Nov/Dec 2009 GBP 25 - UK, ROW

Volume 6 No. 44 USD 45 - America

EUR 35 - EMEA
www.ISJ.tv

Fund Administration - Middle East

Panel - African Custody
Analyse This - Technology

THE GLOBAL
THE GLOBAL MAGAZINE
SECURITIES OF INDUSTRY
SERVICES ASSET SERVICING
MAGAZINE

Progress of
the process
Cost and STP in today’s DC funds

Custody: Germany
US: Transfer Agency
Executive Profile:
Alain Closier, SGSS

Front Cover Section ISJ44.indd 1 20/11/2009 14:08

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 ISJ Investor Services Journal Heads up

Best Practice: Strengthening the

P.08 Executive Profile P.12 Transfer Agency
Seven Pillars of Highly Effective Risk
P.16 German Custody P.17 Analyse This P.19 Panel Debate

Governance
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

P.04 News company. selling bans from the previous

In the European market there year was followed by a wider
Editor-in-Chief’s letter is in some ways a split between concern with counterparty risk
custody providers expounding and the understanding of the
New challenge
The Board Needs Expertise and Information
the benefits of their single-
market focus, and those whose
exact constitution of the lending
programme.
ambitions are to established In this issue we focus on
Our research indicates that a bank’s
a pan-European offering.performance
In during the
the administrative crisis is
headache
this issue, the market profile of playing out for ever-swelling
Editor-in-Chief:
Roy Zimmerhansl predicted by the degree to which its board engages
Germany finds providers that
with risk manage-
defined contribution
roy.zimmerhansl@2i.tv

I takement. Resilient
role at banks showthemuch
represent former; higher
whereas levels of board
schemes. Accountingengagement,
and
Features editor: on my new ISJ’s interview with SGSS’s messaging, involving so
Ben Roberts Investor Services Journal amid a
ben.roberts@2i.tv and have survived the
dynamic market environment in
globalcrisis period
head, Alain without
Closier, finds significant government
many parties including - as
a dedication to a multi-market Anthony Harrington notes
Senior correspondent: custodyintervention.
and securities services, service. ‘Multi-market’ providers - “scheme trustees, plan
Craig McGlashan
craig.mcglashan@2i.tv
not to mention the wider can mean consolidation and administrators, third party
financial sector. acquisition – something that scheme administrators and
Reporter: Though new legislation may increase next year as investment managers” will
Kimberley Ferguson
kimberley.ferguson@2i.tv Alas, boards
and government at too many
and central banks are simply unable
financial stability gives ground
to take effective
continue to increase in
bank intervention has aided
Contributing editor: stewardship
the stabilising of theirfor
of the financial bank’s
ambitious risk profile.
providers Theycomplexity
to claim frequently do
for the notand
middle under-
Anthony Harrington greater market share, in more back offices, spurring the need
system to a degree, assuring that
Account managers: stand the risks theircountries.
assets are kept safe and correctly
company faces or believe forthat managing
enhancements them is
to straight-
Cicely Lewis Throughout these through processing.
cicely.lewis@2i.tv not within
administered has become their
of mandate, developments assuming the responsibility
this year, pension I look forwardhas been dele-
to helping
Eradat Munshi
paramount importance for funds around the world have enhance the depth of coverage
eradat.munshi@2i.tv the widegated to executive management.
and miscellaneous seen significant upheaval. Indeed, at many institutions,
of ISJ and the team remainsthe
audience of institutional Volatile markets earlier 2009 open to hearing your views
Senior account manager:
Patricia De La Grange
information that could
investors. inform them of the risk implications of busi-
depleted trillions of dollars from and capturing the debates and
trish.delagrange@2i.tv We have seen more hedge
ness strategies
funds opening custody accounts or ofbalance
majorsheets. “off-strategy
Securities lending risks” is unavailable
changes as they develop.to ■ the
Digital media producer: became a significant concern for
to achieve this aim, and the
Peter Ainsworth
peter.ainsworth@2i.tv board. some, particularly in the US and
gradual ‘institutionalisation’ that the UK, as the overhang of short
Roy Zimmerhansl,
Editor-in-Chief
Operations manager: has brought this sector closer to
Nicolette Whittaker
nicolette.whittaker@2i.tv
the mainstream continues to be
Figure 1: Top Challenges Top Challenges
in Providing in Providing
Effective Effective Risk Oversight
Risk Oversight
a very interesting development. SOURCE: Celent/Oliver Wyman
Managing director: For the providers serving
Jon Hewson
these funds, caused a of how to execute riskDirector’s
it has understanding
Directors'
understanding of
oversightrisk management 51%
jon.hewson@2i.tv executing
rethink in the breadth of service
Chairman: Management's
available, and the linecapacity Management’s
to define and explain organization's
between capacity to defi ne risk
management structure and processes 33%
custodian and broker risk management structure and processes
Mark Latham
mark.latham@2i.tv dealer –
and the activities expected Unclear Unclear understanding
of understanding of goals of risk of goals of risk 28%
management process and structure
each – may continue to blurmanagement process and structure
2i UK 16-17 Little Portland Street,
London W1W 8BP, UK if
T: +44 (0) 20 7299 7700 Risk information
trading and safekeeping is not linked to the
services Risk information is not linked to
organization's 25%
F: +44 (0) 20 7636 6044 strategic and
strategic and operational operational objectives
objectives
are sought from the same
Organization's capacity to identify and assess 24%
2i USA 410 Park Avenue, 15th Floor Latestrisks
mandates
New York, NY 10022
T: +1 212 231 8421 F: +1 212 231 8121 Lack of clear ownership and organizational
Month Winner Client Location Assignment
23% Mandate size
leadership for risk management
© 2009 2i Media
All rights reserved. November RBC Dexia Lack of clearVIA ownership
Rail for oversight atMontreal Custody/sec
20% lending CAD1.5 billion
No part of this the Board/committee level
publication may November BNP Paribas SS Brevan Howard AM London Global Custody n/a
be reproduced, in
Director "overload" and competing priorities 20%
whole or in part,
without prior November RBC Dexia Georgian Capital Part. London Custody, administration n/a
written permission ..................................................................................................................................................................................
Organization's capacity to aggregate risk assessment 14%
from the publishers. October CIBC Mellon Marrett Asset Mgmt. Toronto Custody n/a
ISSN 1744-151X
Appropriate corporate culture to promote risk 13%
management within the organization
1
Organization's capacity to report risk mitigation 11%
and monitor plans
1-13 ISJ44 ML.indd 1 Risk information is not linked to causes or 8% 07/12/2009 11:18
earnings volatility
 ISJ 267x

Contents ISJ Investor Services Journal

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Contents Letters
Dear ISJ Dear ISJ
In this issue

COVER
COVER STORY
STORY
Progress of the process
STP in administration,
page 10
02 Letters
04 News The last month of
updates in custody, clearing,
securities lending, legal,
regulation, prime brokerage
and technology.
06 News analysis -
Domiciles use art of
persuasion
Plus, an analysis of the latest
catchphrase - ‘custody plus’
People
08 The European Dream -
Executive Profile
Alain Closier of SGSS talks
strategy with Ben Roberts.
Fund Administration
10 Progress of the process
- STP in pension funds -
Anthony Harrington analyses
the middle and back office
demands of DC pension plans.
TO RENEW YOUR SUBSCRIPTION PLEASE TELEPHONE
+44 (0)20 7299 7700 OR VISIT... WWW.ISJ.TV/MEMBERSHIP
12 US name for a global Your recent article ‘Got the
service - Transfer message?’ seemed enthusiastic
in garnering criticism for
agency - Kimberley Ferguson SWIFT and I believe it lost
investigates the growth and
demands in US transfer agency some perspective of the
importance of SWIFT’s core
services - to provide safe means
14 Middle Eastern promise for institutions to move money
- Fund Administration securely and transmit back office
Craig McGlashan discovers the messages, as, indeed can BT.
enhancements in the Middle
East’s fund administration As I see it, the mutual fund
market. debate should not focus on
Custody
SWIFT or BT, nor their business
model. Nor should it focus on
16 Germany Uprising messages or ISO standards, as
- Custody seems to be the editorial trend.
Ben Roberts sees almost Instead, the debate should
innumerable opportunities for
custodians and administrators focus on industry demand
as Germany continues its for interoperability. How can
resurgence. the players collaborate to help
the mutual fund industry
achieve its business objectives?
18 Analyse This - European Distribution, growth, process
Custody Goran Fors of SEB improvement, cost reduction,
gives his thoughts about
servicing in multi-markets, risk management improvement.
and Robert Mattsson-Axen As SWIFT moves into
of Nordea discusses the providing front office services
implication of CCP in the Nordic – specifically the execution
region.
of mutual fund transactions
– and offering their services
19 Custody services, Africa -
Head to Head
for Tier 2 and Tier 3 firms,
is such a complex solution
ISJ brings together to industry
experts to discuss the African best for the industry? The
securities services market. infrastructure expenditure could
Securities Lending be cost prohibitive for what is
a straightforward approach to
20 Still on the fence - transacting mutual funds. My
Securities lending concern isn’t competition, we
Pension funds are still
weighing the benefits with the already collaborate. My concern
risks in securities lending.
is full industry STP. If, say, 20%
of the market cannot automate,
80% of the industry’s efforts will
22 Corporates in action be unnecessarily forced to serve
- Shareholder services - 20% of the community. This
Update and comment on the EU restricts the benefit for everyone.
Shareholder Rights Directive. Calastone and SWIFT already
interconnect to interoperate.
Whatever the size of the mutual
24 Directory of services fund firm, it can choose how
ISJ listing of key asset
servicing praticioners and best to achieve automation and
vendors. 100% STP. No-one need be
excluded.
Kevin Lee,
Managing Director,
Calastone Ltd n
To express your views, write to ben.roberts@2i.tv or blog at www ISJ.tv
2
2009 has seen a number
of regulatory milestones in the
payments world including the
Payment Services Directive
(PSD). The PSD came into force
on 1st November and creates
a new category of Payment
Service Provider – the Payment
Institution (PI).
PIs are intended to embrace
businesses which are not
currently regulated as either
Credit Institutions (banks,
building societies etc) or
e-Money Institutions (pre-pay
cards, certain mobile payment
services etc) and should
encourage the growth of new,
innovative payment services,
providing an alternative to the
traditional bank services.
While industry opinion
differs as to whether banks
should be concerned about the
threat of PIs entering the market
and affecting their traditional
payment business, the PSD
does mean that payments can
no longer be regarded as the
exclusive preserve of the banks.
PIs will compete for this business
and create new payment services,
particularly in the mobile and
online world.
While for the banks,
payments are a core competency
and they enjoy a long-established
presence within their markets,
PIs represent a new and arguably
attractive option for consumers.
PIs may also be able to develop
simpler products and bring them
to the market more quickly than
the banks. Of course, some banks
may seek co-operation with PIs
or could even set up their own.
However, whatever strategy the
traditional payment institutions
decide to follow, 2010 will see a
shake-up of the entire European
payments market and hopefully
along with it further innovation
and healthy competition.
Martin Wilson,
COO, VocaLink n

1-13 ISJ44 ML.indd 2 20/11/2009 17:12

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1-13 ISJ44 ML.indd 3 20/11/2009 17:12

 News
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
News
Roy Zimmerhansl, principal
at FinTuition, the securities
finance training provider, was
appointed editor-in-chief of
Investor Services Journal (ISJ),
Global Securities Lending (GSL),
GSL.tv and ISJ.tv. In 2010 Roy
will celebrate 30 years in the
securities services industry in
areas such as custody, prime
brokerage, investment banking
and lending platforms.
Custody
Northern Trust updated its
‘Custody Made Simple’ industry
guide. The 16 page guide, aimed
at trustees, pension scheme
managers and other scheme-
related parties, is available
through the UKs National
Association of Pension Funds.
The custodian also boosted its
transition management service
with a pre-trade analysis report
that helps clients evaluate the
potential costs and risks of
switching investment managers or
change asset allocation policy.
BNP Paribas Securities Services
Singapore is to provide global
custody and fund administration
to Aberdeen Asset Management
Asia’s‘select’ and South East Asia’
funds. BNP Paribas Trust Services
Singapore Limited* is the new
Trustee for the“Select” funds.
State Street won a CAD2.2 billion
mandate from the Saskatchewan
Teachers’ Federation in Canada.
The collection of pension and
group benefit funds will receive
custody, fund accounting and
securities lending. Last month
Ron Logue, chairman and CEO of
the bank, announced he would
step down next March to become
non-executive chairman. Jay
Hooley, president and COO of
its global investment servicing
group, will assume the role.
Kevin O’Neill and Samina Vernon
joined State Street Global
Markets’ London transition
management team.
Ken Lewis, CEO of Bank of
America Merrill Lynch,
announced his retirement.
1-13 ISJ44 ML.indd 4
RBC Dexia Investor Services
was re-appointed as custody,
securities lending and investment
analytics provider for VIA Rail
Canada Inc.’s CAD 1.5 billion
pension plan. The bank was also
appointed sub-custodian in
Canada by Clearstream Banking
Luxembourg.
Fund Administration
CIBC Mellon Global Securities
Services completed its buy-out of
the fund administration and unit-
holder recordkeeping business of
Felcom Data Services. Felcom’s
client contracts and most of its
staff will move to CIBC Mellon.
The level of assets under
management in the fund
administration industry dropped
by more than a quarter over the
past year, according to a study by
Carbon360° Research.
Bank of New York Mellon saw
its assets under custody and
administration reach USD22.1
trillion at the end of the third
quarter of 2009, an increase of 7%
over the previous quarter.
However, the figure was still 1%
lower than during the same period
in 2008.
Legal
California’s two largest employee
pension funds - the California
Public Employees’ Retirement
System (CalPERS) and the
Californian State Teachers
Retirement System (CalSTRS)
– filed a USD200 million lawsuit
against State Street Corp. for
allegedly inflating the fees it
charges for foreign currency
trades. The pair claim they
have been overcharged nearly
USD57 million in fees. State
Street categorically denies any
allegations of wrongdoing.
Settlement
The Payments Services Directive
(PSD) came into effect on 1st
November to mark the latest
milestone in the levelling of cross-
border payments in the Eurozone.
The directive, created by the
European Commission and
implemented by national
regulators, aims to create a single
market whereby every non-cash
payment is effectively domestic
along with SEPA Direct Debit, also
launched on the same day.
Euroclear Bank, the depositary
arm of the Euroclear Group,
the trade settlement giant,
processed the first ever cross-
border tri-party repo transaction
using Korean government debt
as collateral for DekaBank and
Morgan Stanley. The chairman of
the Group’s Finland and Sweden
offices announced he is to leave
the group in the second quarter
of 2010. Kjell Arvidsson, 57, a
former chief executive officer
of the Nordic Central Securities
Depository (NCSD), played a key
role in the integration of the
two Nordic operations into the
Euroclear Group, following the
acquisition in October 2008.
Trayport and Percival Software
pooled their respective
specialisms in trading and post-
trade with the integration of two
of their key systems.
Trayport’s Exchange Trading
System, software with a particular
clientele in commodities, has
integrated Percival’s Depend,
which provides clearing,
settlement, depository, and
registry system for equities and
bonds, to connect seamlessly and
in real time to a full clearing and
settlement service.
Securities Lending
The US Federal Reserve may
increase its reverse repo activity
following a confirmation that it
was testing such trades to alter
liquidity and cash levels in the
market.
The central bank confirmed to
the Financial Times that it was
experimenting with reverse repo
– selling assets to traders for cash
to repurchase later at a higher
price – to soak up some of the
billions of reserves in the financial
system after two years of federal
support.
KAS BANK, the Dutch custodian,
suffered a steep decline in its
securities lending business
though was hopeful of a rebound
in 2010, according to a release to
supplement their third quarter
results in mid October.
ISJ Investor Services Journal
Technology
J.P. Morgan Worldwide Securities
Services upgraded its securities
lending dashboard to allow clients
to monitor their lending activities
in a customised view with
real-time information available
through the bank’s web-based
portal for treasury and securities
services, ACCESSSM.
MAG Group, the Moafaq Al
Gaddah Group of Companies,
based in Sharjah, United Arab
Emirates, selected IT2, the key
treasury management system of
T2 Treasury Solutions, to satisfy its
treasury best practice objectives.
Schroder Investment
Management implemented
SimCorp Dimension functions
across four countries within its
Asia Pacific operation.
Regulation
The European Central Bank
added its voice to the growing
concern over the proposed
EU directive on alternative
investment fund managers. While
the ECB welcomed proposals to
improve regulation, it warned
that unless a “level playing field”
was created, Europe could lose
business. Meanwhile, the majority
of the members of the the CFA
Institute Centre for Financial
Market Integrity, supported the
mandatory requirements set by
the proposed directive in a survey.
The US Securities and Exchange
Commission voted unanimously
to improve the transparency of
dark pools through a series of new
measures. According to the SEC,
the number of active dark pools
trading on US stock markets has
tripled since 2002.
Prime Brokerage
Daiwa Securities Group is to be
renamed as Daiwa Capital Markets
from 1st January 2010.
Dean Backer was appointed global
head of prime brokerage sales and
capital introduction at Goldman
Sachs. n
For more news, as well as features,
events and video interviews, visit
www.isj.tv
20/11/2009 17:12
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1-13 ISJ44 ML.indd 5 20/11/2009 17:12

 News Analysis
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
Domiciles use art of persuasion
Top marks from research bolster reputation of Crown Dependencies
What do you do when you
are a small jurisdiction and find
yourself the object of wrath of
some not so well informed but
very important persons in very
big jurisdictions?
Ideally you engage in
diplomatic “reaching out and
educating” things. You arrange
visits. You make sensible
adjustments. You get as many
(large) friends to communicate
that you are all about good
business.
This is the plight of offshore
tax havens – specifically the
Channel Islands, occasional
targets for those seeking
to uncover what happens
offshore.
Jersey’s financial centre
supremos enjoyed a very
successful visit to China a few
weeks back and the island
now has a number of Jersey
companies listed on the
Hong Kong Stock Exchange.
Guernsey, for its part, recently
sent its chief executive in
Beijing to wave the island’s flag,
doubtless with similar success.
On the other hand, the
word is that HM Treasury
has informed the two Crown
Dependencies that some
European countries who do not
believe that the islands’ zero-
ten tax policy is in the spirit
of the EU’s business taxation
policy, and who are sharpening
their knives to make their point
more keenly.
However, the islands
have the defence with an
exceedingly clean bill of health.
Mike Rothwell, Jersey Funds
Association spokesperson,
points out that 2009 has seen
many independent reports
proclaiming Jersey as the
world’s anti money laundering
league tables. “The OECD in
its White List, published after
the G20 said that Jersey met
the requirements in full with
no further work required to
1-13 ISJ44 ML.indd 6
ISJ Investor Services Journal
be done on its anti money knowledgeable investors and recognition on the islands that
laundering provisions, and institutions can get regulatory the zero-ten tax regime will
was in fact, top of the list of approval in a matter of days, as need to be adjusted to reflect
off-shore centres for good opposed to weeks or months. the new, post-crash feeling
practices,” Rothwell says. “Flexibility and speed of what constitutes fair play
The International Monetary have been a key theme in the across the developed world.
Fund (IMF)’s review of the growth of these jurisdictions,” “Jersey has acknowledged that
island two months ago also Rothwell says. “The report is what used to be considered
put Jersey at the top of the in effect saying that not only compliant five years ago in
regulatory league tables. “Their is Jersey very well run, it is terms of the zero/ten proposals
conclusions on our anti-money a net contributor to the UK might not be compliant in this
laundering framework scored economy and a very positive new era.
it as the best jurisdiction thing to have. A similar case “We are looking at it afresh
globally,” he points out. could be made for our impact and we will move to another
A report by the City of on the US,” Rothwell says. regime that might be more
London, which produced a That said, there is a compliant,” he concludes. n
Does ‘Custody-
report ranking global financial
centres, placed Jersey at 14th,
ahead of Dublin (23rd). Most
recently, there is HM Treasury’s
plus’ add up?
publication on 29 October of
Michael Foot’s Review of the
opportunities and challenges
facing Guernsey, the Isle
of Man and Jersey and six ‘Custody-plus’ has become think this whole concept of
Overseas Territories, including an increasingly popular risk management and risk
Bermuda and Cayman Islands. term of late - but what is it mitigation is here to stay. This
In this report, the exactly? last experience was so painful
Dependencies and The concept can be that the lesson is not going to
Overseas Territories (OTs) described simply: a bank’s go away quickly.
are offered “benchmark combination of custody and “While no structural
recommendations” on topics prime brokerage services. Some decision has been made to
such as tax transparency, of the big custodians have seen combine the two organisations
financial sector regulation and acted on the opportunity. as some of our competitors
and tackling financial crime. J.P. Morgan and HSBC have done, our custody unit
The Treasury also published recently created teams which already works extremely closely
Deloitte’s submission to the brought together custody and with our prime brokerage
Foot review, on the theme: brokerage, while Northern division,” he adds.
“Why do corporates use the Trust teamed up with prime Other sources suggest
Crown Dependencies and broker Merlin Securities. the name is all that is new,
OTs.” Lee Waite, global head of however. “With some prime
Deloitte found: “Funds are direct custody and clearing brokers being forced to
attracted to these territories by at Citi, told ISJ that while he organise themselves as bank
certainty of tax exempt status, had not heard of custody-plus holding companies and
and by the established legal, before, he recognised the trend. traditional custody banks
regulatory and professional “Post Lehman Brothers, having other services... there’s
infrastructure. Luxembourg hedge funds found a lot of their always been fuzziness to when
and Ireland are the main assets were tied up,” he says. you’re a bank and when you’re
competitors in this market.” “We’ve seen hedge funds a prime broker,” explains one.
For Rothwell, what gives looking to put unencumbered “I don’t know if it’s Eur
Jersey (and Guernsey) an assets in a segregated account anything new, other than The
edge over established onshore which has generally been in maybe just a new wrapper.” pro
regimes like London are one of two forms: a custody Whatever it is called,
but
regulatory innovations such as account or a trust account.” custody-plus is here – but
whether it is really adding to
Jersey’s expert funds regime. A Waite believes the trend
sophisticated fund targeted at may become permanent: “I anything is open to debate. n und
and
on
6
20/11/2009 17:12
EQ9048
 Everyone thinks globally.
We also differentiate locally.
Europe is working towards the realisation of SEPA.
The implementation of standardised payment
products and systems will lead to greater efficiency,
but also calls for extra attention when it comes
to specific local market demands. Equens clearly
understands this. We offer a variety of SEPA solutions
and also facilitate global payment services, based
on the International Payments Framework (IPF).
1-13 ISJ44 ML.indd 7
EQ9048_203x267mm+3.indd 1
nothing What’s more, unlike other European payment
processors, Equens is deeply rooted in a number of
European countries. We use our profound knowledge
equals and expertise concerning local markets to apply the
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sure that your specific local needs will be catered for?
Then Equens has the solution. www.equens.com
20/11/2009 17:12
10-11-2009 16:33:41
 Executive profile
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
The European dream
Alain Closier, global head of SGSS, tells Ben Roberts about strategy,
acquisitions, and the drive to offer a true pan-European service.
Alain Closier has played a significant
part in the swift emergence of Société
Générale Securities Services as a global
player in custody. The arm of the French
bank is the second biggest such provider in
France, and the seventh in the world, and
Mr Closier has been developing the bank
as an international custodian since 2003.
The philosophy is to provide the
best pan-European service, and whether
through acquisitions or organic growth
there has been a domino effect of countries
in which SGSS has entered and claimed
market share.
“France is our domestic original market
and Italy is now the second market after
the acquisition of Unicredit. But we want
to more and more be a pan-European
player proposing to our clients a pan-
European offer,” he says, adding: “I say
more and more because Europe is not one
country under consolidation.”
The choice between acquisition and a
grass roots set up is often down to specific
situations. The purchase of Unicredit in
2006 arose from a rare occasion in which
an Italian firm was up for sale, he explains,
and the entrance into the German market
through buying a fund administrator was
equally opportunistic.
As a counter example, he says SGSS
has around EUR50 billion under custody
in Spain – “an interesting unit” – without
acquisition. Still he appears to relish the
buying mentality to continue to grow.
Such a strategy is also visible in the
bank’s entrance into emerging markets,
though Closier explains that the company
is selective. Egypt, the Czech Republic,
Russia and Morocco are just four of the
countries that the Société Générale retail
bank has entered the fabric of commercial
life, with SGSS providing a key local
presence for international clients. “We
are proposing a comprehensive package
to access to this market in the same way,
it has been successful and we have strong
demand in Egypt and Morocco - we want
to do that in a number of countries, those
where we can use the leverage provided
by the existing presence of the Société
Générale Group.”
Closier joined Societe Gernerale in
1-13 ISJ44 ML.indd 8
1977 as an economist after graduating
in this discipline and completing post
graduate studies at the Ecole Nationale
de la Statistique et de l’Administration
Economique in Paris. He moved to the
international division of the bank in
foreign exchange and treasury, before
spending 10 years developing the FIMAT
Group, a derivatives broker – now New
Edge – where he was chairman and CEO.
He then served in the banking
services division of securities services as
deputy head – and then head – of cash
management, credit cards and retail
custody. Then in 2003 he took the reins
developing the international custody,
moving “from a support function to a
business”.
With multiple mandates won at the end
of summer 2009, what are the secrets to
the swift growth of SGSS?
“The secret is firstly that Societe
Generale had a lot of expertise,” he
responds. “I started five years ago with
2,000-3,000 experts in securities services,
and the idea was to put these people
together with a clear project – along with
good commitment from your bank and
shareholders.
“Second, you must have the ambition
to grow. In Europe you cannot develop a
local strategy – even if you are big in your
country. Your strategy has to be at the
regional level, at the European level.”
He says Europe is very much a “market
of tomorrow” considering the significant
changes to its infrastructure are still in
transition or yet to be implemented.
8
ISJ Investor Services Journal
Target2 Securities – the initiative for a
centralised public securities’ settlement
platform – is perhaps the best example of
this; it will not come into effect until 2013,
and even then, he says, “the migration of
some countries will not happen just in one
day”.
The UCITS IV fund structure will be
“a very important driver for the evolution
of the industry”, however, and the facility
for distributing funds neatly complements
custodians with a pan European outlook.
Looking back over the decade, Europe
has seen nine years of projects and variable
implementation. The disharmony in
settlement has met with policies such as
MiFID that have divided and democratised
trading liquidity. The result has been a
sustained fragmentation in both the front
and back office, and the continent overall.
Closier points out that Euroclear’s
ESES countries – France, Belgium, and
Netherlands – provide a model for future
infrastructure harmony. But he adds that
post-trade systems nevertheless “fully
played their role” during the financial
crisis.
Now the issue has changed on clearing
and settlement. “Before the crisis with
the consolidation of Europe, we spoke
about decreasing the costs of settlement
‘factories’ and create one factory, or to
organise a competition between factories
to decrease costs. Then from time to time
you have US players such as DTCC looking
to provide infrastructure for central
clearing.
“Now, it’s a little bit different. Now
we’ve got to consider regulation, systemic
risk, and the decision as to who is the
regulator for the infrastructure. Is it
possible to have an infrastructure that
is regulated by a body outside Europe?
Is it possible to have a regulator located
in London with rules which apply
throughout the Eurozone?”
Different regulation is a barrier to such
harmony, he adds. “There are projects
to improve the regulation, but you have
no project to create one regulator. For
our industry the key point is to avoid
any competition between the different
countries on regulation.” n
Watch a video interview with Alain Closier
on ISJ.tv.
20/11/2009 17:12 Nordic s
 A Stable Market?

Stock-loan in Stockholm
The Nordic securities lending
industry faces opportunities
and challenges in 2010.
GSL presents an
opportunity for knowledge
sharing and networking.
Register online at gsl.tv/nordic

The Nordic Securities

Lending Summit
“Lending in 2010” Presented by

GSL |
Global
Location: Stockholm, Sweden Securities
Lending
Thursday 28th January ‘10
gsl.tv/nordic

1-13 ISJ44
Nordic ML.indd
summit 9
ISJ44 print ad.indd 40 20/11/2009 13:55
20/11/2009 17:12
 STP Fund Administration
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
Progress of the process
Changes in the world of defined contribution pensions reestablishes the
focus on STP in the adminstration of funds, finds Anthony Harrington.
The world of defined contribution
(DC) pension plans in the UK is small
compared to the long established world
of final salary pension plans – perhaps
comparable in sizes to a pea and a
pumpkin.
But more final salary, or defined benefit
(DB), schemes are being wound down or
closed to new members - with existing
members being transferred to DC plans.
Further, the introduction of mandatory
auto enrolment for employees, into either
the new Personal Account style pension
scheme or a suitable alternative DC
scheme run by the sponsoring company, is
also on the horizon.
This transformation of DC schemes
will have important effects on their middle
and back offices.
As Ed Evers, director of DC Investments
at Fidelity observes, the average employee
take up of an employer’s DC scheme
probably stands at around 35% to 40%.
After auto enrolment, that number will
leap to 100%, bar the few who actively opt
out – which traditionally has been a very
small pool.
“In other words, we are talking about
DC scheme third party administrators and
fund managers having to cope with triple
the current number of daily transactions as
soon as auto enrolment arrives – and this
is not taking any account of the rapidly
rising trend to DC membership,” he says.
This means that a cumbersome, manual
chain of messaging between scheme
trustees, plan administrators, third party
scheme administrators and investment
managers - based almost entirely today
on faxes - is soon to hit an operational
meltdown. GBP1000 wrongly invested in
2009 because of a garbled message or a
simple human error can add up to an eye
watering sum of money lost by 2049.
Increasing staff numbers hand-crank
the instructions, investments and reporting
process as the work load increases would
add up to very significant cost increases for
the administration of DC schemes, which
are already substantially more expensive to
administer than DB schemes, according to
Evers.
Instead, the coming changes in the
1-13 ISJ44 ML.indd 10
pensions landscape means humans have
to be taken out of the loop and straight
through processing (STP) must be
enhanced.
Already the problem is being
highlighted by pension administration
houses. Mercer, the employee benefits
consultant and fund administration
house, fired out a press release at the end
of September headlined: “Trustees should
demand STP for pension administration”.
Their point? Since STP reduces the risk of
human error, speeds up transactions and
reduces the overall cost of pension scheme
administration it is not a “nice-to-have”, it
is a “must-have”!
Wade McDonald, State Street’s head of
customer management & sales, says that
increasingly investment managers can
expect trustees to look at a fund manager’s
levels of STP, and not just its performance
track record.
Clare Ross, head of service
implementation at Mercer, says one of the
first requirements in implementing STP is
10
ISJ Investor Services Journal
for the fund administrator to link directly
to the investment manager’s dealing
system, for buying, selling, switching and
pricing information. All of this can be
ripped directly and automatically from
the dealer’s system as the dealer executes
the trades instructed by the scheme
administrator.
Ross explains that currently, the
scheme administrator will either draw or
have the funds electronically sent from
the sponsor company, together with an
investment plan comprising instructions,
in accordance with the scheme investment
strategy as to how the monthly (or weekly)
contributions are to be invested.
In many administration arrangements
this information is then sent by fax to the
dealer. The dealer makes the trades then
faxes back the price and trade information
to the administrator and the information
has to be rekeyed into the administrator’s
system. “Simply updating prices on the
administrator’s system by hand can take
up to three days. With STP, the updating
is automatic,” she says. Reconciliation can
be automated and any exceptions reported
and clarified or resolved.
From the scheme trustees’ standpoint,
Ross points out, STP massively reduces
operational risk. “In the not so distant past,
there have been compensation claims in
the six figure region where trades have not
been done appropriately.
“All it takes is someone misreading a
fax, or keying in the trade incorrectly, or
putting money into the wrong fund or
the wrong asset class,” she comments. DC
assets are now growing rapidly, so the risks
are growing in proportion to the volume
increase.
State Street’s McDonald says his
organisation has a pivotal role in STP. “We
get the flow of requested trades aggregated
from the plan administrator. We place
and settle the deals and carry out periodic
rebalancing of the portfolio based on the
types of funds in the scheme and deal with
any multi currency dimension.
“If we are servicing the scheme we don’t
decide what to buy and sell; we work under
either dynamic or standing instructions,
and we have been developing some very
20/11/2009 17:12
 ISJ Investor Services Journal
good levels of automation, using available
messaging providers such as EMX and
Calastone,” he explains.
The other end of the process is how
external fund managers receive the
instructions from State Street into their
systems. If the managers still use faxed
subscription and redemption forms then
the bank can handle this to scale and
volume, using well developed manual
process control systems that it has
developed not just for the DC market,
but also for the long term savings market
encompassing life and pension fund
wrappers.
If fund managers are interested in how
to engineer more automation into their IT
systems to facilitate STP, State Street has
a range of proprietary technologies that
it can use to link its systems to the fund
manager’s in house dealing systems.
“The downstream fund managers
will have their own transfer agency
environments to receive and process
orders,” he says. “There are different
environments depending on the managers
selected to serve the scheme.
“Most managers will consider the
market developments available and will
have made decisions on whether to use
SWIFT, EMX and in some cases they
may have outsourced the function to
third party providers who have their
own infrastructure. We work closely
and consultatively with the managers
on behalf of the schemes we serve.
The important step forward is that
we leverage our expertise and scale in
managing operational risk and reducing
administration costs for the schemes,” he
comments.
There are different ways to do this. We
have already seen Mercer’s insistence that it
is up to trustees to see that when they add
managers to their funds panel, they ensure
that the company in question is at least
committed to automating its systems, even
if it hasn’t actually got there yet. There are
also opportunities here for third parties
to provide “gateway” type middleware
solutions that will sit between the fund
manager’s dealing systems and the pension
administration layer and translate between
the two.
“We have an open mind on how all
this is to be achieved. We always look
for standardisation. We don’t want
fragmentation here because we have
to manage the end to end process for
accurate and timely valuations,” McDonald
says.
His problem, and the problem for
all pension administrators, is that there
1-13 ISJ44 ML.indd 11
are any number of different proprietary
dealing systems out there. The universe of
systems that they have to connect to and
automate to achieve STP, changes every
time the trustees add a new fund manager
to their panel.
“We would love to see an industry
standard transport mechanism, but we are
a long way from that. We have to realise
that faxes are going to be around for some
time,” he says.
Ed Evers says that Fidelity is “out in
front of the pack” when it comes to STP.
“The point is that STP makes our dealing
processes much more efficient and speeds
up the process. It is a real win win for us,
which is why we have invested a great deal
in it over the years,” he notes.
Fidelity uses SWIFT messaging
protocols as its basic transport engine. As
Evers says, “With some 20 years of history
behind it, SWIFT is fast becoming one of
the key systems that pension providers are
“We would love
to see an industry
standard transport
mechanism, but we
are a long way from
that”
Wade McDonald,
State Street
using to execute STP. For us to pick it up
and run with it in the pensions world was
quite a natural thing to do.” He points out,
however, that many insurance companies
are quite new to SWIFT and will find it
difficult to grapple with as they try to find
ways of implementing STP.
The thing to realise about fax-based
data transmission he says, is the sheer
amount of time it takes to process. “The
third party administrator (TPA) will
look at all the instructions received from
members throughout the day. Then the
TPA will send a fax to the investment
manager saying: sell these funds, buy those
funds.
“The next day the investment manager
will send a fax back saying this is what we
did, or they will make a web site available
to the TPA for them to download the
information off. From there the TPA will
11
STP Fund Administration
take probably another three days to update
the individual member accounts,” he
explains.
The whole process could take a week
and the plan members would only be able
to see the results of the instructions they
had given to the TPA at the end of that
week if they had web access to the TPA. If
they were waiting for a printed report it
could be two to three weeks before they
saw an update. This is worlds away from
real time, and in volatile markets the
results could well and truly be history by
the time the members get to see them.
SWIFT also provides the backbone for
the biggest pensions industry collaborative
initiative so far on automated messaging,
with the ViaNova standard. However,
ViaNova is very much a starting point, a set
of agreed market practices, rather than an
STP solution.
Ben Cocks, products director at Altus,
a third party provider of STP solutions
to both pension administration and fund
administration houses, points out that
implementing ViaNova, which runs on
top of SWIFT, can be a long and expensive
project, with deployment costs running
for many months. “The perceived cost and
implementation complexity have made the
ViaNova/STP business case a difficult one
in the current financial climate,” he says.
Instead, Altus offers clients a hosted
solution which it has build and which it
can implement, doing all the APIs to the
client systems, in very short time scales.
“The market has been waiting for a
comprehensive, off-the-shelf solution for
STP and the Altus Instruction Gateway
does exactly this,” he says. It can offer a
joined up approach, he says, at all points
from the plan administrator through the
TPA to the investment manager and back
again for settlement, reconciliation and
reporting.
For his part, Ed Evers points out that
if scheme trustees pick the right TPA,
which means either using Fidelity’s fund
administration services or picking a TPA
with STP capabilities and with Fidelity
investment management on their funds
panel, they can have all the benefits of STP
today.
“Ultimately, we can only progress
as fast as the other parts of the chain,
so we are working with our clients
to do this and we are putting some
pressure on administrators to do this.
But they have massive pressures on their
development programmes anyway so it
takes time. However, this is starting to be
a differentiator amongst providers,” he
concludes. n
20/11/2009 17:12
 Transfer Agency
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
US name for a global service
The transfer agent is the party used
to manage fund registers and to execute
all shareholder transactions. With an
essentially important role, it seems odd
that the function often requires definition
outside the United States - home of the
phrase ‘transfer agency’.
Julian Rice, director of global
communications and marketing at
International Financial Data Services,
explains that this could be because the
roles of a transfer agent outside the US,
and perhaps to a lesser extent, the UK, are
different.
“If you buy a fund in the US, you
typically go through a fund manager, and
those fund managers will use external
transfer agents. However, if you buy a
fund in continental Europe, for example,
France, the concept of an external transfer
agent is fairly alien, because it is all done
through a central register. Buying a fund
in continental Europe, you will go through
a bank, where they will have a record
keeping function working in conjunction
with the banking.
“Because distribution is all done
through a bank, the role of the transfer
agency is very much institutional. If
suddenly the banks stopped selling funds,
and suddenly everything went through
financial advisors, then there probably
would be a requirement for a separate
function, as there is in the States,” Mr Rice
adds.
So despite transfer agency being an
international operation, the trend to
treat it as a separate entity is not quite so
ubiquitous.
But in a globalised, competitive world,
Richard Willis, global product manager for
Bank of New York Mellon Asset Servicing,
emphasises the importance of having a
global offering of transfer agency servicing
available.
“We see our clients looking to leverage
our ability as a service provider to provide
single solutions regionally as well as
globally. That said, the domestic element
is particularly sensitive, as foreign funds,
including the UCITS brand cannot be
imported into all countries. So, it is
important for service providers to be
able to continue to expand local market
support as well as the cross border
distribution into new markets as part of a
1-13 ISJ44 ML.indd 12
The US market’s needs
from transfer agency
are changing, writes
Kimberley Ferguson.
global transfer agency offering.”
As a global asset provider, any
expansion of our geographic reach
will typically reflect how our clients
are growing their own footprint either
organically or via consolidation,” Mr Willis
continued. “The transfer agent’s role in the
support of global distribution accordingly
evolves with each new jurisdiction.”
At the Bank of New York Mellon,
transfer agency is viewed as sitting at the
very front of the back office. “We provide
a variety of services, from standard data
maintenance, to full shareholder servicing
to support the non-commoditised element
of asset servicing,” Mr Willis says.
“The focus remains very firmly on
excellent client service and risk aversion,
as we interact with the end-investor and
the distribution community as well as our
direct client, the asset manager”.
Global distribution presents a number
of interesting challenges for both the asset
managers as well as the transfer agent.
BNY Mellon aims to support and simplify
a client’s entry into new markets by
maximising existing relationships as well as
offering supporting technology.
“By establishing hubs operating in the
three major time zones, we have all but
negated the time zone challenge and taken
a significant step towards making global
transfer agency a reality,” explains Mr
Willis.
12
ISJ Investor Services Journal
So how important is the transfer agency
function in fund servicing overall? Mr
Willis explains that transfer agency need
not be viewed a ‘necessary evil’, bedevilled
with inherent operational risks, but rather,
as a function which maintains a dedicated
focus around the underlying investors and
investments into fund related products.
“Whilst the order routing process will
keep being enhanced, the core role of
registrar and the keeper of units in issue
database will of course remain” he says.
According to Mr Willis: “The financial
crisis has sharpened everyone’s awareness
of risk and nowhere more so than in the
transfer agency sphere. There is certainly
tension: we strive for more efficiency and
high rates of straight through processing in
the face of ongoing consolidation, but this
potentially gives rise to less transparency
around the ultimate ownership of
shareholding accounts.
“We view transfer agency compliance
as a highly specialised function where we
deploy highly trained experts to protect
the bank against any unwanted suspicious
activities or investors. This level of scrutiny
requires procedures and technology to be
continually updated and enhanced to meet
these evolving risk-based needs”.
Faced with financial constraints and
a thriving population of sophisticated
investors and products, American
market practitioners have to decide if
shareholder services should be outsourced
to a third party transfer agent. Advisers
and management companies alike are
beginning to realise the benefits that
experienced transfer agency providers can
potentially offer.
Boston Financial Data Services, a
market leader in third-party transfer
agents based in Boston, has recently
experienced a heightened interest in its
transfer agency outsourcing services. Terry
Metzger, president and CEO, attributes this
to investment management firms focusing
on their core competencies and looking
to manage expenses, improve efficiencies,
mitigate risks and ensure customer
satisfaction.
“Because of our focus on best practices
and automation, and the fact that being a
transfer agent is our business, we are able
to deliver highly scalable, efficient and
high quality operations that allow our
20/11/2009 17:12
 ISJ Investor Services Journal
customers to rethink their service models
and expand their business relationships
with us,” Mr Metzger said.
While most firms usually outsource all
of their transfer agent functions, some
elect to retain certain functions such as
investor contact centres in-house. “Because
of the scalability needed for investor and
intermediary servicing, this hybrid model
is typically only used by firms with the
scale to create operational efficiencies” said
Mr Metzger.
The best transfer agency systems
encompass growth, are web-based and
are flexible enough to grasp different
languages, business models and currencies.
In expanding markets, the manual aspect
of cash processing and settlement can
leave room for error, so it is important to
“The financial crisis
has sharpened
everyone’s
awareness of risk
and nowhere more
so than in transfer
agency”
Richard Willis,
BNY Mellon
automate processing from order to cash
and settlement, and finally, to the posting
of activity to the fund.
Keith Parker, sales and marketing
manager at Koger, a technology provider
within the fund administration industry,
including transfer agency software, says:
“Prior to the global financial crisis, most
fund managers, certainly hedge fund
managers, outsourced their transfer
agency, and therefore outsourcing was
already a well-developed industry practice.
“Now with the onset of the financial
crisis, and events such as the Bernie
Madoff scandal, those fund managers that
didn’t outsource their transfer agency now
have even more motivation to do so. There
also seems to be a greater emphasis on the
‘ring fencing’ or ‘segregation’ of expertise.
“The last two years have been very
challenging in terms of selling complex
software products, owing to budgetary
constraints driven off asset value
reductions. This is true for the fund
1-13 ISJ44 ML.indd 13
manager and administrator alike. Where
there has been appetite, there seems to
have been an emphasis on finding a single
product or application that can replace
a number of products or applications
that are often difficult to integrate on a
seamless basis.
“Buying behaviour has also been a lot
more intensive in the sense that buyers
want to maximise what they get out of
a product, and also spend more time
attempting to quantify what type of long-
term savings can be generated through
the increased usage of systems and
automation.”
Tricia Riddell, head of product EMEA
for Bravura Solutions, acknowledges the
recent changes, and suggests potential
room for improvement. “The focus on the
standardisation of basic transfer agency
processes both within an individual
transfer agency service and across multiple
transfer agents, for example, the re-
registration of assets across platforms
must continue. This standardisation also
lends itself to integration with the other
industry bodies such as custodians and
fund accountant.”
Riddell adds that the ability to support
the emerging technologies for investor
and distributor access is another area for
improvement. “There is a minimum of PC
access today for trading, but it will be the
iPhone tomorrow,” she says.
According to Mr Metzger, the US
mutual fund market has experienced
unprecedented changes over the last two
years. “The primary trends have been low
or no growth for many asset managers,
a decoupling of manufacturing and
distribution, and widespread industry
consolidation for both asset managers and
distributors.
“These changes have forced firms to re-
evaluate business models to focus on those
areas that can deliver differentiation and
opportunities for future growth. Because
of the expense challenges, historic staffing
models have shifted. There is a move
toward leveraging lower cost locations,
utilising a non-traditional workforce and
scheduling structure, and driving to more
variable costs.”
The pace of regulatory change seen
over the last two years seems set to
continue. There are four primary drivers
to this regulatory change: the reactions
to the 2008 and 2009 market contraction,
including Money Market Reform and
heightened oversight; significant changes
brought about by the US government
restructure; ongoing activity at both the
Federal and State levels with Privacy
13
Transfer Agency
legislation and the ongoing reform of
key issues like 12b-1 of the Investment
Company Act of 1940 (the rule which
permits mutual funds to use fund assets
to finance the distribution of their
shares); summary prospectus (the rule
stipulating the way Open-end Mutual
Fund companies are to prepare their
prospectuses, ensuring all key information
is on display) and Cost Basis Reporting
- the rule that ensures brokerage firms
and mutual fund companies report their
customers’ cost basis when securities are
sold.
However, as Mr Willis points out, many
of the recent proposals for legislative
change have yet to be fully digested, and
are still in draft discussion state.
“The draft Investor Protection Act of
“There is a move
towards leveraging
lower cost
locations, utilising
a non-traditional
workforce”
Terry Metzger, BFDS
2009 focuses on some key areas which
will potentially impact transfer agents
and their interaction with the investment
community. For example, should this
act come to fruition, it will mean that
subject to the relationship with the asset
manager, the transfer agent may be
required to further facilitate the provision
of disclosure of information to the investor
on behalf of the asset manager.”
It could also mean that changes to
the requirement for beneficial ownership
reporting would require the transfer
agent to report more regularly and
hold additional information, including
additional data pertaining to the advisory
community, and the potential revision of
the record keeping rules.
Transfer agency is a highly specialised
function, enriched by highly trained
experts, brought in to protect the
organisation against unwanted suspicious
activity. This level of scrutiny requires
procedures and technology to be
continually updated and enhanced to
meet new and evolving, primarily risk-
based, needs. n
20/11/2009 17:12
 Fund Administration
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
Middle Eastern promise
Fund administration in the Middle East is growing in competition
along with a new emphasis on transparency, finds Craig McGlashan.
Record oil prices over the last few
years have boosted the Middle East’s
sovereign wealth funds, traditionally the
region’s most well-known investment
pools. But the area has also been hit by
the worldwide financial crisis, so are the
lessons learned in more economically
developed countries being implemented
in the cradle of civilisation?
Ramy Bourgi, head of emerging
markets at Société Générale Securities
Services (SGSS), says that the Middle
Eastern market has recently seen
expansion. “The higher oil prices over
the last few years have contributed
greatly to the increase of sovereign
wealth funds; this has contributed to
larger investments home and abroad,” he
says.
“The growth of investing regionally
has been spurred by better opportunities
at home, especially in the face of the
turmoil of international markets over
the last year.”
Rod Ringrow, senior vice president
and managing director of State Street’s
Doha office, suggests that the market is
recovering from that turmoil. “There
was a growing international interest in
GCC funds that withered away over the
last 18 months and is beginning to re-
emerge,” he says, adding that some of the
markets have moved “from frontier to
emerging status”.
David Morrissey, director of business
development for Europe and Middle
East in SEI’s Investment Manager
Services division, believes that it is
important to consider the Middle East
as a collection of distinct countries, not
one entity. “There are a considerable
number of different markets and
different aspects of the industry, some
more mature than others,” he says.
SEI has experience in these different
markets, servicing 12 clients across
the GCC and administering assets
of roughly USD28 billion. Morrissey
suggests that while Bahrain has
historically been the main financial
hub for the region, Dubai has recently
emerged as a regional player in the funds
business, “riding on the wave” of its
other economic successes.
14-19 ISJ44.indd 14
“A lot of European and US providers
- be they administrators or law firms or
other service providers - have viewed
Dubai as the gateway to the region,
whereas some of the older existing and/
or domestic players who have already
been established would have been set up
in Bahrain,” he says.
Ringrow adds: “Bahrain has tended
to focus on the Islamic finance market.
Dubai is a much more trade-driven
environment, while Doha has tried
to focus on the insurance and asset
management sectors, so different centres
are beginning to emerge as areas of
specialisation.”
Saudi Arabia is an area to watch,
according to Morrissey. The country has
significant levels of assets held through
family offices and domestic banking
groups, in addition to its sovereign
wealth funds, but the fund industry is
“not as developed as perhaps it ought to
be”, given its significance in the region as
a whole - partly because of regulation.
Currently, there are a number of
restrictions on the way non-GCC
investors can access the local equity
market. Several of SEI’s clients have
considered the options available to
resolve this difficulty with a number
selecting equity swaps.
“From an administering and
accounting perspective, using equity
swaps is not problematic for us,” he
says. “However, it does add an extra
level of cost as far as the fund manager
is concerned, because obviously they
have collateral issues and the associated
expenses in relation to the underlying
swap.”
What of the local fund administration
14
ISJ Investor Services Journal
business? SGSS’s Bourgi explains: “Local
fund administration is concentrated in
Bahrain and Dubai, with Qatar joining
in over the last year as an alternative
domicile. Although major players
dominate the scene, there is a big effort
to attract boutiques, which is lessening
the impact of the larger players.”
Dubai-based Ryland Gray has been
in operation for 14 years and has offered
fund administration services since 2000.
The company now has nearly 50 funds
under administration, handling assets of
USD1.1 billion.
Managing director Simon Fielder
believes that competition for small, local
players comes not from larger firms,
but from a culture in the Middle East
where asset managers are neither in the
habit of, nor required by law, to separate
their fund management from their
administration.
“The smaller funds and institutions,
with funds of a size of USD100 to
USD150 million, are fighting against the
fact that asset managers can keep their
own internal records,” he says. “That’s
where the market has been so far, but
because of the issues of insider trading,
insider dealing, lack of transparency, and
no segregation of reporting duties from
an asset management structure and the
issues that have come from that, we do
see that there is a better potential than
there has been in the past.”
This “shallow understanding” of
the separation of administration and
management has hindered the business.
“Since the DIFC [Dubai International
Finance Centre] was launched, a number
of foreign administration companies
– particularly allied to trust businesses –
have popped up,” says Fielder. “They not
so much dipped their toes but plunged
their heads into the water, found it’s
too uncomfortable and have gone back
home again.”
The problem of separation goes into
the regulatory sphere in many cases.
“If you look up the Capital Market
Authority rules in Saudi Arabia, they
skirt over administration in a couple of
paragraphs,” Fielder explains.
“Technically speaking, there is not a
20/11/2009 17:07
 ISJ Investor Services Journal
requirement for registration as a fund
administrator because they do not seem
to recognise it as a separate activity and
from my experience that is exactly the
same in the central bank of the UAE.”
SGSS’s Bourgi believes this light-
touch regulation is changing in light of
Madoff and the wider financial crisis.
“From a regulatory perspective, we have
different levels in each market, but the
direction is clear in that transparency
and adherence to sound practices are
of paramount importance in attracting
foreign investors to the region.”
State Street’s Ringrow cites a
British influence on this new desire for
transparency and standards. He says
that a number of centres have modelled
themselves on the London market and
have brought in ex-Bank of England and
ex-FSA people.
But this drive is “not happening fast
enough”, according to Fielder. “The
reason Ryland Gray hasn’t grown faster
is because there is no necessity for
most of the domiciles to segregate that
responsibility.”
Fielder thinks his marketplace will
grow as the regulation is imposed. But
he adds: “The DFSA [the regulatory
body for the DIFC] has probably gone
too far in the opposite direction, and
has stunted any potential for fund-
based business within the DIFC with
a regulatory regime which is overly
restrictive.”
There are other difficulties for
administrators in the region to
overcome.
“The Middle East, in spite of its major
advances in sophisticated investing,
remains an area with strong cultural
values,” says Bourgi. “Relationships are
developed and nurtured over the years
and trust and honesty are valued in
developing relationships.”
SEI’s Morrissey cites the example
of anti-money laundering practices.
“While people in Europe and the US
may take that as standard, the individual
requirements that are required do not
change and you need to make sure that
your client understands that this is not
something they are being singled out for,
but rather that it is a standard industry
requirement worldwide.”
Fielder believes that local players
can have an edge in these areas. “We
have a lot of Islamic funds and a
fair proportion of our assets under
management are Islamic,” he says.
“We know how to administer those.
You have to be sympathetic to how those
14-19 ISJ44.indd 15
funds are run, and you have to have an
understanding of how some of the assets
within a fund are going to be valued
and the risks that are inherent in those
falling apart between valuation dates.”
Islam forbids the payment of interest
on a loan, which results in the creation
of unique financial instruments.
One example is Murabahah funds,
which are in the form of a loan
secured against real assets, usually
commodities. This loan will be repaid
at a set point and at a set amount. A
person may borrow USD1 million and
repay a capital sum of USD1.1 million
in six months’ time, resulting in a
USD100,000 profit for the lender. These
instruments present new challenges to
administrators, says Fielder.
“During the term of the loan, do we
add that USD 0.1 million on an accruing
basis to reflect the fund value, or do
we lump it on at the valuation point?
That really depends on the terms of the
underlying assets being made and the
offering document of the fund itself, and
so the pricing methodology we adopt
reflects both the Islamic nature, and
the value of the transaction, within the
terms of the investment itself.”
State Street’s Ringrow says local firms
sometimes have an advantage, with
many front ends in Arabic script.
However, he adds: “The international
firms can deal with the Sharia issues as
long as they have a screening process
in place with regards to investment
selection. I think some of the local
firms have more experience and
expertise in terms of dealing with the
AAOIFI [Accounting and Auditing
Organisation for Islamic Financial
Institutions] process. It is an added
layer of complexity but it is not an
insurmountable barrier for doing
business.”
Flexibility is also key, according
to Ryland Gray’s Fielder.“The Arabic
and Bedouin tradition of the Majlis is
still strong; the Majlis being both the
location of a meeting and the actual act
of sitting with a tribal or governmental
leader to discuss matters of the day,” he
explains.
“This practice trickles through
the commercial strata of society: the
chairman of a bank for example may sit
and meet his friends and other people,
many of whom may be customers, and
if someone says, ‘I’ve signed up to one of
your funds for a fixed term and I really
need my money now’, I can guarantee
that we will have a request saying ‘I
15
Fund Administration
know this is not within the rules but
can we let this customer have his money
early’.”
Time keeping also requires flexibility.
Different areas of the Middle East
have different weekends – some take
Thursday and Friday off, others Friday
and Saturday. This could make it
impossible to price a stock quoted on
both regional and international stock
markets from Thursday to Sunday, for
instance.
SEI deals with this through its
internet-based service offering. “What
we try to do is ensure that transparency
and information available to clients is
accessible via the internet 24 hours a
day, seven days a week. Giving round-
the-clock access to information, not just
data, is very helpful to our clients,” says
Morrissey.
He sees a glowing future for the
Middle East fund industry and believes
local players may soon branch out
internationally by providing UCITS
funds. “With a wealth of local knowledge
and expertise, some of the leading
investment managers in the region
believe that they are ideally positioned
to market successfully to international
investors. I believe that this is going to
be a very popular area for international
investors in the future and one in which
we are expecting to see significant
growth.”
However, Fielder points to the old
systems of local standards and fairly
lax regulation as a potential bar to this
future growth and warns of another
cultural nuance that could act as a
barrier to Saudi Arabia taking its fund
industry to the outside world.
“The Capital Market Authority does
not appear to have any specific rules
on this, but it seems not to like data
being held outside the boundaries of the
Kingdom,” he explains. “When we open
in the Kingdom we will have to work
with a regulated custodian and we would
carry out the administration duties but
we’d have to make sure the data was held
within the Kingdom, not exported and
processed in our Dubai office.”
Few would argue that the Middle
East fund market is maturing, but
questions remain as to just how
quickly. In particular, firms are looking
for the industry to establish a clear
boundary between management and
administration. Lessons are being
learned, but cultures are often slow to
change, so a regulatory push may well be
required to get the market moving. n
20/11/2009 17:07
 Custody
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Germany’s uprising
Europe’s biggest economy looks forward to
significant custody opportunities next year,
finds Ben Roberts.
Germany returned to growth last
August, with a 0.3% increase clearly
outstripping the 0.1% decline in the
Eurozone overall.
This occurred within a sharp incline
on the DAX, the country’s main exchange,
dispelling the fears for the export-led
economy that seemed to be heading the
same way as Japan 12 months ago.
The rise in the markets - as well as
the political stability from a re-elected
Chancellor Merkel and her coalition with
the business-friendly FDP - has done
wonders for the holdings of the country’s
institutional investors, partly easing the
pressure for all concerned, including
its custodian, Depot bank and fund
administration industries.
The country remains a hyper-
competitive market for its international
custody banks, Sparkassen institutions and
state-owned Landesbanks.
But as Evert van den Brink, managing
director of CACEIS Bank Deutschland
GmbH points out, a buoyant stock market
is bolstered by low interest rates, which is
not the best news for custody. “Extremely
low interest rates have a negative impact
on the banking industry revenues – such
as with global custody activities – as with
client assets you have the possibility to
optimise your earnings out of the interest
spread created.”
It both is, and is not, business as usual
14-19 ISJ44.indd 16
for these investors and their relationships
with their service providers. Uwe Dreger,
head of domestic custody Western Europe
at Deutsche Bank, tells ISJ that current
trends for the risk-averse investor –
such as asset segregation - was already
an established practice in the country.
“There’s a long history of segregating and
securing client assets. If you look at the
legislation in Germany there were not
“What other markets
had developed in
the area of asset
protection was
never a new issue”
Uwe Dreger,
Deutsche Bank
many changes - so what other markets
have developed in the area of asset
protection was never a new issue in the
German market,” he says.
Jorg Sittman, managing director for
Germany at KAS BANK agrees, and says
the ‘Depot’ bank system – which oversees
16
ISJ |ISJ Investor
Investor Services
Services Journal
Journal
the activity of both asset managers and
fund administrators – is an example of
the high levels of fiduciary scrutiny in the
market.
Investor priorities have shifted, and
the transparency and performance of the
funds in which they have invested have
climbed the agenda in the mandate given
to custodian banks.
CACEIS, a custodian and depository
bank in the country that is in the process
of developing its business line in fund
administration in Germany, has a market
share of around 10-15% in some areas.
Mr van den Brink says that of all emerging
client demands, reporting is near the top
of the list. “There is absolutely a market
to increase the reporting possibility
towards the client as they wish to see more
transparency.”
He explains that the fund
administration side is in development to
complement custody and the depositary
banking as “the assets are often directly
related”. The company has two other
significant business lines in the country:
the transaction banking services and
clearing.
Its clearing offering came from a three-
fold recognition that there were fewer
competitors in this space than a year ago,
more companies looking to outsource,
and that it was worth the risks as a direct
clearing member to the exchanges.
“Competitors in 2008 are perhaps no
longer competitors in 2009,” he says. “We
see huge players looking to reduce the
complexity within their IT environment so
that they might, for example, reduce their
status from a direct clearing member to
a non-clearing membership. So they can
therefore outsource this to a company
like CACEIS.”
Acting as clearing agent means taking
on the counterparty risks of clients, and
entails the ability to monitor transactions
with several counterparts coming from
different sides of the market. Mr van den
Brink estimates that CACEIS processes
around 100,000 transactions each day,
emphasising the need for high levels of
risk management, despite the reduction
in risk from Europe’s central counterparty
clearing systems.
The infrastructure for German
securities and funds is firmly nestled
within the fabric of a Europe increasingly
dissolving its borders. Clearstream – a
20/11/2009 17:07
 ISJ Investor Services Journal
custodian, domestic and international
central security depository, and settlement
provider – has Germany as one of its
biggest markets on its Link Up Markets
initiative to connect central security
depositories – which launched last March.
Clearstream Banking Frankfurt is the CSD
for the local market, and Martina Gruber,
regional director for Germany, said the
resilience of the market has made it a
“brilliant year”.
Despite a decline, as seen elsewhere, in
custody asset values and transactions, a fall
from EUR10.8 trillion to EUR10.6 trillion
was in relative terms “a very light decrease”.
The fall in transactions is perhaps more
significant to transaction banks, she
believes.
“It’s typical for Germany to have
back offices for securities businesses
concentrated in transaction banks
“It was very
important for our
customers to have
a good valuation of
their securities used
as collateral. This
will be a topic for
next year”
Martina Gruber,
Clearstream
providing these service to other banks,” she
says. “I think they suffered quite a lot as
they charge per transaction and, of course,
the number of transactions went down
significantly.”
She expects there will be further
consolidation within the Landesbank
sector as firms seek to shed ‘daughter’
companies and focus on core activities.
The company has seen significant
opportunities as counterparty risk has
become prominent in the market.
This year it launched Euro GC Pooling,
a collateral service for money market
loans. Two counterparts agree on the Eurex
Repo platform and agree on the collateral
‘baskets’, or securities to be pledged for the
loan. The trade goes directly to the whole
value chain to Clearstream, where the
trade is collateralised by securities assessed
14-19 ISJ44.indd 17
Custody
by the European Central Bank.
Gruber says this was a well timed
addition to the market as more short Analyse
This:
term money lending left the relatively
unsecured money markets to fully covered
loan systems. It allows custodians acting as
agents to benefit from ‘hubs’ of liquidity
through a centralised collateral account. How have the
“When the crisis was at its peak it was
very important for our customers to have services of a
a good valuation of their securities that
act as collateral to other counterparts. custodian with a wide
This will be a topic for the next year –
the extension of collateral management Europe network in-
to have collateral in one place, that is a
liquidity hub, where you can collateralise
creased in importance
deals without shifting your securities from
one country to another.”
over 2009? Goran
KAS BANK, the Dutch custodian and
fund administrator, has also acted on
Fors, global head,
opportunities to expand in the German
market. Its fund administration business
custody sales, SEB
If we go back some 15 years and look
entered the country last year with the
purchase of a KAG – a German fund
at European custody we find more than a
administrator - from a Dutch insurer.
Then in July last year it bought the fund
hundred global- and sub-custodians.
In some markets you could find more
administration arm of Deutsche Postbank.
Jorg Sittman at KAS BANK told ISJ that
than 10 banks acting as sub-custodian
and/or as a global custodian. With a few
an acquisition in the German market was
exceptions all these providers were single-
market providers that specialised either in
a more viable option than organic growth.
The Postbank deal immediately gave the
local domestic institutions or in servicing
that specific market as a sub-custodian.
company 12 mutual funds to administer –
Over the years demand grew, and the
in Germany funds must be connected with
level of service became more important.
a legal entity.
Mr Sittman says the fact that it simply
This development very quickly triggered
consolidation and more institutions
provides administration – rather than
being part of a large local bank - gives
became multi market providers.
Today we have a number of institutions
it a unique selling point to funds. It also
that offer 10 or more markets. Single
secured the deal with Deutsche Postbank,
market providers will over time disappear
who would have been loathe to sell the
arm to a rival such as Commerzbank, he
as the demands for coverage increases. The
developments in Europe today are moving
believes.
He sees two particular growth
towards a single market at a great speed,
meaning investors will look for providers
opportunities for next year. Firstly, asset
with a good geographical coverage.
management firms that are consolidating
Trading has changed with the
will look to reduce the costs incurred from
introduction of MTFs and consolidation
internal administration.
of platforms becoming more European,
Secondly, he sees potential clients in
with the domestic presence less important.
the insurance sector that make ‘direct’
Following that, investors need to feel safe
investments. “Insurance firms take in
concerning counterparty risk and the
deposits with the intention of offering
operational set up, including cost. Asset
interest on the deposit. To provide
servicing, including corporate actions, is of
these yields the insurance firm will
great concern for all investors.
either derive the return from funds
To achieve a high comfort level the
or ‘direct’ investments such as buying
investors will choose providers that can
bonds.” These direct investments on the
service them in multi markets across
company account, he explains, need to
Europe. In the future we will see a few
be administered, and small insurance
providers that have full coverage in Europe
groups in particular might be open to an
combined with a couple that cover large
outsourcing arrangement.
regions of Europe. In the more distant
On the custody side, Mr Sittman
future we will see a limited number of
believes there will be necessary reform in
providers that cover the whole integrated
Continued on page 18 financial market of Europe. n
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the pension sector. There are three pillars
in the pension industry – a state-backed
social security scheme, occupational
pensions and individual retirement
plans. The first of these dominates, and is
pressurised by an ageing population.
The occupation-based pension pillar
must be enhanced to cover the short falls
of the other two. “We still have to come to
a funded pension system,” he says. “Many
German employees are not really invested
in investment funds when they retire – this
culture has to change over the next year.”
Some service providers say that
institutional investors are removing
Germany from their global custody
mandate in order to have a specific
provider in the country. Moritz Ostwald
of BHF Asset Servicing told ISJ in the last
issue of the magazine: “I see an increasing
demand of banks considering excluding
the German market from their existing
agreement from their global custodian as
they need the best service possible and go
directly to the market.”
Uwe Dreger at Deutsche Bank – which,
since selling its global custody business to
State Street in 2003 has enhanced its focus
on domestic custody - agreed that there
are significant benefits to using a local
provider, particularly with services such
as corporate actions. “The advantage of a
local provider is the expertise – the people
you deal with know the market by heart
– you are normally better linked up with
local tax authorities for tax reclaims.”
But he adds that this market trend
is usually down to the client’s overall
allocation to Germany. “If 80% of the
investments are made in one market
then you probably will spend the time
looking into a single market with a single
custodian. The remaining 20% portfolio
allocation will probably be with a global or
regional custodian”
For next year, Mr Dreger expects to see
more frequent requests for proposals as
institutional investors reassess the services
they are hiring.
“Due to the financial crisis more
clients will be looking at their longer term
custodian relationships and assessing them
more critically in terms of risk and service
levels, and at looking at choices available in
the market.”
Mr van den Brink at CACEIS adds that
institutional investors now “would like
to know exactly the business a provider
conducts. That’s different to before, where
people think the global picture looks fine.
CACEIS benefits from this situation –
the last thing that we can use is another
banking crisis.” n
14-19 ISJ44.indd 18
ISJ |ISJ Investor
Investor Services
Services Journal
Journal
Analyse
in many cases will lead to increased fees
for the remaining transactions. The
competition between service providers
in the Nordic regions has been fierce for
This:
a number of years, continuously pushing
down margins. For years we have seen a
combination of continuous high volume
What do growth which has enabled service provider
to reduce their fees. This will create a
common need to review the whole price structure
as service providers are still expected to
standards for central deliver the same service levels as before.
Clearly the introduction of CCP has
clearing mean for the and will change the business landscape.
With further changes to the markets
individual services planned and when the CCP environment
has settled in, the Nordic market will
provider? Robert definitely look different and the question is
which service providers will be left. n
Mattsson-Axen,
CCP: my
head of product
development, Nordea
On October 9, 2009, Denmark,
Finland and Sweden entered into a new
era of post-trade securities processing view
when CCP clearing for equities through
EMCF was introduced. Oslo Bors will
Marco
implement CCP clearing in March 2010,
although they have chosen a different
Strimer,
route with an in-house solution. All
markets are also planning to add more
CEO, SIX x-clear
“It’s important clients have a choice of
CCP providers through interoperability in
clearing with central counterparties.
order to secure competition and freedom
We’re in a phase where interoperability
of choice for clearing members.
is not a swear word. We’re gearing to
This has a major impact on all
get interoperability among each other
individual service providers in the region.
for our clients to give them a choice of
The Nordic markets will now have a more
a strategic CCP.
harmonised post-trade environment which
“Interoperability means you need
is in line with the major European markets.
to be efficient and have a competitive
CCP clearing is particularly welcomed by
offering, not just price but service. The
the foreign brokers trading on the Nordic
second thing is risk; there might be a
markets as it will in addition to reducing
thin line as to when the price impacts
the counterparty risk also reduce the costs
on the risk. Since the crisis, we had
for clearing exchange trades.
seen that members are more concerned
New market practices and procedures
as to how much collateral they had to
have been introduced which are to a large
provide to a single CCP provider.
extent harmonised with other European
This is exactly why interoperability is
markets. As a starting point this is positive
so important, that you can net out the
for the Nordic service providers as it
risk you have across different exchange
makes it easier to operate on multiple
platforms to one risk position.
markets. CCP clearing also opens up for
“I find that the Nordic marketplace
new business opportunities for service
made a good choice in having a CCP.
providers to provide General Clearing
If you look last year after Lehman
Member services as well as services needed
[collapse] and how important the
for collateral and liquidity management.
CCP became, and the stability of the
For the more traditional clearing
infrastructure – it’s really remarkable.
and settlement services the CCP
Nordic markets deciding to move into
implementation does of course
CCP model is very welcome; that they
dramatically reduce the income for
offer choice is even more welcome.” n
service providers. At the same time the
Speaking to ISJ.tv at Sibos. See the
CSDs are reviewing their prices which
interview online now.
18
20/11/2009 17:07
 ISJ Investor Services Journal Custody

Head to head: Custody, Africa

and local presence in Egypt to
Two industry cater to this client base.

experts discuss 5.What are the issues or

disadvantages to not having a
ISJ’s questions pan-African central clearing
system, and is there a chance
that groups of countries can
1.South Africa and Nigeria have a shared settlement
Ramy Bourgi is head of Amr Sonbol is Head of Custody infrastructure or central
remain perhaps the most emerging markets at SGSS.
diverse and well-populated and Clearing, HSBC Bank Egypt counterparty?
S.A.E
countries for securities
services. But which countries BOURGI: A pan-clearing
do you believe are closing the for example, are increasingly system will be beneficial in
diversified sectors/companies
gap on them fastest, and why? using each other as securities any continent let alone Africa.
listed on EGX.
services providers, rather The advantages outweigh
There’s also no restriction
BOURGI: Egypt and Morocco than providing an automatic the disadvantages which are
on the repatriation of capital
from a stock market perspective business line to Europe or the mainly limited to impact on
and dividends; EGX acts as the
are ahead of Nigeria hence US. How do you assess the time frames for settlement.
President of ASEA and active
their inclusion in the Morgan intercontinental spread of However, in spite of AMEDA’s
member in FEAS; and EGX is
Stanley Emerging Markets business in Africa? great efforts, we will see cross
the only Arab Stock Exchange
index. listings but we are far away
Member of WFE since 2005.
Their infrastructure is more BOURGI: The African markets from a Pan central clearing
developed with huge external do learn from each other’s system in Africa.
2.What are the most
appetite that withstood the developments and experiences.
pressing concerns for your
financial crisis better than The central depositories have SONBOL: Having a pan-African
international clients when
other markets. Both countries formed AMEDA, African and central clearing system and
seeking to enter certain
attract a lot of sovereign wealth Middle East Depositaries depository is not applicable in
African markets – is it
money from the region which Association. This does not Egypt, but most of the African
regulation, market liquidity,
South Africa and Nigeria do only help bring the countries are looking forward
both, or other issues?
not see in the same magnitude. infrastructure closer but to having dual listing rather
Future IPOs and corporate is allowing cross listings than a having a pan-African
BOURGI: African markets are
finance activity is high against and developing strong central clearing system.
at varying degrees of maturity
a backdrop of stagnation in intercontinental partnerships.
and it is difficult to generalise.
South Africa and infancy in 6.How much have additional
Deciding to invest in any
Nigeria. 4.A number of African custody services such as
market or instrument depends
countries – such as Egypt – securities lending penetrated
on the risk return trade off, the
SONBOL: During the annual have been relatively unscathed the African markets, and is
risk being financial, regulatory,
Summit organized by Africa from the global financial there significant potential in
political and structural.
Investor (Ai) in collaboration crisis. What opportunities the next few years?
So with this in mind, the
with NYSE Euronext, The on an international level are
market will be viewed on a
Egyptian Exchange (EGX) won there for service providers, BOURGI: Securities lending
different scale according to
the award of the second most such as when pension or has entered South Africa many
their ability to meet investors’
innovative African Exchange mutual funds seek to invest years ago. Egypt is developing
concerns by providing the long
in 2009. internationally? an infrastructure through
term returns that one expects
Choosing EGX as the second MCDR to offer passive and
from investing in emerging
most innovative Exchange was BOURGI: Pension funds’ and active lending. Development
markets.
based on objective criteria, mutual funds’ attraction of other markets will only be a
including the initiatives and in Egypt and other African matter of time but will depend
SONBOL: The most pressing
programs implemented by countries markets is growing, on the markets levels of
concerns of our clients in any
the exchange in improving so global custodians that cover liquidity and the sophistication
emerging market is the clarity
the exchange’s regulatory these markets in a proper and of market participants.
of market regulations and
framework, products as secure manner will be the
Egypt is no different. However
well as the technical and beneficiaries of the flows. SONBOL: Currently there is no
the regulators and market
technological infrastructure stock lending Egypt ,but we
authorities appreciate the
and competitive advantages: no SONBOL: We see an increasing are expecting stock lending to
importance of this issue, and
tax on dividends and no stamp trend of local funds investing be activated in the Egyptian
try to do their best to address
duties on investments; foreign internationally, and this creates market by the first quarter of
queries posed by investors and
securities firms (brokers) and significant opportunities for 2010. n
market participants.
foreign issuers are governed global banks like HSBC to use
as domestic firms; there’s well our international connectivity Next issue: US custody
3.Asian countries and firms,

19

14-19 ISJ44.indd 19 20/11/2009 17:07

 Securities Lending
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
Still on the fence
Securities lending is a
matter of perspective
for trustees, says
Anthony Harrington.
People on securities lending desks
have seen the current hesitancy and
volatility in securities lending all before.
Every time the market drops
significantly, beneficial owners pause for
thought. Securities lending might be a nice
little earner, but adverse market conditions
can cause counterparty risk to loom a little
too large for comfort.
Ed Oliver, director at Data Explorers
Consultancy, says the global data on
lending volumes is regionally fragmented.
In the UK and the US, his feeling, based
on a detailed study of the figures, is that
demand has picked up from the low point
after the milestone collapse of Lehman
Brothers. In Asia and continental Europe,
however, there is still lower demand than
at any point over the last three years.
While the total value for securities
lending is down some 20% on its pre-
crash levels, Oliver points out that a good
chunk of this drop is directly attributable
to falling market values rather than to
falling lending volumes. “Our chart for the
Global 50, the top 50 capitalised securities
globally, shows a smaller for the 2009 May
to June dividend season, but the really
interesting thing is the drop off afterwards,
where there is a more significant drop than
we have seen for the last two years,” he
says. “It has really only just started to pick
up a little. However, that pick up is specific
to certain regions.”
After the default of Lehman, clients
paused or stopped lending, leading to a
10% to 15% drop in global inventory (the
value of securities available for lending).
That figure, given the cataclysmic
financial meltdown, is not surprising, and
could arguably have been more severe. You
would have had to be a dedicated believer
in securities lending’benefits, and a
dedicated optimist to whom counterparty
risk means nothing, to have not so much
as paused for thought.
So when trustees stop and re-evaluate
their securities lending programmes, what
do they see?
20-23 ISJ44.indd 20
Securities lending generates around
five basis points of additional revenue for
a beneficial borrower, Oliver estimates. It
can generate a lot more if the securities
offered are highly sought after, or if
dividend arbitrage is on the cards. But
this is basis points, not percentage points.
This sounds like a low number, and when
you add counterparty risk, or the risk that
a market event will render your agent’s
indemnity null and void, perhaps the game
starts to look not worth it to some trustees.
But as Oliver notes, securities lending
generates some GBP1 million or more
in revenues for many beneficial owners -
which can be especially attractive when the
other party is providing 105% collateral in
the form of G7 government gilts.
Reputational risk is still playing on the
minds of beneficial owners. It was not that
long ago that senior politicians in Europe
were speaking as if short sellers were out
to destroy the fabric of the financial world.
Trustees equated securities lending with
short selling, and for some it looked as if
their most worthy fund was engaged in
helping an unworthy activity.
That regulators withdrew their short
selling bans and experts pointed out the
market benefits of short selling did not, of
itself, make trustees immediately return to
securities lending. Securities lending has,
in fact, never been questioned in terms of
its market role. There was still a lingering
sense that somehow it wouldn’t look
“right” to the public, or their members.
The fact that 50% of securities lending
is about fixed income lending - often for
raising cash or improving collateral for
other activities - means that short selling
does not dominate the practice.
This is something that the industry
has been trying to impress upon reluctant
trustees. “The other activities involved,
such as securities lending being used to
cover arbitrage opportunities or market
failure, involves equities and amounts to
some 40% or so, which leaves only a small
amount of the total volume being used for
directional short selling,” Oliver says.
Once trustee boards grasp this point
fully, we can expect to see volumes rising
sharply again. There will still be a focus on
collateral liquidity, but much of the fear
and doubt that is currently still inhibiting
funds from engaging in securities lending,
would then be laid to rest. n
20
ISJ Investor Services Journal
PSD view
Michael Steinbach,
The Payment Services
Directive that came
into effect on 1st
November will have
no direct effect on a
payment processor like
Equens, particularly
as we already meet its criteria for payment
durations.
One of the key parts of the Directive
is the opportunity for non-banking firms
to apply to be a ‘payments institute’. This
element aimed to enhance competition and
give non-banks a kind of banking status.
After carefully weighing the pros and
cons we have decided not to apply to be a
‘payments institute’. We provide services to
banks as a payment processor; we are not
competing with them.
The ‘payments institute’ initiative has
prompted important discussion. Non-
banking payment institutions do not
need to comply with the high capital
requirements of traditional banks,
potentially putting them at an advantage
as payment processors. Some could say this
is not a level playing field. It’s now perhaps
to be seen who is applying to be such a
payment institute.
We are currently in a transformational
period, where it will take time before many
of the Eurozone countries to implement the
PSD into national law.
There is tremendous pressure for banks
to streamline the business and save costs
by focusing on core business lines. It’s a
good opportunity for back office processing
companies like Equens to provide
outsourcing services, as well as sharing
investment in the kind of technology
needed for SEPA. n
Michael Steinbach (1961) is Chairman of Equens’
Board of Directors as of 1 May 2007. Before his
appointment as Chairman he held the position
as Deputy Chairman. He has been spokesman of
the Board of Directors of Transaktionsinstitut
für Zahlungsverkehrsdienstleistungen AG (TAI)
since July 2003. Prior to his appointment at
TAI in 2003 he was a director of DZ BANK AG,
where he headed the payments department. In
1985 he became head of the electronic payments
department at the then “Genossenschaftliche
Zentralbank” or GZB-Bank (cooperative central
bank) in Stuttgart. Since then he has headed
increasingly large and complex payment
divisions formed by mergers in the German
banking world.
n
20/11/2009 17:05 32551_
 Nordea Bank
Custody services with
a broader horizon
Are you looking for a single point of entry to the Nordic and Baltic region? Or do you have
your eyes set on a specific local market? Nordea is the leading Nordic custodian and the only
truly Nordic player with well-established banks in Finland, Denmark, Sweden and Norway
as well as a strong presence in the Baltic countries.

A dedicated relationship manager supported by a specialist team will always be able to offer
you a winning combination of regional competence and local insight. Our size, experience and
connections with key players make us a sustainable provider in the evolving Nordic and Baltic
securities markets.

To capitalise on our expertise, please contact

Ms. Anne-Lise Kristiansen, tel +47 2248 6238, email: anne-lise.kristiansen@nordea.com,
Ms. Nina Groth, tel +45 3333 6124, email: nina.groth@nordea.com or
Mr. Teemu Pihlatie, tel +358 9 165 51008, email: teemu.pihlatie@nordea.com.

nordea.com Making it possible

20-23 ISJ44.indd 21
32551_Custody_203x267.indd 1 20/11/2009
21.4.2009 17:05
12:27:47

Corporate Actions
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
Corporates in action
The EU Shareholder Rights Directive crept quietly into the legislative
fabric. ISJ summarises the changes and gains industry comment.
Corporate actions is competing to
be the most important investor service in
2010 as boardroom moves, rights issues,
and banks’ structural changes combine
with headline issues of correct governance
and streamlining processes.
The EU’s Shareholder Rights Directive,
launched 3rd August as an update of
the Companies Act 2006, may not have
seized headlines to the same extent as
its proposed regulation for alternative
investment funds, but it clarified for some
the best framework for investors to exert
their influence on the changes in financial
institutions.
The Directive sets minimum standards
for traded companies as to notices of
meetings and documents available at the
event; shareholders’ ability to add items
to the meeting agenda, ask questions and
vote; as well as issues around proxies and
publicising voting results.
It also attempted to remove blocking,
where an investor would need to lock
up their shares while their vote is being
counted for the annual general meeting.
A general meeting must be held on
21 days’ notice but this can be reduced
to 14 days if certain conditions are met.
Additional information must be included
in notices of general meetings and
documents and information regarding a
general meeting must be published on the
company’s website.
Robert Mattsson Axen, head of product
development at Nordea, said that there
haven’t been large changes so far in the
Swedish market, but smaller changes that
have harmonised the business of corporate
actions.
“You can admit electronic voting, and
the notice period will change from two
to three weeks,” he said of the Directive’s
changes. “The minutes of the meeting
must be being published on the company
website. In Sweden before, the rules and
regulations stated that you needed to
publish either on the website or a national
newspaper.”
Companies must answer shareholders’
questions at a general meeting (subject
to certain exceptions). The chairman is
20-23 ISJ44.indd 22
prevented from making a casting vote, and
meetings adjourned for lack of quorum
must be held at least 10 days after the date
of the original meeting.
The automation of corporate actions
processing continues to evolve and forms a
core part of meeting the Directive’s tenets.
All shareholders are offered the facility
to vote by electronic means, including
allowing proxy appointments by means of
a website – (appointing a proxy via CREST
is not sufficient by itself; certificated
shareholders must be able to appoint a
proxy electronically). An electronic address
for proxy appointments must be included
in a company’s proxy card. Further, a
special resolution is passed annually to
approve the reduced notice period.
Shareholders with 5% of voting shares,
rather than 10% as before, can require
the directors to call a general meeting.
Shareholders can vote in advance of a
meeting if permitted by a company’s
articles of association.
Corporate representatives can vote in
different ways from one another in respect
of different blocks of shares owned by
the same shareholder. This corrected the
CA 2006 provisions and removed the
requirement for the ‘designated corporate
representative’ method of voting at
meetings.
Speaking to ISJ.tv at the Sibos
conference, James O’Regan, general
manager of Investor Communication
Solution, said of the Directive: “In many
countries there are impediments to voting,
and access to data is not as timely as
possible. The Directive sets some standards
across the EU countries that would remove
the impediments and further encourage
22
FAX_Fu
ISJ Investor Services Journal
shareholders to vote.”
Mattsson Axen adds that the
information provided has become more
important and adds there have been more
corporate actions in the Nordic region.
“It’s become more vital to provide the
correct infomation and for people to
understand how the market works. More
and more the fund companies become
more global, and people buy funds
worldwide. If I look at Sweden [a few years
ago]investors bought in Sweden mainly;
nowadays they buy wherever. So the
information becomes more vital.”
Many hedge funds have enhanced
corporate actions processing and standards
– part of a wider institutionalisation of
the sector that has also seen them increase
third-party administration and regulated
products such as UCITS funds.
Fidelity ActionsXchange is one of
the leading providers in this sector, and
snapped up a few hedge fund clients
last year. Laura Pollard, executive
vice president, says: “We recognise
the opportunities associated with the
increasing availability of hedge fund
products to a wider spectrum of the
investing public.
“As the demand for these products
changes, we believe hedge fund managers
will want to form strategic, longer-term
relationships with trusted business
partners like ActionsXchange. These
partnerships will continue to emphasise
the traditional needs of administration
and asset servicing support, but with
increasing demand for providers that offer
products and services specifically designed
to assist these firms in more effectively
managing risk and disclosure needs.”
She adds that, like other clients,
hedge funds are looking for better ways
to manage the scope of risk, including
operational risk. “Assuring that our
clients have access to fully validated
and researched event activity is critical,
not only in managing the financial
risk associated with an event but also
in ensuring that we are facilitating an
appropriate level of effective
investor communication." n
20/11/2009 17:06
FAX_Fullw_ISJ_081309.qxd 8/13/09 3:06 PM Page 1

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23

20-23 ISJ44.indd 23 20/11/2009 17:06

 ISJ Directory of Ser-
ISJ Investor Services Journal To be listed,
Investor Directory of Asset Servicing Vendors contact:
servIces editorial@2i.tv
Journal

Consultancy/Legal

Clifford Chance 10 Upper Bank Street, London, E14 5JJ, UK T: 020 7006 1000

Hassans 57-63 Line WISJ/GSL Road PO Box 199, Gibraltar T: +350 79000 238

Dillon Eustace 33 Sir John Rogerson’s Quay Dublin 2 Ireland T:+ 353 1 6670022

Rule Financial 101 Moorgate, London EC2M 6SL, UK T: +44 (0)20 7826 4444

SMA Financial Limited 65-71 Bermondsey Street, London SE1 3XF T: +44 (0)20 7940 4200

Custody & Clearing

BHF Asset Servicing GmbH comprises the custody, depotbanking Strahlenbergerstraße 45;
and securities services of BHF-BANK Aktiengesellschaft. With around 63067 Offenbach a.M.
250 members of staff, approx. EUR 270 billion in assets under Germany
administration and a depotbanking volume of EUR 85 billion, BHF •Contact: Moritz Ostwald
Asset Servicing GmbH is one of Germany’s leading specialists in •Phone:+49 69 667744 838
depotbanking and custody business. It develops innovative and high- •Email: moritz.ostwald@
class services for investment companies, institutional investors and bhfassetserv.com
foreign banks, and excels at tailoring solutions to the individual needs
of its clientele.
Assets under Administration: EUR 270 bn
No of funds: 478

Deutsche Bank Theodor-Heuss-Allee 70, 60486 Frankfurt, Germany T:+49 69 910-00

DnB NOR is the leading provider of Custody, Clearing and Remote

Member Service in Norway. DnB NOR offers a full range of securities
settlement, Corporate Action and cash management services for
both foreign and domestic institutional clients. The bank has a strong
commitment to the Custody business in Norway and the staff is highly T: +47 22 94 92 95
knowledgeable and experienced. In addition, DnB NOR provides F: +47 22 48 28 46
a wide range of value-added services for foreign clients such as Contact: Bente I. Hoem, Head of
Securities Lending, Income Collection, Proxy Voting, Tax Reclaim, and Global Relations & Network
MIS reporting. E: bente.hoem@dnbnor.no
As the largest commercial bank in Norway, DnB NOR offers clients W:www.dnbnor.com
full services in securities trading, registration, foreign exchange and
Money Market.

Banking Securities Services provides award winning local and regional

custody services for investment professionals. We are proud to be the
largest custodian provider in terms of assets and number of foreign
clients in Central & Eastern Europe. ING has been providing Securities For further information please
Services in CEE since 1994 and we will continue our ongoing pursuit of contact
excellence through new technology. Innovation and client focus are the Lilla Juranyi, Global Head
key drivers to service our clients the best way. Custody
Other activities of ING Wholesale Banking Securities Services are at + 31 20 7979 435
Paying Agency Services and web-based management of employee or contact her by email:
stock option & share plans. Lilla.Juranyi@mail.ing.nl
ING is your local partner in: Belgium, Bulgaria, Czech Republic,
Hungary, Poland, Romania, Russia, Slovak Republic and Ukraine.

Directory ISJ44 ML final.indd 2 20/11/2009 17:04

 ISJ Investor Services Journal Directory of Services

Intesa Sanpaolo’s Transaction Services include :

• Sub Custody, Derivatives and Remote Membership Clearing
• Global Custody and Depository Bank for mutual funds, Piazza della Scala 6
pension funds, real estate funds, private equity funds and 20121 Milan, Italy
hedge funds T: +39 02 8794 2466
• Fund Administration for mutual funds, pension funds, real F: +39 02 8794 1519
estate funds, private equity funds and hedge funds W: intesasanpaolo.com
• Paying Agent for foreign funds and sicavs C: Riccardo Lamanna
• Cash and Payment services like swift to checks, mass E: riccardo.lamanna@
payments, checks and cash letters intesasanpaolo.com

Nordea is the leading financial services group in the Nordic and Baltic
region and operates through three business areas: Nordic Banking,
Private Banking and Institutional & International Banking. Nordea is the
leading custody services provider in the region. Nordea provides high
quality, tailor-made custody services for local and foreign investors Contact:
dealing with Nordic and Baltic securities. Due to the unique history of Nina Groth
being formed from four established banks, Nordea is the only Nordic Head of Sub-custody and
custody provider with strong local presence and expertise in all four Clearing
markets. Nordea combines Nordic competence with local expertise, Tel: +45 3333 6124
and has proven ability to deliver high quality services that meet E-mail: nina.groth@nordea.com
both clients’ and each local market’s requirements. Leading Nordic
custodian: Critical mass and resources available; deep local experience
and active involvement in each Nordic market; Complete operational
capabilities and best-fit systems developed in each Nordic market;
Proven ability to deliver high-quality service in all Nordic markets;
Excellent connection with key players in all Nordic Markets; Extensive
product and service offering; Your single point of entry to the whole
Nordic region.

Northern Trust 50 South La Salle Street, Chicago, IL 60603 T: +1 312-630-6000

RBC Dexia Investor Services 71 Queen Victoria Street, London, EC4V 4DE, UK T : +44 (0) 20 7653 4096

Santander is Spain’s leading financial institution and the largest

bank in the euro zone by market capitalization. Our commitment and
T: Europe: (34) 91 2893932 / 28
contribution to the securities industry is well established after more
T: USA: (1212) 350 39 02
than a century of providing services in this field.
W: santanderglobal.com
Santander’s cutting edge technology enables it to offer a
E: globalsecurities@
comprehensive array of innovative services in a broad range of
gruposantander.com
markets. Santander currently has full local capabilities in Iberian and
Latin American markets along with a franchised presence in many
others. Santander`s experience and product range ensures that every
aspect of the securities business is fully contemplated.

SEB is the leading provider of securities services in the Nordic and

Baltic area. We are committed to custody and clearing processes for
the wholesale market. We hold securities worth over 560 bn EUR and T: +46 8 763 53 04
provide services in more that 75 markets, 10 of them under the SEB F: +46 8 763 69 30
name (Sweden, Norway, Finland, Denmark, Luxembourg, Germany, C: Goran Fors, Global Head
Estonia, Latvia, Lithuania and Ukraine). of Custody Services
We offer a full range of securities services including corporate E: goran.fors@seb.se
action and information services, securities lending and services to W: www.seb.se
remote members of the Nordic and Baltic stock exchanges. We
continuously develop new products in connection with clients and
partners to ensure we deliver the high-quality products our clients
demand. We always strive to make the processes more efficient. With
a history of over 150 years in the securities industry; we know the
market and our clients well.

Société Générale Securities Services offers institutional investors, Sébastien Danloy

asset managers and financial intermediaries a comprehensive range Global Head of Sales,
of financial securities services: custody, clearing & trustee services, Investor Services
fund administration, asset servicing and transfer agency. SGSS Société Générale Securities
currently ranks 3rd European custodian and 9th worldwide custodian Services
(Source: Globalcustody.net) with EUR 2,580* billion in assets held T: +33 (0)1 41 42 98 65
and valuates 4,354* funds representing assets of EUR 405* billion (as E: sebastien.danloy@socgen.
of June 2007). com

Directory ISJ44 ML final.indd 3 20/11/2009 17:04

 Directory of Services ISJ Investor Services Journal

Standard Bank 25 Sauer Street , 2nd Floor, Entrance 3 Johannesburg 2001, SA T: +2711 636 6615

State Street 225 Franklin St, Boston, MA, United States T: +1 (617) 482-3709‎

With an extensive network that spans over 70 countries, well-positioned in the

emerging trade and investment corridors across Asia, Africa and the Middle East,
Standard Chartered’s Wholesale Banking business combines global capabilities
with local expertise to develop innovative products and services to meet the
diverse needs of our corporate and institutional clients in some of the world’s C: Giles Elliott, Global Head,
most dynamic markets. Building on a rich banking heritage, Standard Chartered Securities Services
is noted for a client-focused approach to business, unmatched on-the-ground P: +65 6517 0134
expertise and a solid track record of innovative, award-winning financial services E: Giles.Elliott@sc.com
solutions, reflecting our continued commitment to power our clients’ ambitions. W: www.standardchartered.com
As one of Asia’s leading custodians, Standard Chartered serves global, regional
and local custodians and broker-dealers, as well as local and regional fund
managers. The Bank plays a key role in promoting the development of these
markets and keeping the international investor community informed of industry
developments across the region.

Swedbank Stockholm SE 105 34 Sweden T: +46 8 5859 1800

Data Services

Avox/Deutsche Bourse Group Redwither Tower, Redwither Business Park, Wrexham, LL13 9XT , UK T: +44 (1978) 661 813

GoldenSource 22 Cortlandt Street 22nd Floor, New York, NY 10007 USA T: +1 212 798 7255

International Financial Data Service IFDS House St Nicholas Lane, Basildon, Essex, SS15 5FS, UK T: +44 (0)1268 443 248

Interactive Data Fitzroy House, 13-17 Epworth Street, London EC2A 4DL UK T: 020 7825 7800

Orc Software 420 Lexington Avenue Suite 2007, New York, NY 10170, USA T: +1 46 8 506 477 00

SmartCo 37 rue de Liège, 75008 Paris, France T: + 33 1 58 22 29 60

Fund Administration

With more than 35 years’ industry experience, Capita Financial Group

provides fund managers with fast and cost effective third-party
administration services, enabling you to free up your day to focus on Leah Cox
growing your funds and business. Our main focus is to provide a ‘Best +44 (0) 207 954 9559
in Class’ administration service, we work in partnership with you to leah.cox@capitafinancial.com
innovate, increase efficiency and provide the high level of customer www.capitafinancial.com.
service that you and your clients expect. With our UK and offshore
centres (Jersey, Guernsey, Ireland and Gibraltar), we offer a bespoke
service to our clients and each area’s unique regulatory environment.

IMFC Rivierstaete Building, Amsteldijk 166, 1079 LH Amsterdam, Netherlands T : +31.20.644.4558

Phoenix Fund Services Springfield Lodge, Colchester Road, Chelsmford, Essex, CM2 5PW T : +44 (0)1245 398 950

Schroders plc 31 Gresham Street, London, EC2V 7QA, UK T : +44 (0)20 7658 6000.

SEI Investments Global Fund Services 1 Freedom VISJ/GSLey Drive Oaks, PA 19456 USA T : +1 6106763185

Trinity Fund Administration Oyster Point Temple Road, Blackrock T : +353 1 279 96 60

Directory ISJ44 ML final.indd 4 20/11/2009 17:04

 ISJ Investor Services Journal Directory of Services

Intesa Sanpaolo’s Transaction Services include :

• Sub Custody, Derivatives and Remote Membership Clearing Piazza della Scala 6
• Global Custody and Depository Bank for mutual funds, 20121 Milan, Italy
pension funds, real estate funds, private equity funds and T: +39 02 8794 2466
hedge funds F: +39 02 8794 1519
• Fund Administration for mutual funds, pension funds, real W: intesasanpaolo.com
estate funds, private equity funds and hedge funds C: Riccardo Lamanna
• Paying Agent for foreign funds and sicavs E: riccardo.lamanna@
• Cash and Payment services like swift to checks, mass intesasanpaolo.com
payments, checks and cash letters

Société Générale Securities Services offers institutional investors, asset

managers and financial intermediaries a comprehensive range of Sébastien Danloy
financial securities services: Clearing, Liquidity Management, Custody Global Head of Sales
and Trustee, Fund Administration, Asset Servicing, Fund Distribution Société Générale Securities
Services and Issuer Services. SGSS currently ranks 3rd European Services
custodian and 7th worldwide T: +33 (0)1 41 42 98 65
custodian (Source: Globalcustody.net) with EUR 2,731* billion in assets E: sebastien.danloy@socgen.
held and valuates 5,158* funds representing assets of EUR 499* billion com
(at end March 2008). W: www.sg-securities-services.
com

Swiss Financial Services

(Ireland) Ltd. Block 4B,Cleaboy Business Park, Old Kilmeaden Road, Waterford, Ireland T: +353 51 351180

UBS Global Asset

Management- Fund Services Brunngässlein 12, PO Box CH-4002 Basel, Switzerland tel. +352-44-1010 1

Hedge Fund Administration

Apex Fund Services Ltd is a global hedge fund administration

solution for hedge funds and private equity clients located in 12 C: Peter Hughes
separate jurisdictions across the globe. The company uses the Group Managing Director
software solution, PFS PAXUS, which is a fully integrated hedge fund T: +1 441-292-2739
accounting system combined with web-based reporting to allow F:+1 441-292-1884
clients and investors to access their information 24/7 securely online. E: peter@apex.bm
We will tailor all solutions to meet your needs and our continuing John Bohan
focus on the quality of service and the relationship with each and Group Manager of Operations
individual client ensures that we retain our ethos of providing a T: +353 21 4633366
personalized service rather than a generic solution. F: +353 21 4633377
Highly qualified and experienced staff, mirrored with top tier E: John@apexfunds.ie
technology and competitive fee structures make Apex Fund Services
Ltd the clear choice for your fund administration needs.

Custom House, which is one of the world’s largest independent Custom House Administration &
alternative investment and hedge fund administrators, was awarded a Corporate Services Limited
SAS 70 Type I in May 2007 and a SAS 70 Type II in December 2007. A: 25 Eden Quay, Dublin 1,
Custom House offers a round-the-world, round-the-clock service from Ireland
its office in Dublin and representative offices in Chicago and Singapore, T: +(353) 1 878 0807
enabling it to provide, not only complete global administration services, F: +(353) 1 878 0827
but also the ability to produce daily dealing NAVs. C: dermot.butler@
Custom House is authorised by the Irish Financial Regulator under customhousegroup.com
Section 10 of the Investment Intermediaries Act, 1995, which C: david.blair@
authorisation does not extend to the Chicago and Singapore customhousegroup.com
representative offices. www.customhousegroup.com

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 Directory of Services ISJ Investor Services Journal

SS&C Fund Services 80 Lamberton Road, Windsor, CT, 06095 T+1-800-234-0556

UBS Global Asset Management -

Fund Services (Cayman) UBS House, 227 Elgin Avenue, PO Box 852 GT, Grand Cayman, KYI-1103 T: +1-345-914 1060

International Finance Centres

British Virgin Islands Haycraft Building, 1 Pasea Estate, Road Town, Tortola, British Virgin Islands T: +1 284 494 1509

Jersey Finance 4th Floor Sir Walter Raleigh House 48-50 Esplanade, St. Helier, Jersey, UK, JE2 3QB T: +44 (0)1534 836000

Guernsey Finance PO Box 655, St Peter Port, Guernsey, GY1 3PN, UK T: +44 (0)1481 720071

Payments & Settlements

Equens Eendrachtlaan 315, 3526 LB Utrecht, PO Box 30500, 3503 AH Utrecht T: +31 (0)30 283 51 11

Vocalink Drake House, Homestead Road, Rickmansworth, Hertfordshire, WD3 1FX T: +44(0)870 1650019

Prime Brokerage

Barclays Capital 5 The North Colonnade, Canary Wharf London E14 4BB, United Kingdom T: +44 (0)20 7623 2323

Citigroup Global Prime Brokerage Services/Prime Finance Canada Square Canary Wharf,London, E14 5LB, UK T: + 44-20-7986-0675

Credit Suisse 20 Columbus Courtyard London E14 4DA T: (020) 7888 8888.

Deutsche Bank 1 Great Winchester Street T: +44 20 754 58000

Goldman Sachs International 133 Fleet St London, EC4 T: 020 77741000

Hermes Administration Services Peterborough Court 133 Fleet Street, London EC4A 2BB, United Kingdom T: 020 7774 1000

Morgan Stanley 25 Cabot Square, London, E14 4QA T: 020 7425 8000

Newedge 10 Bishops Square, London, E1 6EG, England T +44 20 7676 8536

Scotia Capital 40 King Street West 63rd Floor Toronto Ontario M5W 2X6 Canada T: 001 416 863-7411

Securities Lending

Data Explorers (www.dataexplorers.com), based in New York and

London, is the world’s most complete resource for data, analysis UK: 2 Seething Lane, London, EC3N 4AT
and insight into securities lending and short selling. The company’s T +44 (0) 20 7264 7600,
proprietary data gives an unrivalled, comprehensive view on share F +44 (0)20 7392 4004
lending and short-selling activity. With data sourced directly from US: 75 Rockefeller Plaza, 19th Floor
securities lending desks of over 100 of the top lending firms and New York, 10019, USA
representing most of the global securities lending market, Data T +1 212 710 2210 F + 1 212 710 2212
Explorers has built a reputation with leading financial institutions as Julian Pittam T +44 (0) 207 264 7616
the source for short intelligence that informs their decision-making E:julian.pittam@dataexplorers.com
and their coverage of market sectors and companies. Please visit our New York: Ken Read T +212 710 2210
Blog: dataexplorers.com/news, Twitter, twitter.com/dataexplorers, E: kenneth.read@dataexplorers.com
Video dataexplorers.com/daily-briefing and LinkedIn linkedin.com/ www.dataexplorers.com
companies/data-explorers sites.

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 ISJ Investor Services Journal Directory of Services

EquiLend is a leading provider of trading services for the securities www.equilend.com

finance industry. EquiLend facilitates straight-through processing by EquiLend Europe Ltd.
using a common standards-based protocol and infrastructure, which 14 Devonshire Square
automates formerly manual trading processes. Used by borrowers London, EC2M 4TE
and lenders throughout the world, the EquiLend platform allows for +44 (0) 207 426 4426
greater efficiency and enables firms to scale their business globally. T: UK- +44 (0)20 7743 9510
Using EquiLend’s complete end-to-end services, including pre- C: Michelle Lindenberger
and post-trade, reduces the risk of potential errors. The platform E: michelle.lindenberger@equilend.
eliminates the need to maintain costly point-to-point connections com
while allowing firms to drive down unit costs, allowing firms to expand A: 17 State Street, 9th Floor
business, move into different markets, increase trading volumes, all New York, NY, 10004
without additional spend. This makes the EquiLend platform a cost- T: US- +1 212 901 2224
efficient choice for all institutions, regardless of size. C: Michelle Lindenberger
E: michelle.lindenberger@equilend.
com W: www.equilend.com

eSecLending is a full service securities lending agent and administrator

of customized securities lending programs. Their program has been
adopted by many of the world’s largest and most sophisticated asset
gatherers including pension funds, mutual funds, investment managers T: US- +1 617 204 4500
and insurance companies. They are a third party industry specialist T: UK- +44 (0)20 7469 6000
providing lenders with customized programs, high touch client service, C: Christopher Jaynes
comprehensive risk management, and superior risk adjusted returns. E: info@eseclending.com
The firm takes a highly consultative approach with their clients by W: www.eseclending.com
structuring separate, non-pooled programs and utilizing a competitive A: 175 Federal Street, 11th FL,
auction to determine the optimal route to market for their clients’ Boston, MA 02110, US
lendable assets. Having built their business to incorporate investment
practices such as the use of specialists, multiple-managers, unbundling, A: 1st Floor, 10 King William Street,
price transparency, and competition, their approach ensures best London EC4N 7TW, UK
execution and also provides clients with greater control over their
programs, allowing them to more effectively monitor and mitigate risks
and counterparty relationships.

Eurex Selnaustrasse, 30, 8021 Zurich, Switzerland T: +41 58 854 2066

Euroclear Euroclear Belgium, Avenue de Schiphol 6, 1140 Brussels T: +32 (0)2 337 5111

FINACE® is the only fully integrated solution today which supports T: +41 (0)44 298 92 00
the future business model within the area of Securities Finance and F: +41 (0)44 298 93 00
Collateral Management. The architecture of FINACE® is based on a A: COMIT AG,
stable, leading edge technology platform, which was developed with Pflanzschulstrasse 7,
performance and robustness as the focus of design. With flexibility at CH-8004 Zürich, Switzerland
its core, customer-driven extensions and modifications can be quickly W: www.finacesolution.com
and easily applied to the standard component set. www.comit.ch

Fortis Bank Nederlands Prins Bernhardplein 200, 1097 JB Amsterdam, Nederland T: +31 (12) 34 567 89

JP Morgan 60, Victoria Embankment, London EC4Y OJP London: T: 44 207 742 0256

Santander is the only Spanish financial institution with a team

exclusively dedicated to securities finance & with the purchase of W: www.gruposantander.com
Abbey in 2004 has expanded its capacity on a Global basis with T: (3491) 289 39 42/54
trading teams in London (UK) & Connecticut (USA). E: securitieslending@
Santander’s leading local capabilities in Spain, Portugal, UK, USA & gruposantander.com
Latin America, along with its solid balance sheet & combined with
the state-of-the-art technology, provides its clients with the broadest
range of solutions in securities lending & financing, including
availability across all assets classes, as well as access to uncommon
emerging markets.

SecFinex 60 Cannon Street London EC4N 6NPX T: +44 (0)20 7002 1003

Around the world, securities financing is managed on SunGard’s

proven solutions for international and U.S. domestic securities Email: securities.finance@
lending and repo for over 250 clients. Through our Loanet, Global sungard.
One, Martini and Astec Analytics products and services, we com
provide comprehensive business solutions and information with Contact:
worldwide reach for equities or fixed income securities financing. EMEA: +44 (0) 20 8081 2779
These solutions – all in an integrated, exception-based processing America’s: +1 (646) 445-1179
architecture – includes order routing, pre-trade analytics, trading, Asia Pacific: + 62276400
position management, operations, accounting, settlement and Visit: www.sungard.com/
reconciliation. securitiesfinance

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 Directory of Services ISJ Investor Services Journal

Technology

Aquin Components GmbH Moosmatthalde 4, Meggen, CH-6045, Switzerland T: +41 44 455 62 44

Accuity Market House 124 Middleessex Street Bishopsgate London E1 7HY UK T: +44 20 7014 3454

Advent Software 1 Bedford Avenue, London, WC1B 3AU, UK T: 0207 631 9240

BI-SAM 1 Cornhill, London EC3V 3ND T: +44 (0)20 3008 5834

Bravura Solutions Austin Friars House 2-6 Austin Friars London EC2N 2HD, UK T: 020 7997 3000
Broadridge Financial Solutions, Inc., with over $2.1 billion in revenues in
fiscal year 2009 and more than 40 years of experience, is a leading global
provider of technology-based solutions to the financial services industry.
Our systems and services include investor communication, securities
processing, and clearing and outsourcing solutions. We offer advanced, For more information about
integrated systems and services that are dependable, scalable and cost- Broadridge, please visit www.
efficient. Our systems help reduce the need for clients to make significant broadridge.com.
capital investments in operations infrastructure, thereby allowing them
to increase their focus on core business activities.Proxy Edge - our
comprehensive solution for institutional global proxy voting management.
Gloss - our leading international STP system which automates the trade
processing lifecycle from trade capture through confirmation, clearing
agency reporting and settlement. Tarot - a UK retail and private client
stockbroking, custody and fund management solution. Securities Data
Management - outsourced data services for securities operations.
Calypso Technology 17 Dominion Street, London, EC2M 2EF, UK T: 020 7826 2500

DST International DST House, St Mark’s Hill, Surbiton, Surrey, KT6 4QD T: +44 (0)20 8390 5000
Eagle Investment Systems LLC is a global provider of financial Eagle Investment Systems LLC
services technology serving the world’s leading financial institutions. The Bank of New York Mellon
Eagle provides enterprise-wide, leading-edge technology and Financial Centre
professional services for data management, investment accounting 160 Queen Victoria Street,
and performance measurement. Eagle’s Web-based solutions London
support the complex requirements of firms of any size including UNITED KINGDOM
institutional investment managers, mutual funds, hedge funds, EC4V 4LA
brokers, public funds, plan sponsors and insurance companies. Phone Number: 44 (0)20 7163
Eagle’s product suite is offered as an installed application or can be 5700
hosted via Eagle ACCESSSM, Eagle’s ASP offering. Eagle Investment E-mail: sales@eagleinvsys.com
Systems LLC is a subsidiary of The Bank of New York Mellon Website: http://www.eagleinvsys.
Corporation. To learn more about Eagle’s solutions, contact sales@ com
eagleinvsys.com or visit www.eagleinvsys.com.

Financial Tradeware provides integrated solutions for medium to small

sized Investment Management firms, Fund Managers and Hedge
Funds, covering the full trade life cycle. It is part of the Dharma Group W: www.f-tradeware.com
of companies and benefits from the joint contributions and experiences T: +44 (0)20 7493 2773
within the group of market traders, business analysts, financial F: +44 (0)20 7495 4858
services professionals and skilled Microsoft Certified programmers. C: Graham Bright
The company has developed a suite of applications that integrate E: info@f-tradeware.com
and Straight Through Process (STP) real-time trading, back office A: 31 Dover Street
administration, accounting and compliance. Ultra.net®, S-Messenger® London W1S 4ND UK
and H-Fund® arwe the company’s flagship products all based on
Microsoft.NET infrastructure. The company also offers a Member
Concentrator for hosted SWIFT connectivity and Member Administered
Closed User Group (MA-CUG) services for Corporates and Hedge
funds.

Fidelity ActionsXchange is the leading provider of flexible, technology-

driven global corporate actions information solutions for many of C: Gil Isenstein
the world’s financial industry leaders. Through our two products, Senior Manager
ActionService and ActionCompare, we provide multi-sourced, Fidelity Investments
cleansed data and complementary event information which is
validated, enhanced and enriched by a team of in-house analysts. A: 82 Devonshire Street, W4A
By leveraging more than 10 years of analytical expertise, technology Boston, MA 02109
and service, we offer solutions that source, enhance, compare and E: Gil.isenstein@fmr.com
validate corporate action announcements, turning even the most T: 617-563-6764
complex data into valuable intelligence. Our strategic value allows
clients to reduce costs, mitigate risk, gain efficiencies and enhance
transparency giving them the highest degree of control over their
global event information.

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 ISJ Investor Services Journal Directory of Services

HCL Technologies The Leela GISJ/GSLeria Commercial Block No 23 6th Floor Airport Road Bangalore Karnataka 560008, IndiaT: +44 (0)20 7621 5800

IGEFI Group Rue des Primeurs, L-2361 Strassen T: +352 26 44 211

For more information on

Information Mosaic is a global provider of advanced custody, corporate Information Mosaic, please visit
actions and wealth management solutions to the global securities our website at
industry. Information Mosaic’s business professionals leverage www.informationmosaic.com
decades of financial industry expertise and technical knowledge to Global:
deliver complex projects on time and within budget. Since inception, emullan@informationmosaic.
the company has utilized the most modern technology to develop com,
solutions to run on a scalable, single platform. Today, Information US:
Mosaic supports clients from offices in Boston, Dublin, London, emadigan@informationmosaic.
Luxembourg, New York and Singapore. Currently, six of the top 10 com
global custodians deploy Information Mosaic solutions worldwide. Europe:
aleyder@informationmosaic.com
Asia:
Isis Financial Systems provides mission critical investment
management software and services to many large and small
companies. Our customers perform a broad range of functions Contact:
including fund accounting, derivative and hedge funds, wealth Isis Financial Systems
management, and pension and endowments, etc…. Our integrated 14 Felton Street
solution services the front, middle, and back offices of these Waltham, MA 02453
companies with software that accommodates most any security type. Sales@IsisFS.com
Built on a contemporary three tiered architecture our application (00-1) 781-209-0262
helps financial companies improve operating efficiencies, increase
accuracy and reliability and improve customer service.

For more than a decade, administrators, managers, and advisors

have relied on KOGER for dependable software tools backed by T: 001-201-291-7747
extensive industry experience and expertise. Now, for those who F: 001-201-291-7808
want to reduce costs and streamline business processes, Koger C: Mr Ras Sipko
offers Fully Integrated Fund Administrator, a vertically integrated suite E: ras@kogerusa.com
serving the back-office software needs of the fund industry. KOGER USA
Fully Integrated Fund Administrator consists of three core programs: 12 Route 17 North
~ NTAS, the New Transfer-agency System Suite 111
~ E*TAS, Electronic Transfer Agency System Paramus
~ GRID, Global Reach Interface Daemon New Jersey, NJ 07652, USA
Other programs, such as PTAS, KIT, and KORS available separately, W: www.kogerusa.com
complement the core competency of Fully Integrated Fund
Administrator.

Misys provides integrated, comprehensive solutions that deliver

significant results to over 1,200 financial institutions globally. Our
buyside solutions help asset servicers, asset managers and hedge
funds handle the latest complex products, streamline processes,
reduce costs and improve STP. Misys Summit is our award winning, www.misys.com
multi-asset class solution that boasts 18 years OTC derivatives tcm.marketing@misys.com
market expertise. With extensive OTC buyside coverage and the
market leading structured products module, Misys Summit delivers
the solution you need for handling the end to end process for OTC.
We also provide a customisable ASP service for fast implementation
and lower costs.

Building on over twenty years of experience in capital markets

and cross-asset software solutions, Murex introduces Mx Asset
Manager - a unique cross currency, cross asset fund management
solution capable of handling the full range of products, from plain C: Hélène Desbiez
vanilla to the most complex derivative products. Coupled with a high Business Development Manager
degree of flexibility and customization, Mx Asset Manager features a T: +33 1 44 05 32 00
multifaceted design catering to the needs of both service providers E: helene.desbiez@murex.com
(prime brokers, administrators, asset servicing providers) and direct W: www.murex.com
clients (portfolio managers for mutual, pension or hedge funds,
insurance companies). With so many new challenges presented to
buy-side managers when integrating increasingly-complex derivatives
into their portfolios and funds, Mx Asset Manager represents a strong
and reliable ally for dynamic position keeping and multi-dimensional
risk management in a thriving market.

Netik For more information please visit: www.netik.com or email: marketing@netik.com

Odyssey Martin House, 5 Martin Lane, London EC4R 0DP UK T: +44 (0)20 7621 5800

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 Directory of Services ISJ Investor Services Journal

peterevans New Broad Street House, 35 New Broad Street, London EC2M 1NH T: +44 (0) 29 20 402200

Pirum provides a full suite of automated reconciliation and straight

through processing (STP) services supporting Operations within the
global securities finance industry. The company’s on-line SBLREX T: +44 20 7220 0961
service encompasses daily contract compare, monthly billing F: +44 20 7220 0977
comparison, mark-to-market & exposure processing, pending trade C: Rupert Perry
comparison, income claims processing and custody reconciliation. E: rupert.perry@pirum.com
Subscribers to Pirum’s services significantly increase their A: Pirum Systems Limited
operational efficiency and reduce their risk by using Pirum’s solutions, 37-39 Lime Street
as staff are able to focus on fixing the exceptions instead of using London, EC3M 7AY
their time to check and process routine business. These automated W: www.pirum.com
processes are more scalable and risk controlled too, allowing
significantly higher volumes to be managed without corresponding
increases in operations headcount.

Princeton Financial Systems 600 C ollege Road East, Princeton, NJ 08540, USA T: +1 609-987-2400

Redi2 Technologies, Inc. 1771 Br oadway St., Oakland, CA 94612 T: +1 (510) 834-7334

SmartStream Technologies 1690 Park Avenue Aztec West Almondsbury Bristol BS32 4RA UK T: +44 (0)20 8390 5000

SimCorp Dimension is a powerful, comprehensive and truly seamless

investment management system. It can handle NAV and other
calculations, with complete related accounting, for a huge variety of
fund structures and product types, including regional specialities. T: +44 (0)20 7260 1900
SimCorp Dimension has been designed from scratch as an F: +44 (0)20 7260 1911
enterprise-wide system, handling all aspects of the investment C: Elizabeth Gee, sales
management process and related administration functions, director
consistently. Data is recorded once into a core database so that of SimCorp Dimension
reporting is made easy, there is no reconciliation of data and no E: elizabeth.gee@simcorp.com
duplication of procedures. W: www.simcorpdimension.
-By cutting latency in securities processing, our clients are recognising com
new efficiencies, reducing costs and increasing throughput A: SimCorp, 100 Wood Street,
-By streamlining their customer on-boarding processes, our clients London EC2V 7AN
are gaining faster access to fees, increasing customer satisfaction,
gaining greater cross-sell opportunities.

SunGard is one of the world’s leading software and IT services

companies. SunGard serves more than 25,000 customers in more SunGard Global Trading
than 70 countries, including the world’s 25 largest financial services 25 Canada Square, London E14
companies. Dedicated to post trade securities operations, GL RIMS 5LQ
is your comprehensive real time securities post execution processing Tel +44 (0)20 8081 2000
solution, covering middle office, settlement and accounting Fax +44 (0)20 8081 3399
requirements. Its wide use of automation enables global capital www.sungard.com/globaltrading
markets organisation to achieve maximum STP. It is a flexible, highly Email: info.globaltrading@sungard.
scalable and easy to install platform with a new Service Oriented com
Architecture feature that allows smooth and efficient connections with
other third parties within a company.

Witholding Tax

T: +44 (0) 208 760 7130

Goal is widely-acknowledged in the financial services sector for C: Stephen Everard or
its innovative and creative solutions to highly-specialized niche Saghar Bigwood
processes. A: 7th Floor, 69 Park Lane,
Goal’s research has shown that in excess of USD8 billion of Croydon, Surrey, CR9 1BG
withholding tax remains unclaimed each year by the rightful owners E: severard@goalgroup.com or
and beneficiaries and that over USD12 billion is lost because rightful sbigwood@goalgroup.com or
beneficiaries are not participating in class actions, bankruptcies and info@goalgroup.com
disgorgements. W: www.goalgroup.com

10

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