Tieto supports Länsförsäkringar’s growth in funds


Tieto supports Länsförsäkringar’s growth in funds

http://www.bobsguide.com//guide/news/2013/Aug/27/tieto-supports-lansforsakringars-growth-in-funds.html?utm_source=bgdailynewsletter&utm_medium=email

Länsförsäkringar and Tieto have signed a service agreement making Tieto overall responsible for maintaining, supporting and operating the bank’s fund administration system. The new service will allow Länsförsäkringar to focus on its core business, allowing for more flexibility and cost efficiency.

Tieto and Länsförsäkringar have a long business relationship and Tieto has been a strategic partner for Länsförsäkringar ever since the launch of Länsförsäkringar Bank.

“We wanted a proactive partner that actively helps us to improve and simplify our business as Sweden’s fifth largest fund company,” says Maria Jerhamre Engström, head of Product and Process at Länsförsäkringar Bank. “We currently have 30 different funds combining a variety of investment strategies, which together with our fund portfolio “Fondtorg” create a highly competitive offering for our clients. In this context, the service provided by Tieto gives us an improved and more uniform interface with an active commitment to continuous improvement and greater cost efficiency.”

“This is an important deal for Tieto,” says Alexandra Fürst, head of Tieto’s Financial Services in Sweden. “The trend in the industry moves towards companies signing agreements for service delivery rather than system delivery, allowing them to focus more on their core business and less on system-related and operational issues. The deal shows that our strategy of packaging and delivering services is totally in line with market demands,” Furst concludes.

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Rewiring Europe’s ETP industry


Rewiring Europe’s ETP industry

http://www.efinancialnews.com/story/2013-07-22/rewiring-europe-exchange-traded-products-industry?omref=email_TradingTechnology

European exchange-traded products are being delisted at a record rate as the region battles with fragmented liquidity and high running costs.

Rewiring Europe’s ETP industry

During the first half of this year, 231 ETPs were delisted from European exchanges compared with 189 for the whole of 2012, according to data from consultancy ETFGI.

Arnaud Llinas, Lyxor’s global head of ETFs and indexing, said: “There are definitely too many products in Europe. There are more ETPs in Europe than the US. I’m not surprised that the market is rationalising now in terms of number of products.”

Compared with the US, the European ETP market presents a fragmented picture, with issuers required to list products across many regional exchanges, clearing and settlement systems. Each product could be listed on as many as five exchanges.

At the end of June, the European industry had 1,954 ETPs, with 6,156 listings, and assets of $357 billion, compared with 1,478 ETPs, 1,478 listings, and assets of $1.44 trillion in the US, according to ETFGI.

 

Some of this fragmentation is regulatory-driven: Switzerland, for example, forces providers to list on its local exchange if they want to market their products in the country. In addition, issuers have seen it as necessary to have a shop window in each jurisdiction to target retail customers.

In recognition of how disparate the European market has become, and to concentrate liquidity, issuers are rethinking their strategy.

Deborah Fuhr, founding partner of ETFGI, said: “In the early days of ETPs in Europe, many people thought that marketing and listing should go hand in hand, especially if you wanted to sell to retail and financial advisers. However, there are considerable costs involved with maintaining multiple cross-listings and it fragments liquidity across multiple exchanges.”

The ETFGI data shows the number of new listings on European exchanges has also slowed considerably, from 758 for the whole of last year to 295 so far this year. New listings peaked at 1,589 in 2010.

 

Leland Clemons, head of iShares capital markets for Europe, Middle East and Africa at BlackRock, said: “We are trying to take a more proactive approach to developing the market structure for ETPs. We would like to see liquidity better consolidated to make the investor experience better. From my perspective, the European ETP market structure or ecosystem has developed a bit from when the proliferation of listings began five or six years ago.”

Clemons said rule changes set to come in with a revised version of the Markets in Financial Instruments Directive are also driving change. The directive is not expected to come into force before 2015, but its draft form calls for increased reporting of trades, and the greater transparency this will bring will highlight products that lack volume, he said. Recent industry initiatives are also thought likely to consolidate the market.

Bats Chi-X Europe, the largest pan-European cash equities trading platform, is exploring using trade order routing techniques to direct investors to the most liquid products. For example, an investor looking to buy the iShares Euro Stoxx 50 ETF, which is traded on six European exchanges, would be directed to the most liquid of these listings.

BlackRock and settlement giant Euroclear have also made a move to improve the European ETP market, with plans to create one international central securities depository that would allow ETPs to be settled in one place rather than nationally.

 

But issuers say delistings and consolidation will also see some market participants lose out.

The five largest European exchanges have lost 194 listings so far this year, compared with 51 in the first six months of last year.

According to ETFGI, Borsa Italiana has been the worst hit of Europe’s exchanges, having seen 57 ETPs delisted from its platform so far this year (see chart).

NYSE Euronext’s Paris exchange has lost 43 ETPs; German exchange Deutsche Börse, 35; the London Stock Exchange, 34; and Switzerland’s Six Swiss Exchange, 25.

 

Silvia Bosoni, Borsa Italiana’s head of ETF listing, said despite recent delistings the market remained popular. She said: “There are no Italian issuers of ETFs, which means Italy is often the first market issuers list in after their domestic market. Issuers have to be alive to the fact that most Italian investors in Italy are not very keen to invest in something not listed in Italy.”

Providers say the LSE has benefited from its position as a hub for Europe, cemented by a number of US issuers that have come into the market and used the LSE as a launch pad. The Six Swiss Exchange, meanwhile, has been protected by its regulatory framework.

According to issuers, the primary consideration when it comes to delistings is geographical positioning and running costs.

Although all the exchanges offer deals for multiple listings, new issuers and annual fees, an individual listing of an ETF on Borsa Italiana costs €8,500; on NYSE Euronext, €7,500; LSE charges £5,000 (€5,807); Deutsche Börse, €3,500, and it costs Sfr3,000 (€2,425) plus charges for new equity securities in relation to market capitalisation on the Six Swiss Exchange.

 

Manooj Mistry, head of ETPs for Europe, the Middle East and Africa at Deutsche Bank’s Asset and Wealth Management unit, said: “Listing fees are a component of the costs so you need to take into consideration that some exchanges are more expensive than others.”

According to ETFGI research, Lyxor has delisted the most products this year with 53, followed by Royal Bank of Scotland, 42, iShares at 40 and ETF Securities with 38.

Matt Johnson, head of distribution for Europe, Middle East and Africa at ETF Securities, said: “The rationale is, of course, based on economics. Multiple listings incur a cost that is both direct, such as legal time, and indirect, such as marketmaker support.

“We’ll certainly be keeping all of this in mind when listing new or cross-listing existing products and as we continue our six-monthly reviews of potential delistings,” he said.

 

• Global product shutdowns hit record level

The number of closures of global exchange-traded products hit a record 117 in the first six months of this year, according to ETP consultancy ETFGI.

Providers have engaged in rapid expansion in recent years, with the number of global ETPs rising by 217% since 2008 and hitting a growth peak between 2009 and 2010 of 32%.

But this has slowed over the last 18 months, to 8.8% from 2011 to 2012 and 2.6% in the six months to June, according to ETFGI.

 

Market participants have attributed the change to a smaller number of benchmarks still available for new products and a move by issuers to take stock of their portfolios after high levels of growth.

Deborah Fuhr, founding partner of ETFGI, said: “There has been a decline in the number of new launches as most of the core benchmarks in core asset classes are already covered by ETPs. There is a first-mover advantage when bringing an ETP to market. Many firms are [now] working to grow the assets in their existing products.”

Earlier this month, db X-trackers, the ETP arm of Deutsche Bank, announced the largest number of closures at one time by a single provider, with 36 ETPs set to disappear. The bank attributed the closures to “low levels of interest”.

The figure is not included in the first-half global total because the products are still in the process of being closed.

 

Manooj Mistry, head of ETPs for Europe, the Middle East and Africa at Deutsche Bank’s Asset and Wealth Management unit, said: “Over the past few years we have very much been in expansion mode in terms of products we’ve launched.

“We felt we reached a stage in our evolution where it made sense to review our product range in terms of whether there had been the anticipated demand and turnover on exchange we had expected.
“Some products had not met these levels after a fair time period of around five years so we have decided to close them.”

The majority of the db X-trackers closures are in niche products that have failed to grow substantial assets, said Mistry. Some issuers said that rapid growth and innovation in the ETP industry had led to a number of more specialist products being created that are harder to market and can take a long time to build assets.

–This article first appeared in the print edition of Financial News dated July 22, 2013

Alternative Investment Fund Managers Directive (AIFMD) – Financial Conduct Authority


Alternative Investment Fund Managers Directive (AIFMD) – Financial Conduct Authority

http://www.fca.org.uk/news/aifmd

On the 22 July 2013 UK law implementing the Alternative Investment Fund Managers Directive (AIFMD) came into force.

It creates a tighter regulatory framework for alternative investment fund managers including managers of hedge funds, private equity firms and investment trusts.

For more information please see our AIFMD pages.

http://www.fca.org.uk/firms/markets/international-markets/aifmd

The Alternative Investment Fund Managers Directive (AIFMD) was published in the Official Journal of the European Union on 1 July 2011 and must be transposed into national law by 22 July 2013.
The scope of the AIFMD is broad and, with a few exceptions, covers the management, administration and marketing of alternative investment funds (AIFs). Its focus is on regulating the Alternative Investment Fund Manager (AIFM) rather than the AIF.

An AIF is a ‘collective investment undertaking’ that is not subject to the UCITS regime, and includes hedge funds, private equity funds, retail investment funds, investment companies and real estate funds, among others. The AIFMD establishes an EU-wide harmonised framework for monitoring and supervising risks posed by AIFMs and the AIFs they manage, and for strengthening the internal market in alternative funds. The Directive also includes new requirements for firms acting as a depositary for an AIF.

New Role for Buy Side in Corporate Bond Market: Liquidity Providers


New Role for Buy Side in Corporate Bond Market: Liquidity Providers

http://tabbforum.com/opinions/new-role-for-buy-side-in-corporate-bond-market-liquidity-providers?utm_source=TabbFORUM+Alerts&utm_campaign=12c4c4b950-UA-12160392-1&utm_medium=email&utm_term=0_29f4b8f8f1-12c4c4b950-271568421

Full document at:-
http://www.scribd.com/mobile/doc/154736561

New Role for Buy Side in Corporate Bond Market: Liquidity Providers?
With the shift in the corporate bond market from voice to electronic trading, and from capital facilitation by dealers to agency facilitation, will the largest institutional investors commit their own capital to replace that which has been withdrawn by dealers?
Corporate bond markets are being radically changed by a confluence of factors: new Basel III capital and liquidity rules, the MiFID requirements on transparency in bond markets, and the availability of innovative new platforms based on equity and FX market technology. These factors have already led to a reduction in capital commitment by dealers, even prior to the regulatory implementation of Basel III.

[Related: “In Search of Liquidity: The Transformation of the Corporate Bond Market”]

The shift from voice to electronic trading and from capital facilitation by dealers to agency facilitation are well established trends, but RFQ mechanisms are likely to continue to be necessary due to the clear differences between equities and FX on the one hand and most corporate bonds on the other. A key question is whether the largest institutional investors themselves might now choose to commit capital to replace that which has been withdrawn by dealers and to do this by making prices through order-driven and RFQ platforms. This would enable them to buy at the bid and sell at the offer, thereby taking out the spread. An increasing number of platforms are now All-to-All, thus enabling the buy side to act as capital providers.

For more on the technological innovation in and transformation of the corporate bond market, see Professor Scott-Quinn’s complete research paper, “European Corporate Bond Trading – the role of the buy side in pricing and liquidity provision,” below.

Institutional large-in-scale (LIS) crossing networks for bonds, such as Liquidnet provides for equities, and the use of reference pricing should enable investment institutions to transact with each other without broker-dealer, MDP or SDP intermediation. However, under recent draft proposals for MiFIR, European regulators have introduced a volume cap mechanism that may have a dramatic effect on dark trading in Europe – whether in equities or, in the future, in bonds. Regulatory control will be based on a (low) cap on the percentage of trading that can go through mechanisms using a reference price. This would seem to be only the most recent of a number of retrograde steps taken by the EU in terms of its implications for market liquidity.

The combination of Basel and EU regulation certainly has the potential to counter all the efforts of individual governments and the G30 to encourage corporations to raise finance for economic expansion through bond markets rather than through fragile banking systems in order to reduce systemic risk. At this stage it is too early to say if higher costs and reduced position taking by broker- dealers in response to regulatory change will result in higher funding costs for issuers of corporate bonds in Europe or if the innovations we discuss in the paper below may be able to offset at least some of these additional regulatory costs. Certainly at the moment, there is little sign on this side of the Atlantic that regulators are heeding the sentiment of SEC Commissioner Daniel Gallagher, who hoped that “the Commission … will understand the differences and interplay amongst the equities, debt and credit markets so that we can be a more sophisticated regulator of those markets.”

Professor Brian Scott-Quinn is Chairman and Director of Banking Programmes at the ICMA Centre, Henley Business School, and a former practitioner in the eurobond secondary market. Deyber Cano, a research assistant to Professor Scott-Quinn at the ICMA Centre, contributed to the paper.

TS Associates releases Correlix 5.2


TS Associates releases Correlix 5.2

http://www.atmonitor.co.uk/news/newsview.aspx?title=ts-associates-releases-correlix-5-2

Published on   Jul 18, 2013

logo

TS Associates, providers of Precision Instrumentation of electronic trading systems, and developers of TipOff, Correlix, and Application Tap, have released Correlix 5.2, the trade flow latency monitoring solution.

The new Analytic Business Reporting Module automates the production of reports summarising trading activity and latency metrics. Output includes transaction count, traded volume, notional value and latency statistics. Reports can be broken down by time period, session, customer, account, order type or symbol. Reports can also be aggregated by resource tier such as gateway, FIX engine, SOR, matching engine or execution venue. Reports are saved for historical comparison and trend analysis. Report generation is now integrated into the core architecture of the product, improving on the previous generation of customised add-on reporting.

The account mapping feature allows Correlix customers to migrate from FIX to alternative protocols without losing any of their existing reporting functionality. Whilst account information is present in FIX orders, this information is often omitted from binary order entry protocols offered by exchanges and brokers. The account mapping feature of Correlix 5.2 reconstructs this information from session management messages or by inference through complex correlation rules.

Henry Young, CEO, TS-Associates, says, “Correlix has always had the reputation of being the business focussed trade flow monitoring tool of choice. With Correlix 5.2 we have added to the product’s respected business reporting credentials. We are proud of what we have achieved for our customers since acquiring Correlix last year and have exciting plans for the future.”

Raymond Marra, TS-Associates COO Americas, says, “This release validates TS-Associates’ commitment to Correlix as the premium product for business centric trade flow analysis. A press release simply cannot do justice to the myriad of new features.”

 

Clearstream’s investment funds strategy for Latin America strengthens with Latin Clear joining Vestima


Clearstream’s investment funds strategy for Latin America strengthens with Latin Clear joining Vestima
Latin Clear Panama as central hub for investment funds across Latin America to use Clearstream’s post-trade solution Vestima/ International investors can now gain easy access to Panama-domiciled funds through Clearstream/ Regulatory changes: markets in Latin America open up for offshore funds
17. July 2013
Clearstream: Clearstream has taken an important step in strengthening its ties with Latin American financial markets by signing Latin Clear Panama as the first transfer agent (TA) to join its investment funds platform, Vestima. Accordingly, in the course of July 2013, investment funds domiciled in Panama will be eligible for order routing, settlement and custody at Clearstream.

The Vestima suite of services will bring increased operational efficiency and security benefits to the Latin American financial markets by providing centralised delivery versus payment (DVP) settlement services based on synchronous exchange of cash and securities between fund distributors and transfer agents.

Philippe Seyll, Member of the Executive Board of Clearstream and Head of Investment Funds Services, said the cooperation with Latin Clear and the migration of Panama domiciled funds to Vestima was key in light of the company’s Latin America funds strategy as it allowed international investors to gain easy access to these financial instruments.

“We are pleased to welcome the first TA in Panama, a major domicile for cross-border distribution of investment funds in Latin America, where markets are gradually opening up to offshore funds,” he said. “Our objective is to become a partner of choice for the financial institutions in the region that wish to enhance their investment funds offering.”

Clearstream is headquartered in Luxembourg which has more than EUR 2,500 billion (April 2013) assets under management in investment funds. Luxembourg is the second-largest funds market in the world after the US. Currently, more than 3,800 collective investment schemes are administered in and distributed from the Grand Duchy.

About Clearstream

Clearstream is one of the leading providers of investment funds services globally. It has more than 120,000 investment funds on its Vestima order routing platform and more than 7 million fund settlement instructions are processed every year. The company is also the largest contributor to the standardisation of funds processing worldwide.

Clearstream holds EUR 11.6 trillion in assets under custody making it one of the world’s largest settlement and custody firms for domestic and international securities. As an international central securities depository (ICSD) headquartered in Luxembourg, Clearstream provides the post-trade infrastructure for the Eurobond market and services for securities from 53 domestic markets worldwide. Clearstream’s customers comprise approximately 2,500 financial institutions in more than 110 countries. Its services include the issuance, settlement and custody of securities, as well as investment fund services and global securities financing.

About Latin Clear

Latin Clear is acting as central hub for Latin America as it has established settlement links to other markets in the region, such as Costa Rica, Nicaragua, El Salvador and Venezuela. Access to the Dominican Republic is in progress.

Panama is currently attracting an increasing number of international investors because of its stable government and the size of its financial sector. It is the largest international banking centre in Latin America with more than 150 banks from more than 35 countries and offers easy access to other Latin American markets.

UCITS’ collateral access for clearing “heavily restricted”


UCITS’ collateral access for clearing “heavily restricted”

UCITS funds that are struggling to access collateral to post as margin for cleared OTC derivatives trades should be granted initial margin exemptions for non-cleared bilateral contracts, a European buy-side association insist.

Limits on borrowing, collateral repackaging and use of the repo market by UCITS makes it difficult for them to comply with the European market infrastructure regulation (EMIR), which requires OTC derivatives to be centrally cleared.

The EMIR rules means that buy-side firms will have to post initial and variation margin for the first time, leading market participants to fear a potential collateral shortage when clearing requirements kick in.

Vincent Dessard, regulatory policy advisor at the European Fund and Asset Management Association (EFAMA), said the cumulative impact of OTC reforms would restrict UCITS from having collateral for clearing.

“UCITS funds have to deliver collateral just like any other market participant, but they are the sole market participants that don’t have access to credit capabilities,” he said. “As a result, they are bound to use their own fund assets, leading to a collateral dry out.”

UCITS funds are considered suitable for retail investors and have been established in accordance with successive European Union directives on undertakings for collective investment in transferable securities (UCITS), which can be freely marketed across the member states.

According to statistics provided by Strategic Insight, an Asset International company, UCITS account for 65% of all portfolios across local European and cross-border mutual funds and 79% of assets under management.

The funds have borrowing limits of 10% of net asset value on a temporary basis, and can’t repackage collateral because of restrictions on the use of assets within other sub-funds.

ESMA’s ‘Guidelines on ETFs and other UCITS issues’ released in December last year has also closed the door on the repo market, with regulator stating cash collateral received by a fund could not be used for clearing obligations.

Perry Braithwaite, adviser product regulation at the Investment Management Association (IMA), said as a result, “UCITS funds are heavily restricted in terms of where they are going to get their collateral from”.

“It’s something that we have raised with the European Commission and ESMA, but don’t know what the outcome is going to be.”

Braithwaite said UK-domiciled funds weren’t as affected as others in Europe, as they were less likely to use repos or OTC derivatives.

Exemptions

EFAMA’s Dessard said the association had also been in touch with ESMA and the International Organisation of Securities Commission (IOSCO), which is currently working on margin requirements for non-cleared OTC derivatives trades that are set to be published by late-August.

He is calling for IOSCO to give funds an exemption on posting initial margin for bilateral trades.

“We are very well aware that there will be changes in the market. We do welcome them in terms of safety, but we are very much under the impression that institutions investors, especially funds, were not taken into account with all the rules that are being prepared and set in place.”

Dessard said if nothing were done, asset managers would shift to “streamlined, plain vanilla instruments”.

“They will no longer finance growth in Europe and small and medium enterprise development,” he said.

Technology becomes the new dividing line for fund administrators (a discussion….)


Technology becomes the new dividing line for fund administrators

http://www.efinancialnews.com/story/2013-07-08/technology-becomes-the-new-dividing-line-for-fund-administrators?omref=email_HedgeFunds

08 Jul 2013

Financial News asks a panel of experts about whether outsourcing providers are responding to the changing needs of hedge funds and the effects of regulation such as a financial transaction tax, the European Market Infrastructure Regulation and mandatory OTC clearing.

 

Michelle Price
Financial News

How have outsourcing providers responded to the changing needs of hedge funds?

Mark Schoen
Northern Trust

It depends on the particular needs of each hedge fund at any particular time. If you are diversifying into another asset class, you will need infrastructure that is aligned to that mandate. You may have a particular view of the way you look at risk and the supplier may not be able to deal with that. Perhaps you could say the bigger firms can demand more and set the agenda much easier than that middle ones.

 

Michelle Price
Financial News

How has Northern Trust adapted its technology and functionality to develop a hedge fund administration business?

Mark Schoen
Northern Trust

In the long run, we foresee many traditional fund managers using hedge fund type strategies, so we need a system that will support the wide variety of asset classes and strategies. What we wanted was a system that was built for a hedge fund, designed by hedge fund managers. Legacy fund accounting systems simply weren’t designed to cope with the middle office. They can’t look at information in the way that the manager wants to look at it.

 

We investigated many administrators and looked at our own infrastructure, and decided to acquire Citadel’s hedge fund administration business in 2011, taking on its Omnium technology, which is designed for the purpose. We can see the huge difference it is going to make to us and it will be the foundation for many of the things that we do with other managers in the future.

Michelle Price
Financial News

If service providers require that technology to deal with hedge funds, will there be more acquisitions and more consolidation?

Tony Freeman
Omgeo

 

I don’t see many other Omnium-type opportunities. I come from a global custody background, and turning a fund accounting platform into a hedge fund processing platform is a near impossibility. Hedge fund employees also have a different mindset. If there are other providers in the hedge fund space willing to sell their technology and people, then they will definitely be acquired because it is a faster route to market than doing it yourself in a very different segment of the market.

Michelle Price
Financial News

What key tools and areas are becoming more important to the outsourcing provider?

Mark Schoen
Northern Trust

The scope of services has changed significantly. Previously, the administrator calculated the net asset value, now it is typically responsible for a number of other functions. It now has to look at the daily profit and loss in a very different way.

 

It is essential to have a real-time system that can deal with all the functions I just talked about but also any asset class as well, where futures, commodities, bank loans, equities and bonds, property, private equity and more are all on the same platform. The administrator’s capital spend will keep on increasing to provide infrastructure that will accommodate any hedge fund strategy.

Julian Mant
Mercer

When calculating the NAV, three things in the back office are essential. One is to confirm the trades once executed. The second is to reconcile cash positions and transactions. The third is pricing the assets.
Another thing that has changed significantly more recently is risk. When setting up, a hedge fund needs several systems, including a portfolio management system, a risk system and then you need your middle- and back-office system. It is wonderful if you can find a system that will do all that for you.

Outsourced service providers are providing you with good middle- and back-office functionality and appropriate risk functionality. They provide technology that is commoditised and, consequently, cheaper and can be delivered more effectively. What the hedge fund managers have to do is say: “Am I prepared to go for that slightly more commoditised process and adapt my thinking?”

 

It is not just the provider adapting to the hedge fund manager, it is the hedge fund manager adapting to what is available. It is a two-way process.

Tony Freeman
Omgeo

Transaction reporting is also increasingly important, because it is a huge growth industry around the world. In the US market, there is an increased need for reporting about equities and derivatives. And a year or two down the line, we will have the consolidated audit trail, which is not on most people’s radar yet, which will require options reporting by 8am on T+1. To comply with such reporting obligations you need a very slick organisational process. This trend will grow. It is not something that hedge funds will be interested in doing themselves. It is a great opportunity for an outsourcer to build a consolidated transaction-reporting platform.

— The FTT effect

 

Michelle Price
Financial News

How would a financial transaction tax affect hedge fund businesses?

Conrad Levy
Brummer & Partners

Hedge funds look to how to trade effectively around transaction taxes, and spend a lot of time questioning whether their impact has anything like the desired outcome. Does the fact that they are putting a transaction tax in place do anything to dampen the market? Does it help in any way? Does it raise the level of funds that people expect, or does it just add another layer of complication in how you are going to report it and how the funds are going to be sent to individual countries? It is another problem that is more politically than financially driven, and I question whether it will have the desired outcome.

 

Tony Freeman
Omgeo

For some hedge funds a financial transaction tax will not be operationally burdensome at all because they don’t trade in any equity products, and concentrate only on contracts for difference. I’m not sure whether the newly enacted Italian law, which covers derivatives, also includes CFDs in its remit.

Conrad Levy
Brummer & Partners

On occasion, we have had to call the regulator to try to ascertain whether a trade we are entering into would be subject to FTT. It is an awkward position to be in.

Tony Freeman
Omgeo

 

We have seen a big rise in CFD volumes across the market. If you are an institutional investor with shareholder governance requirements and corporate responsibility, you can’t sell equities and start doing CFDs across the board, but hedge funds can. A pure, synthetic portfolio is a possibility and will not incur a transaction tax. It is one of those unintended consequences. The biggest impact of the FTT is the uncertainty of implementation, which has consumed a vast amount of management time.

Mark Schoen
Northern Trust

Another dynamic of this is you see new behaviour as a result of taxes. Several years ago there was a market that imposed a stamp tax on all equity and bond transactions. To avoid the stamp tax investors piled into funds and traded offshore. The FTT could also lead to such behaviour.

— The central clearing debate

 

Michelle Price
Financial News

What will be the effect of the European Market Infrastructure Regulation and mandatory OTC clearing on hedge funds?

Mark Schoen
Northern Trust

It depends on what you trade. For the foreseeable future, interest rate and credit default swaps are included under Emir until 2016. If you trade a lot of CDSs and IRSs, you will have a problem.

 

Conrad Levy
Brummer & Partners

Is there any kind of synergy and arbitrage between Europe and the US? The US rules are different from the European ones, although there is talk of aligning them. In the meantime, hedge funds are looking at all these looming problems. There are a lot of issues to be addressed, while some are kicked down the road to give people more breathing space. But it is frustrating because everyone wants a resolution.

Hedge funds want to focus on trading and making money for their investors. What they don’t like is the distraction of a raft of unclear demands and shifting timescales and boundaries.

Michelle Price
Financial News

 

Emir requires firms to invest in collateral management services. What does it mean for providers?

Mark Schoen
Northern Trust

It means a significant investment in infrastructure to be able to clear centrally, deal with compression issues, reconciling at the clearing member’s account and being able to break down the one movement that you get every day to understand how the commission is a part of that, how the collateral movement is part of that. In the long run, we anticipate that collateral demands will be huge for institutions like pensions funds immunising their books.

Tony Freeman
Omgeo

 

That is if they have to pay initial margin.

Mark Schoen
Northern Trust

Yes, and managers are likely to need collateral transformation capabilities. We are looking to develop that capability with our clients.

 

SEI selects Calastone for automated order routing


SEI selects Calastone for automated order routing

http://www.automatedtrader.net/news/at/143748/sei-selects-calastone-for-automated-order-routing

Calastone chosen to provide order routing service for SEI’s UK business

Fund services provider SEI has chosen Calastone to provide its order routing service for the UK business.

SEI will now move toward automated order processing for transactions across its retail fund range and goals-based Strategic Portfolios.

The move aims to provide faster turnaround times for order confirmations and contract notes which will allow SEI and client counterparties to reduce processing time and operational risk.

Calastone’s system allows all parties in the process – third party administrator, distributor or platform to choose which messaging format they wish to communicate with, the order message is then routed and translated by Calastone into the preferred format, as determined by SEI.

Andrea Hohlachoff, Head of Asset Management Solutions at SEI, said the business had already witnessed the operational benefit of working with Calastone.

She added: “We are pleased to have selected Calastone as our connectivity partner and have been impressed by their flexibility in providing us with the facility to process fund orders electronically with our clients. We very much look forward to expanding the use of the order routing service and enabling more of our clients to benefit from the system.”

In addition, SEI will be able to follow each order through the entire lifecycle of the trade, using Calastone’s Execution Management Systems (EMS), a web-enabled graphic user interface (GUI) which allows users a real-time view of the transaction. The EMS also has the ability to flag any potential restrictions, which otherwise would have to be dealt with manually.

Paul Jacobs, UK Sales Director at Calastone, said: “We are looking forward to working with SEI to help improve efficiencies and mitigate operational risk during their order routing activity. We hope the industry continues to recognise the clear benefits of moving away from manual processes.”

Mandeville selects Broadridge to power wealth management platform


Mandeville selects Broadridge to power wealth management platform

http://www.automatedtrader.net/news/at/143767/mandeville-selects-broadridge-to-power-wealth-management-platform

Toronto, Ontario – Broadridge Financial Solutions has announced that Mandeville Wealth Services, a new member of the Mutual Fund Dealers Association of Canada (“MFDA”), and Mandeville Private Client Inc., a member of the Investment Industry Regulatory Organization of Canada (“IIROC”), will be powered by Broadridge’s Dataphile securities processing and advisor desktop platform. Although securities and mutual fund dealers are separately regulated entities, Broadridge’s Dataphile solution can support both businesses on a single platform.

“Mandeville chose to partner with Broadridge for its depth of experience and because Broadridge’s Dataphile solution is the only platform in Canada that effectively supports both MFDA and IIROC businesses,” said Michael Lee-Chin, Founder and Chairman of Mandeville Holdings Inc.

Mr. Lee-Chin formed the Canadian dealers with a commitment to make private investment opportunities, which are typically reserved for affluent and institutional investors, more accessible to individual retail investors. “As a wealth management organization, focusing on our clients, growing our business and operating as efficiently and effectively as possible, are our key priorities. Broadridge’s securities processing and advisor desktop solutions will support each of those priorities as well as our mission to create and preserve wealth.”

“The financial services industry is transforming at a rapid pace. Companies require smart solutions to allow them to bring products to market quickly and to help them meet increasingly stringent regulatory demands,” said Michael Dignam, President, Broadridge, Canada. “Broadridge is committed to partnering with our clients and providing them with the technology and processing solutions to succeed and differentiate themselves in this changing environment.”

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