fund processing standardisation · automation rates of fund orders received by transfer agents...

Fund Processing Standardisation

Tracking industry progress

Mid 2011 Update

EFAMA – SWIFT FPS Report Mid 2011 update

Background

Since May 2009, EFAMA has published several reports on trends in standardisation and

automation rates of fund orders received by transfer agents (TAs) in Luxembourg and

Ireland. These reports are available on both EFAMA and SWIFT websites1.

This latest version is the mid-year 2011 report. It combines the Luxembourg and Ireland data

into one single cross-border fund processing report providing

a. an aggregated view on both fund processing centres together and

b. a detailed overview per fund processing centre (Luxembourg and Ireland separately).

The goal of this initiative is to inform all institutions involved in fund processing, as well as

the European Commission, the European Parliament and other interested stakeholders, about

the industry’s progress towards greater automation of fund orders and use of the ISO

messaging standards recommended by EFAMA.

This report contains an analysis on the regional split of order volumes. The regional split

analysis is performed on a sub-set of survey respondents in each of the markets; hence, each

market focus section will contain a specific regional split.

EFAMA and SWIFT publish two fund processing standardisation reports per year: a full year

detailed report and a mid-year update report.

1 http://www.swift.com/solutions/funds/automation.page?

http://www.efama.org/index.php?option=com_docman&task=cat_view&gid=88&Itemid=-99

Annual Report 2007 and 2008 (May 2009)

Mid 2009 update (Oct 2009)

Annual Report 2009 (Feb and Jul 2010)

Annual Report 2010 (May 2011)

Mid 2010 update (Nov 2010)

Mid 2011 update (Dec 2011)

http://www.swift.com/solutions/funds/automation.page

http://www.efama.org/index.php?option=com_docman&task=cat_view&gid=88&Itemid=-99


Report Highlights

A. Cross-border fund processing standardisation in Luxembourg and Ireland

Combined surveys coverage:

o 31 transfers agents (TAs) surveyed (20 in Luxembourg, 11 in Ireland)*2

o >80% market coverage (on incoming 3d-party investment funds order volumes)

o Standardisation data collected on 13.2 million incoming orders H1 2011

The total automation rate of orders processed during Q2 2011 reaches 75.1%; this

represents an increase of 0.6 percentage points compared to Q2 2010 (where it stood

at 74.5%).

The ISO messaging standards*3 market adoption rate continues to strengthen to the

detriment mainly of proprietary ftps:

o The ISO automation rate has indeed risen from 35.8% (Q2 2010) to 37.3% (Q2

2011), while

o The use of proprietary ftps has decreased from 38.7% (Q2 2010) to 37.7% (Q2

2011).

The number of incoming orders manually processed during the first half of 2011

reaches 3.3 million.

B. Cross-border fund processing standardisation in Luxembourg

The total automation rate of orders processed by Luxembourg TAs was 70.1% during

Q2 2011; this represents an increase of 0.4 percentage points compared to Q2 2010

(where it stood at 69.7%).

o The automation rate in the Asia-Pacific region*4 (APAC) reached 44.4%. This

represents a decrease of 2.6 percentage points compared to Q2 2010 where it

stood at 47%.

2 The number of survey participants has remained the same although the distribution between LU and IE has changed due

to an evolution in various transfer agency mandates. By comparing 2010 and 2011 volumes, the impact for Luxembourg surveyed volumes represents -1% while Ireland surveyed volumes have risen by 7%. 3 The ISO messaging standards currently used for fund order processing are a combination of ISO 15022 and ISO 20022

messages. SWIFT is leading a migration programme from ISO 15022 fund messages into ISO 20022 fund messages with end date Q4 2015. EFAMA recommends ISO 20022 as single standard for fund processing. 4 Please note that the regional data for Luxembourg is based on contributions of 14 out of the 20 transfer agents,

representing about 67% of the survey volumes for H1 2011.


The percentage of automated orders based on the ISO messaging standards

substantially increased from 47.9% during Q2 2010 to 51.4% during Q2 2011. This

compares with a drop from 21.8% during Q2 2010 to 18.7% during Q2 2011 for

proprietary ftps.

o The ISO adoption rate in APAC stood at 16.2% during Q2 2011, compared to

13.6% during Q2 2010, while proprietary ftps dropped from 33.5% during Q2

2010 down to 28.2% during Q2 2011.

Order volumes have grown: +10% during H1 2011 compared to H1 2010. In total, 8.7

million orders were processed by survey contributors during the first half of 2011.

o Order volumes coming from APAC-based order givers decreased compared to H1

2010: they represented 29% of all incoming volumes at Luxembourg TAs

compared to 31% H1 2010.

The 21 Luxembourg-based TAs surveyed manually processed 2.5 million orders

during the first half of 2011.

C. Cross-border fund processing standardisation in Ireland

The total automation rate of orders processed by Irish transfer agents was 84.2%

during Q2 2011; this represents a decrease by 1.1 percentage point compared to Q2

2010 (where it stood at 85.3%).

The percentage of automated orders based on the ISO messaging standards

substantially increased to 11.5% during Q2 2011 compared to 8.5% during Q2 2010,

while the proprietary ftp rate fell to 72.6% compared to 76.8% during Q2 2010.

Order volumes grew substantially: +30% during H1 2011 compared to H1 2010. In

total, 4.5 million orders were processed by survey contributors during the first half of

2011.

The 11 Ireland-based TAs surveyed manually processed 0.8 million orders during the

first half of 2011.

ISO standardisation rates continue to increase with EMEA*5-based order givers; the

rate stood at 5.4% in Q2 2011, compared to 3.2% in Q2 2010.

On the other hand, the ISO standardisation rate in APAC*5 grew to 12.1% in Q2 2011

compared to 8.5% in Q2 2010

5 Please note that the regional data is based on contributions of 6 out of the 11 transfer agents, representing

about 75% of the survey volumes for H1 2011.


A. Cross-border fund processing standardisation

Ireland and Luxembourg

A.1 Order volume evolution

By end of June 2011, 13.2 million orders had been processed by the 31 survey contributors

across Ireland and Luxembourg. This represents an average 2.2 million monthly volume of

orders, up by 16% compared to the first half of 2010.

Figure 1 - Order volume evolution

Transaction volumes peaked in March in both Luxembourg and Ireland. A sharp decline was

observed in April as numerous events triggered volatility in financial markets and unnerved

investors, in particular the ongoing unrest in North Africa and the Middle East, the

uncertainties surrounding the devastating earthquake in Japan, and the tensions in oil prices

and sovereign debt markets.

A.2 Automation level

The total automation rate reached 75.1%, compared to 74.5% during Q2 2010.

Figure 2 - Automation level evolution


Automation levels suffered in Q1 2010 reflecting flows on funds triggered by non-automated

distributors in Asia which had a strong influence of manual processing. The manual

processing rate in Asia increased by 44% between February and March 2011.

A.3 Standardisation levels

Adoption of ISO has increased by 1.5 percentage points in volume terms between Q2 2010

and Q2 2011, reaching 37.3% during Q2 2011 compared to 35.8% in Q2 2010. The adoption

of proprietary formats has decreased by 1 percentage point, from 38.7% in Q2 2010 to 37.7%

in Q2 2011. The share of manual orders fell from 25.5% in Q2 2010 to 24.9% in Q2 2011.

Figure 3 - Standardisation rate


B. Focus on Luxembourg

B.1 Order volume evolution

By end of June 2011, 8.7 million orders had been processed by the 20 Luxembourg survey

contributors. This represents an average 1.4 million monthly volume of orders, up by 10%

compared to the first half of 2010.


B.2 Automation level

The total automation rate reached 70.1% in Q2 2011, compared to 69.7% in Q2 2010.



B.3 Standardisation levels

Adoption of ISO has increased by 3.5 percentage points in volume terms between Q2 2010

and Q2 2011, reaching 51.4% during Q2 2011 compared to 47.9% in Q2 2010. While the

adoption of proprietary formats has decreased by 3.1 percentage points, with 18.7% during

Q2 2011 compared to 21.8% during Q2 2010. The share of manual orders fell from 30.3% in

Q2 2010 to 29.9% in Q2 2011.


B.4 Regional data*6

B.4.1 Split of volumes by region

APAC-based order givers generated 29.3% of incoming order volumes in Luxembourg

during H1 2011; this represents a decrease of 1.4 percentage points compared to H1 2010.

The percentage of orders from EMEA-based order givers increased by 1.9 percentage points

to 65.9%. The percentage of orders from Americas-based order givers remained stable at 5%.


about 67% of the survey volumes for H1 2011. This explains data variations compared to the full survey sample statistics.


Figure 7 - Order volumes per region

B.4.2 Split of automation and standardisation rates by region

ISO standardisation rates continue to be much higher with EMEA-based order givers; the rate

stands at 61.1% for Q2 2011, compared to 55.8% for Q2 2010.

In APAC, ISO adoption has increased by 2.6 percentage points to reach 16.2% during Q2

2011 (compared to 13.6% during Q2 2010).

The proprietary ftp rate in APAC dropped by 5.3 percentage points, from 33.5% during Q2

2010 to 28.2% during Q2 2011, in favour of ISO automation.

The total automation rate (ISO + proprietary) in APAC has decreased by 2.6 percentage

points to reach 44.4% for Q2 2011 (compared to 47% in Q2 2010).

Figure 8 - standardisation rates per region – Q2 2011


C. Focus on Ireland

C.1 Order volume evolution

By end of June 2011, 4.5 million orders had been processed by the 11 Irish survey

contributors. This represents an average 0.75 million monthly volume of orders, up by 30%

compared to the first half of 2010.


C.2 Automation level

The total automation rate reached 84.2% during Q2 2011, compared to 85.3% in Q2 2010.



C.3 Standardisation levels

The ISO adoption rate reached 11.5% during Q2 2011, compared to 8.5% during Q2 2010,

whereas the adoption of proprietary formats decreased from 76.8% to 72.6% during the same

period. The share of manual orders increased from 14.7% in Q2 2010 to 15.8% in the first

half of 2011.


C.4. Regional split of automation and standardisation rates*7

Regional breakdown information is available from a subset of the Irish survey contributors (6

out of 11) representing 75% of the volumes. The regional percentages are calculated on this

subset.

ISO standardisation rates continue to increase with EMEA-based order givers; the rate stood

at 5.4% in Q2 2011, compared to 3.2% in Q2 2010.

On the other hand, the ISO standardisation rate in APAC grew to 12.1% in Q2 2011

compared to 8.5% in Q2 2010 while the total automation increased to 48.3% in Q2 2011

compared to 39.6% in 2010


about 75% of the survey volumes for H1 2011.


Figure 12 – Ireland standardisation rates per region


D. Next report

The next joint EFAMA-SWIFT Fund Processing Standardisation report is planned for

publication in April-May 2012 and will cover the January 2009 – December 2011 progress in

standardisation rates across the two main cross-border investment fund centres, Luxembourg

and Ireland.

_________________________

fund processing standardisation · automation rates of fund orders received by transfer agents...

Documents