se-suers keep the market informed and to ensure there price that reflects, not only supply and demand, cure a kite mark which demonstrates they haveis equality of treatment of shareholders. but also to some extent, the value of the compa- met rigorous disclosure requirements or to at- 20 www.assetservicingtimes.com

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