Transfers THIS PAPER EXPLORES THE CURRENT ISSUES AND PROPOSALS FOR AUTOMATION. Findel Transfers Working Group

Transcription

1 Transfers THIS PAPER EXPLORES THE CURRENT ISSUES AND PROPOSALS FOR AUTOMATION. Findel Transfers Wrking Grup PUBLISHED OCTOBER

2 CONTENTS Intrductin... 2 Challenges... 3 Current Prcess... 4 The Vice fr autmatin Recmmendatins... 7 IMPORTANT INFORMATION

3 1. INTRODUCTION The Findel Grup is frmed f asset managers fcused n identifying cmmn pprtunities fr peratinal efficiency in crss brder distributin and where relevant recmmending and prmting cmmn slutins t the benefit f fund market participants and ultimately end investrs. In the current climate, Findel believes this missin is ever-mre relevant because crss brder firms are seeing significant grwth in vlumes each year with challenges created by manual prcesses and service gaps becming mre visible. Given a regulatry envirnment that requires cnstantly increasing transparency and reprting, the impetus t address these gaps has never been strnger. The aim f this paper is nt t define a slutin but t state the current issues experienced utlising the existing prcess and t attract submissins frm industry partners with prpsals t prvide a cmmn reslutin that is bth rbust and efficient. 2

4 2. CHALLENGES The members f the Findel Grup have agreed that transfers f funds' shares is an peratinal issue experienced acrss the industry, therefre the grup has decided t pay sme attentin t this tpic and lk at pssibilities t slve the issue. Why we cnsider the current situatin is far frm ptimal? The prcesses arund transfers are different frm ne cuntry t anther and als differ between Transfer Agents (TA); this increases csts, risks and can lead t pr custmer service. In a perid where investrs can d almst everything nline and instantaneusly, ur industry needs t have a mre rbust slutin fr transfers instead f the existing prcess which incurs delays, risks and csts and pssible claims. Therefre the Findel Grup believe that changes need t happen imminently and supprt imprvement in this directin. The grup has identified the fllwing cmmn issues: 1. Incnsistent practices acrss transfer agents resulting frm TA s wn plicies and prcedures as well as regulatry. Bth same and crss dmicile transfers are affected. 2. Lack f visibility fr intermediaries in the transfer chain. 3. Timeliness: time span can range frm ne day if the instructin is in gd rder t several weeks if insufficient infrmatin. 4. As an industry, the transfer prcess is nt well understd as there are currently n standards/guidelines. Cnsequently, csts assciated t transfers d nt accurately reflect the high administrative effrt required. 5. Business cases are difficult t build as prcesses, prices and technlgies used are different frm ne prvider t the ther, frm ne market t the ther. 3

5 3. CURRENT PROCESS Direct sharehlder t sharehlder transfers / paper: Uncmplicated and straight-frward with minimal intermediaries. Delays nly ccur because f missing accunt infrmatin r incmplete instructins. Institutinal transfers: Numerus activities need t be undertaken by a range f intermediaries t enable a smth TA prcess t take place at the end f the chain. All these steps can be surces f risks and delays. Trading and settlement platfrms such as Fundsettle, Vestima, NSCC have develped intratransfer prcesses with benefits fr them while efficiency is nt met fr market participants: Fundsettle transfer-withins require the TA t manually mirrr the activity. Clearing market withins impact the TA as they invlve intensive recnciliatin effrts. Transfers between Clearstream participants appear thrugh recnciliatin breaks, nt as transactins received by the TA. These platfrms becme additinal burdens when inter-platfrm transfers need t be perated. Incnsistent prcesses 4

6 Transfers placed slely n the delivering party s instructins: expedite the peratinal side but frequently trigger queries n the service side (receiving party nt able t apply the shares). Transfers placed with matching cunterparties instructins (clearing market r nt): imprve the cmmunicatin aspect between cunterparties but increase the administratin effrt. Reginal differences: crss-reginal transfers are ften quted as a cause f delay due t differing institutinal mdels and lack f clarity acrss regins. The Findel transfers wrking grup has spent sme time t assess the size f the prblem as well as where the nn-settled transfers are cming frm. Transfer turnarund times (retail and institutinal blend): 88% are prcessed within 3 days 93% are prcessed within 5 days 96 % are prcessed within 10 days Transfer vlumes: Out f 20,500 transfers per mnth: 14,000 are recnciliatin items fr the Clearstream and Eurclear bks 3,000 are institutinal transfers 1,500 are NSCC autmated transfers 900 have either side invlving a clearing platfrm (with a retail r institutinal cunterparty) 600 are hybrid crss reginal/crss platfrms transfers 500 are pure retail transfers The cnclusin is that there is a clear need fr mre autmatin and standardisatin and fr a slutin t be implemented crss brder. Autmatin ptential sits with the institutinal transfers and represents 3,000 transfers per mnth, r 15% f ur transfer vlumes. We estimate that 85% f these vlumes culd be autmated based n the clients that are currently SWIFT enabled. Surces: Eurclear presentatin 5

7 4. THE VOICE FOR AUTOMATION Different slutins have been develped: The Luxemburg wrking grup has prduced a paper explaining hw SWIFT culd supprt the 2 leg transfer prcesses. The UK market has answered the transfers questin by building a grup f trusty cunterparty (transfer club) in rder t facilitate the settlement f such rders. Prviders like Eurclear, IFSAM, Calastne have develped platfrms t facilitate the transfers crss brder. Surces: Calastne Transfer Factsheet 6

8 The Findel grup has asked Swift t freeze the standard fr transfers in rder t facilitate the adptin f the actual message type which culd be use fr 1 r 2 leg transfer. Having a cmmn message ver Eurpe t send and receive transfers wuld definitely imprve the situatin, mtivate nn autmated player t mve fr autmatin. In Luxemburg sme transfer agents have adpted the single leg transfers fr mre than 2 years. They have reached psitive results by drastically reducing their number f nn-settled transfers by 80%. Fcus nw needs t cncentrate n autmating the remaining 20% which will cntinue t lead t enhanced client services, whilst allwing peratinal resurce t fcus n value added tasks as well as reducing csts. 5. OUR RECOMMENDATIONS: 1. Implementatin f the single leg in frmat preferably withut pre-matching (althugh pre-matching is nt a majr bstacle). 2. Freeze f the actual SWIFT standard 4,9 fr cntinental Eurpe and 4,5 fr the UK market fr at least 3 years. 3. Ask ALFI t repen discussin with Clearstream as during the last ALMUS/Findel wrking grup meeting Clearstream and Sciete Generale expressed their cncern abut the legal aspect f allwing a dump f shares n the transferee accunt at the TAs. The grup is in the prcess f seeking pinins n this frm bth ALFI and CSSF. 4. Seek submissins frm industry partners with prpsals t prvide a cmmn reslutin that is bth rbust and efficient, in rder t ensure that ur lng term bjective t agree a a standard industry prcess that allws ecnmies f scale in terms f shared peratinal services, enhanced custmer experience and reduce csts. 5. Open discussin with authrities t supprt easy prcesses with push f assets and n riginals required. 6. Open discussins with imprtant distributrs t encurage them t adpt the same slutin. 6. IMPORTANT INFORMATION This dcument has been cmpiled fr the use f Findel Grup members nly and is fr guidance purpses. This dcument must nt be cpied r distributed withut written cnsent frm the Findel Grup. Fr any queries regarding this dcument, please cntact enquiries@findelgrup.cm WITH THANKS The Findel Grup wuld like t thank Vanessa Grueneklee, Chair f the Findel Transfers wrking grup and its members fr their cllabratin and cntributin t this dcument. 7