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: Sebastien
London pension schemes set to Chaker
Calastone’s Luxembourg head explains
join forces in cost cutting move
the issues and solution surrounding au-
tomated messaging within the fund dis-
tribution market
LONDON 13.04.2012 page16
London’s 32 councils are in talks to establish a
pooled 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 the
Municipal Employers Retirement System’s infra- methods such as the potential benefits of being part of impact that FATCA will have on firms
structure vehicle ‘Borealis’. If the merging of the 34 a Common Investment Fund, which allows a number of both inside and outside the US
schemes 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 separately
Advocates 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 latest
administration 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 grow
of assets, or £2.25 billion, into local projects.
facilitate the set-up and operation of the new UK tax page24
One 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 moves
sion will be made. Currently Northern Trust and State savings, through reduced investment management fees Find out the latest hires, and who is
Street 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 page28
gan, 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 p3
Ten markets, ten
cultures, one bank.
3. NewsInBrief
Societe Generale wins Metropole
Gestion mandate
Continued from page 1
SGSS in Italy offers securities services includ-
ing clearing, custody and trustee services,
fund administration, liquidity management and
transfer agent services.
Metropole Gestion is an independent asset
management 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 UK
tax law
Continued from page 1
First announced in the 2010 UK Budget, the UK
tax transparent fund will enable fund managers
and institutional investors to pool their assets
to achieve cost and administrative efficiencies
through 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 can
compete with fund jurisdictions already offer-
ing tax transparent fund structures, such as
Ireland, Luxembourg and The Netherlands,
and becomes the location of choice for master
feeder 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 mandates
UCITS 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 Managers
business 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 wide
fund in the UK would become the natural choice the distressed asset verticals, primarily asset range of investment strategies. We have not
for 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 billion
and 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 funds
rope, Asia and US-based asset managers look-
portfolio analytics, acquisition, repositioning
and liquidation strategies for the private invest-
asset servicing mandate
ing to operate a central platform in the UK for
ment and mortgage servicing industry. CIBC Mellon will provide asset servicing solutions
their 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 custody
Halo 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. NewsInBrief
“We selected CIBC Mellon as our asset servicing
provider based on the impressive dedication to
client service permeating the company’s culture,”
said Paul Bloom, president of Bloom Investment
Counsel, Inc. “We have worked with many custo-
dians and have found CIBC Mellon to be the best
at allowing us to focus on our goals.”
CIBC Mellon now provides asset servicing for
more $370 million of assets managed by Bloom.
NYSE Liffe US to launch new
repo futures
NYSE Euronext will launch repo futures market
trading on 16 July, if it passes regulatory approval.
Seeking to compete with CME, which is aim-
ing to own a futures exchange in London, NYSE
will launch its repo futures trading through its
NYSE Liffe US that comply with the Depository
Trust and Clearing Corporation’s (DTCC) trade-
mark – GCF Repo Index.
With Libor, a diurnal fixing of interbank overnight
dollar lending rates, under scrutiny for manipu-
lation, and benchmark rates offered by Federal
Reserve losing lustre following the transaction
tax introduced by Federal Deposit Insurance
Corporation (FDIC), NYSE is optimistic about
exploring the $400 billion GCF repo market.
Thomas Callahan, chief executive of NYSE
Liffe US, said at an investor meeting earlier this
month: “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 life
benchmark, 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 pay
market needs a new benchmark and we think the Belgian gas and electricity sector.
more for services above and beyond that of a
that 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 Services
management, has expanded its relationship
with 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 a
tration 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 investors
trator for Para’s offshore fund since early 2010, hedge funds, commodity pools, private equity
are willing to pay separately for services such
but 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 available
Para stay ahead of growing industry needs for prime brokerage division in Dallas, James Davis
opportunities to sell such new services on a
more independence and transparency. will head the new office.
stand-alone basis.
“The expansion is a testament to our value of
independence, client excellence, customised
CACEIS new custodian for “Better serving the needs of our clients located
in Texas and the Southwest is the primary reason
approach, 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 serve
Para launched its flagship onshore fund in 1991. bank and its administrative agent. this leading alternative investment community.”
4 www.assetservicingtimes.com
6. NewsInBrief
BNP 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 Hove
administration 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 in
hedge fund administration services for its latest
the main equities and bonds markets for private LCH.Clearnet to sell majority stake
insurance-linked investment strategy.
and professional investors.
to London Stock Exchange
Anchor Risk Advisors, an investment manager
focused on the insurance-linked securities and Vistra looks to Netherlands with Shareholders of LCH.Clearnet supported its
catastrophe risk investment sector, are con- acquisition of FTC Trust plan to sell a majority stake to London Stock
tinuing 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 Netherlands
ministration 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 were
Andrew Dougherty, managing director and head
in favor of the merger, with LSE reporting a 99.9
of 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, and
Anchor Risk Advisors has direct access to the corporate services. It is expected to be re-
The clearing house attracted interest from
operations 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 per
Societe 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. Bottom line:
2 @
Your securities services expert
in Central and Eastern Europe
Our network is available for you in Central and Eastern Europe for your securities services
business. We bring you in-depth local experience and award winning international expertise.
ING is your partner in Bulgaria, Czech Republic, Hungary, Poland, Romania, Russia, Slovak
Republic and Ukraine. For more information call Lilla Juranyi, Global Head of Investor Services
on +31 20 563 6435 or e-mail: Lilla.Juranyi@mail.ing.nl.
www.ingcommercialbanking.com
ING 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. CountryFocus
Central and Eastern Europe
It is impossible to stereotype - or even define - the CEE region, but
the financial crisis has led to leaner, meaner operations
GEORGINA LAVERS REPORTS
A 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 foreseeable
sidering the intensely heterogenic nature of the liquidity of CEE and CIS banking markets future, and will fall well below growth rates of
the 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 GDP
across the border, Hungary is recording aver- of the region. growth trajectories that demonstrate the region’s
age daily trading turnover of €42.8 million: a increasing diversity.”
veritable feast for custodian banks. Technol- However, the recovery that was expected has
ogy in Ukraine still, as Matthew Grabois from not materialised. At the beginning of 2011, Katalin Bóta, deputy regional head of Securities
BNP Paribas admits, “has got some roadwork the European Bank for Reconstruction and Services for Austria & CEE Region at Deutsche
to go”, while IT solutions in Austria are remark- Development (EBDR) predicted a growth rate Bank, comments: “There was a slight window
ably 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 risk
that 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 very
The CEE region’s back story over the last 10 product of central and eastern Europe to grow slight chance. However, things are cyclical: Asia
years 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 everything
impacted during the 2008 crisis, international October 2011. is circular.”
banks and their subsidiaries lent a helping hand
to 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 mixed
to stand on their own two feet. The Vienna Ini- CEE countries, ‘From Stabilisation to Recov- outlook. The EBRD raised growth forecasts for
tiative was launched in January 2009 to align ery’, seems accurate in its prediction of growth Latvia, Poland and the Slovak Republic, and
the 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. CountryFocus
contract 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 have
mestic policy mistakes in Hungary had un- Hungary and Turkey are definitely UniCredit, strong positions. The two flagship markets of
nerved 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 Commercial
cent respectively in 2012, with the EBRD stat- at Poland, Czech Republic or Hungary, I would Banking Securities Services Lilla Juranyi
ing 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 market
market 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 the
Against this dynamic background, custodians CEE are ING, Citibank, UniCredit, Deutsche
are continually looking at the growth of coun- The need for splitting the region into compo- Bank, and there are a few smaller custodian
tries; deciding when to exit markets, when to nent parts is vital when defining competitors, as banks offering their services to special type of
enter - 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 into
Jockeying 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. Morgan
market 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. CountryFocus
local operation, however they will not be a Cen- Grabois comments: “Global players are more But it does not mean fully harmonised financial
tral & Eastern European multimarket service likely to open markets where they see immediate regulation in all the CEE countries. I’ve seen this
provider. Within their strategy they identified a scale, and scale is important in our business. The as understandable, because the capital market
few important markets all around the world: in regional providers need these markets for their legislation is related to several other laws and
Eastern Europe, it is Russia, and J.P.Morgan own scale, so pressure will continue in the region complex regulations including, but not limited to
announced that they intend to extend their local and consolidation is foreseeable. The require- civil law, law on taxation etc., and its complexity
presence 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 operational
sub-custodian like ING, who has a much bigger revenues for the existing regional providers will processes being harmonised, and I believe that
market coverage – with the eight major markets be under pressure and SIFIs need to use other institutions that are offering custodian services
in 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 much
The 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 board
tunities. 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: “These
asset 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.” Matthew
Custodians 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 standardise
CEE region. Says Katalin Bóta of Deutsche: “I ing outcomes is hard, because targets are moving regulation within their own country, harmony
think 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 least
to Asia. That’s one of the major obstacles. My from risk absorption and mitigation viewpoint.” “In December 2011, Russia passed the law for
feeling 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-CEE
Global 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 cost
argues 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, thus
in 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 say
owners want growth and so the current growth that the function or role of sub-custodians might The disparity of legislation also means that
markets – Latin America and Asia included – are increase, and it’s going to be a reshuffling be- whilst non-EU member states have 900-odd
attracting a proportion of the emerging markets tween the big providers. Don’t forget about the pages of Dodd-Frank to contend with, they will
risk based assets. More assets in general will Russians, either. They are starting to buy up be let off from regulation specifically targeted at
be 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 view
say that this attractiveness in the Asia and Latin It’s an absolutely changing landscape.” is that non-EU member states will benefit from
markets will actually help the CEE as more at- not having to comply with this regulation,” says
Bóta. Juranyi and Grabois both agree, but state
tention 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 are
in 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 likely
Noren takes a more moderate view, acknowl- ché there is truth, as legislation from both the to look first at asset safety and for countries that
edging that SEB’s position as a sub-custodian EU and the US continues to impact on custo- have high risk mitigation and regulation – and that
means 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 players
aware 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 with
a 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 for
about 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, Istanbul
the 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 definitely
Whether the use of regional custodians will happened,” says Juranyi. “The CEE countries “Scale and the best IT will be the drivers,” concludes
lessen 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. Ten markets, ten cultures,
one bank.
For further information please contact:
Global Head of GTS Banks: Göran Fors, goran.fors@seb.se
Global Head of Sub-Custody, GTS Banks: Ulf Norén, ulf.noren@seb.se
Global Head of Client Relations and Sales, GTS Banks: Patrik Thiis, patrik.thiis@seb.se
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 market
AST: 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 to
of 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, Private
year 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 made
Jersey such a success story?
As a centre for asset management and
Nick Solt: Jersey has a deep pool of talent
when it comes to professional service providers servicing, Jersey is used by highly
with many organisations like ourselves providing
very specialist and bespoke services. Combine professional, sophisticated investors
this with a strong reputation for robust regula-
tion and you have a jurisdiction that instils a high supported by strong service providers
level of confidence in investors and promoters. Phil McGowan, State Street
Whilst the global recession has been a difficult
time, 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 a
ment 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 real
take 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 zone
the 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 a
sey regulatory framework, has meant that we
legal, regulatory and fiscal environment which has
have 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 fund
on-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 stability
of the assets held here. As a centre for asset regimes and vehicles. should not be underestimated, nor the inherent
management and servicing, Jersey is used by skills that the jurisdiction’s workforce can call upon
highly professional, sophisticated investors sup- The emphasis in recent years has moved to- through decades of growth and diversification into
ported by strong service providers. wards alternative investment funds and the more different aspects of financial services.
12 www.assetservicingtimes.com
13. JerseyFocus
AST: 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 to
ist to a more diversified centre. Do tors in the UK protection at least equivalent to tell and there is an opportunity to publicise its
you think perceptions are changing, that provided under FSMA. Jersey has obtained capabilities more widely to assist clients with the
and 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 the
being 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 proposal
classed 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 expertise
This 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. Jersey
not solely providing structures for what is seen as recognised funds may also be marketed to the At MSFA we have already established working
the 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 necessary
Jersey 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 to
ceived both within the UK and globally, with cess to a statutory compensation scheme. our clients.
Jersey Finance Ltd, several major law firms and
other industry bodies establishing secondary of-
fices in other, non-offshore, destinations such
as Abu Dhabi, Singapore and Mumbai. Jersey has obtained designated territory status
Whilst the changes in perception are only tak- under section 270 of the FSMA and a number
ing effect slowly, we believe that once they are
established it will mean a wider market and of recognised funds have been recognised by
range of services that are available, which
consequently will strengthen Jersey’s financial the Securities and Investment Board
reputation and, of course, we see ourselves in Geoff Cook, Jersey Finance
a 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 major
has 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 should
ings for jurisdictions every six months. In recent has enabled some of the larger organisations to be approached with a positive mind-set and be
reports, 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 the
one 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 generally
For 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 finance
top 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 sectors
are onshore or offshore. I think these factors including funds. We have established a specific
are 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 with
for 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 taken
oversight, 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 all
under the UCITS directive been em- mands that new regulations will place on them.
financial institutions in Jersey will be engaging
braced within Jersey, and what’s in activities that are affected by FATCA or, if they
next 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 in
to offer shares directly to investors in the UK data management and reporting, are strongly Jersey also enjoys an excellent relationship with
has been restricted by the Financial Services placed to support clients as they navigate the the US. It has signed a TIEA with them as far
and Markets Act 2000 (FSMA). However, sec- new environment. back as 2002 and has a Statement of Co-op-
13
14. JerseyFocus
eration 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 with
regulators) to formalise existing arrangements lations enable us to provide a competitive and a high degree of granularity exactly where their
for 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 the
AST: 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 to
fecting 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 have
McGowan: 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 track
jurisdictions, 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 2012
professional, sophisticated investors. It helps panning out?
sophisticated investors to quickly seize on in- In particular, clients who are launching new
vestment opportunities when they arise and Solt: We believe that Jersey is in a strong posi- products need to be able to access support
make 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 deeper
Although it’s early days yet, the new private due diligence on them, and transparency from
placement funds regime is a great additional The continuing challenges in the financial those managers for being early investors in new
strength of Jersey’s. It was a good response to sector can also present opportunities for products and funds. We believe that the trend
what 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 is
Cook: 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 the
funds, the new Private Placement Fund offer- to divest themselves of parts of the real es- end of 2011, alternative funds business continued
ing further widens the choice available to inves- tate loan portfolios. to perform strongly, standing at £145 billion - over
tors and is designed for ‘fast track’ approval, 75 per cent of the total. Hedge fund business in
usually 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 cent
coming increasingly important in today’s mar- providers in Jersey to demonstrate their ability increase on the previous year and an impressive
ket 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 regulatory
oversight, is expected to be attractive across
the alternative asset classes, including real es-
tate, private equity, mezzanine, cleantech and
emerging market funds.
The Private Placement Fund also is positioned
Opportunities for the sophisticated
to support fund managers who do not want to investor and we in Jersey are in a
operate funds within the EU and the stringent
requirements of the AIFM Directive and the ad- strong position to take advantage of this.
ditional costs of compliance that will inevitably
arise. Jersey’s Private Placement Fund regime
Nick Solt, Moore Stephens
will provide fund managers with structuring
opportunities to navigate an alternative route
around the Directive.
For those specialist private funds which do not
fall 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 specialist
ate 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 and
industry. This regime will allow us to compete delivering good returns to their investors then
with, or even be ahead of, rival jurisdictions in we will all be successful.
The global funds industry is seeing some real
terms of our ability to set up fund structures
shifts. However, if Jersey can continue to
quickly 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, retain
It will be of particular interest to fund promoters tors and asset managers are looking for ever- a commitment to innovation and maintain the
who wish to move quickly to take advantage of increasing amounts of data. Moreover, they regulatory conditions to support the needs of
an 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 growing
to market their products. able to provide clients with industrial-strength funds sector. AST
14 www.assetservicingtimes.com
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. SebastienChaker
Automated messaging
Calastone’s Luxembourg head explains the issues and solution surrounding
automated messaging within the fund distribution market
BEN WILKIE REPORTS
AST: Can you tell me a little about in Luxembourg and Ireland. We opened our Lux- AST: What is holding back the move
Calastone - 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 fund
Sebastien 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 ISO
equities space. We were convinced that existing effort and millions have been spent to automate standard would solve the problem and all their
solutions 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 orders
What Calastone is doing can be compared to to go into the fund space. There are a number by developing new communication standards
what 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 distributors
distributors and fund managers irrespective of But the latest EFAMA-SWIFT survey on the lev- come from diverse types of organisation - they
the 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 specialised
Calastone 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 sophistication
actions in 2008. Our clients are fund manag- rest of the transactions are bilateral flat files and and different IT infrastructures - they do not
ers who operate across multiple jurisdictions there are still over six million faxes processed necessarily think of themselves as being part
as 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 have
same model for cross-border funds domiciled and to new types of distributors. different voltages and frequencies around
16 www.assetservicingtimes.com
17. SebastienChaker
the world. But there’s very little debate about from cross-border funds rather than domestic which has a culture of zero defects, there’s no
whether or not to harmonise electrical sup- funds. Luxembourg and Dublin have been very tolerance of errors. And when you’re expanding
plies, which is what the fund industry is trying successful in promoting UCITS funds across into other markets, particularly those where the
to do. Even if the electrical suppliers were able the world – fund managers with UCITS products time difference is significant, doing everything
to 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 end
likely, 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 across
need to adapt. But the main reason why there the globe as more Asian and Latin American AST: Are there particular types of
isn’t a debate is because there is a simple solu- countries adopt UCITS. funds that are seeing the benefits
tion - 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 funds
problem and accelerate the automation take- and different IT infrastructures, so each time with high dealing volumes from multiple distributors
up by creating this interoperability. Everyone you increase distribution, transaction numbers tend to see the cost savings sooner. But the risk
can keep their own communication standards increase but the level of automation falls. reduction aspect is the key driver for institutional or
and 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 you
AST: 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 are
it 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 building
can 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. SebastienChaker
easier. 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 been
messaging 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 running
AST: 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 then
Chaker: Fund managers are the ones that need roll out our network to all the major players in
the 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’t
think 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 in
fund orders. The main costs of manual process- managers either setting up operations in the re- June. I think this proves our model is exportable
ing lies at the transfer agent level, they need to gion or expanding their presence there. But we - of course every market is different but because
charge fund managers more for manual trans- now also see large Asian asset management we are interoperable, none of our clients needs
actions. 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 difference
20 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 of
transfer agency costs, simply because the lev- their European distributor base. As Asian flows
els 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 on
cross-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 our
Chaker: The growth is coming from emerging When you look at the opportunities in the global
space is the changing behaviour of investors
markets. At the moment, Asia is the biggest re- markets, for our clients Asia is the most impor-
over the next 10-20 years. Current investors
gion 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 on
ing 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 for
platform in Luxembourg or Ireland, for example, processing is not yet a major issue. the industry. AST
benefit from the economies of scale of hav-
ing one fund range distributed globally. Initially
UCITS were created for distribution in the Eu-
AST: You already have a successful
ropean market, and that remains about 60 per base in Australia - does this trans-
late well for the rest of the Asian
Calastone Transaction Network Luxembourg
cent of where the assets are sourced from. But
the rest of the world now often accounts for up market, or are the requirements
to 40 per cent of the assets, and that’s growing.
very different?
Most of the cross-border fund expansion comes
from European funds looking outward – UCITS is Chaker: The Australian funds landscape is very
currently the only true global fund product We don’t similar to that of the UK, with domestic funds
see 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 Chaker
funds 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 director
AST: How much is changing regu- and several large domestic funds. We are now
lation altering the way fund manag- successfully expanding our network to other
ers 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
19. China
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20. SponsoredFeature
All exchange
The chief executive of Channel Islands Stock Exchange explains the
benefits of listing on a recognised stock exchange
CISX FOCUS
There are three main benefits to be derived Now more than ever, it is particularly important ny. Of course the stock market mechanism can
from 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 and
change 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 many
Transparency underpins the expectations of ested in transparency and ensuring the equality
investors, regulatory bodies and market partici- of treatment of shareholders.
reasons why a
pants in the post financial crisis environment. As
a result, over the past two or three years there The CISX Market Authority has always worked
company may choose
has been greater focus on the transparency to ensure listed issuers understand fully the im- to list. Most often, the
benefits 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 financial
exchange should add value and enhance infor- workshops, seminars and conferences – for
mation flow to investors (and the public general- example, an upcoming workshop on due dili- institutions wish
ly) 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 create
The exchange’s public disclosure regime is designed the exchange’s work, but in the aftermath of the
to provide information flows not only to investors but financial crisis there is even greater emphasis
a market value
credit institutions that may also rely upon the listing on disclosure and transparency and the role of
status 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 may
here 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 a
to the Model Code. At the heart of the disclosure re- function of enabling the shares which represent market value, to provide investors with an exit
gime 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 have
is 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
