isj047 and european custody

European Custody - 2011 Guide

Mark Mobius - ISJ Profile

Corporate Actions - XBRL, Swift and DTCCBarclays Exits - African custody

May/Jun 2010Volume 7 No. 47

Annual membershipGBP 249 - UK, ROWUSD 379 - AmericaEUR 286 - EMEAwww.ISJ.tv

THE GLOBAL CUSTODY AND ASSET SERVICING INDUSTRY MAGAZINE

Under the microscope,UCITS - the workings

www.ISJ.tv

ISJ InvestorServices Journal

Front Cover Section ISJ47.indd 1 03/06/2010 20:37

ING Commercial Banking is a marketing name of ING Bank N.V., registered by the Netherlands Authority for the Financial Markets (AFM). Copyright ING Commercial Banking (2010).

Our network is available for you in Central and Eastern Europe for your securities services business. We bring you in-depth local experience and award winning international expertise. ING is your partner in Bulgaria, Czech Republic, Hungary, Poland, Romania, Russia, Slovak Republic and Ukraine. For more information call Lilla Juranyi, Global Head of Custody, on +31 20 7979435 or e-mail: [email protected].

www.ingcommercialbanking.com

Bottom line: Your securities services expert 2in Central and Eastern Europe @

ISJ47 complete text.indd 15 27/05/2010 12:11Front Cover Section ISJ47.indd 2 03/06/2010 20:38

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contents Heads Up

EditorBrian [email protected]

Advisory Board ChairmanClive Gandeclive.gandeISJ.tv

Senior correspondentCraig [email protected]

US correspondentJohn [email protected]

Special correspondentsCherry ReynardAnthony Harrington

Head of salesPatricia De La [email protected] Account managersCicely Lewis [email protected]

Eradat [email protected]

CTOPeter [email protected]

Operations managerNicolette Whittaker [email protected]

Editor-in-ChiefRoy [email protected]

Managing directorJon Hewson [email protected]

Publisher Mark Latham [email protected]

2i UK One Angel Wharf,59 Eagle Wharf Road London, N1 7ER, UKT: +44 (0) 20 7183 7470 F: +44 (0) 20 7250 0350 2i US 410 Park Avenue, 15th Floor, New York, NY 10022T: +1 212 231 8421 F: +1 212 231 8121

© 2010 2i Media. All rights reserved. No part of this publication may be reproduced, in whole or in part, without prior written permission from the publisher. ISSN 1744-151X

CONTENTS4 swings and roundabouts New People, New Positions

HSBC SS Joint Heads The HSBC Six Colle BP2S appointment Vanderweyen leaves RBC Wallace Takes Charge Mustoe Goes Perpetual Andy Hughes Joins Omgeo

8 news review African CustodyBarclays and Standard Chartered

12 US focus Outsourcing by John Sandman

14 US focus Technology, Same day affirmation, ISITC Boston

16 US focus Corporate Actions by John Sandman

18 Under the Microscope UCITS VI

26 The ISJ Profile Mark Mobius Templeton Investments

30 Regulation OTC Derivatives, Market Risk in EU

32 Technology Releases Thomson Reuters Elektron / BNY Melllon Dashboard



European Custody - 2011 Guide

Mark Mobius - ISJ Profile

Corporate Actions - XBRL, Swift and DTCCBarclays Exits - African custody

May/Jun 2010Volume 7 No. 47

Annual membershipGBP 249 - UK, ROWUSD 379 - AmericaEUR 286 - EMEAwww.ISJ.tv


Under the microscope,UCITS - the workings

www.ISJ.tv


Front Cover Section ISJ47.indd 1 03/06/2010 20:37

Welcome to a new look ISJ and welcome to new people on our own team as Brian Bollen is appointed Editor of the journal, working with Roy Zimmerhansl our E-in-C, and Clive Gande chairs our new advisory board. Both need little introduction as readers of the FT will know Brian’s incisive style, and Clive’s knowledge of custody issues and people is familiar to many who came across him at BNY Mellon. ISJ launches its first European Custody Summit in July which is complemented by another inaugration; that of our double-sided - or two-faced? - issue. If you flip this ISJ over you will find our review of key markets in European Custody. Enjoy the writing, John Sandman our US correspondent guides us through corporate actions and SDA, we profile the legendary Mark Mobius and Euroclear’s John Trundle formerly a central banker looks at how we should regulate from here to regain capital market confidence.

Mark Latham, publisher

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contents Continued

Custody services with a broader horizonAre you looking for a single point of entry to the Nordic and Baltic region? Or do you have your eyes set on a specifi c 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: [email protected], Ms. Nina Groth, tel +45 3333 6124, email: [email protected] or Mr. Teemu Pihlatie, tel +358 9 165 51008, email: [email protected].

Making it possiblenordea.com

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EurOpEaNCustody

European Custody Landscape

Germany 2Southern Europe 4Central & Eastern Europe 8Nordic region 16

Spotlight on: Cyprus for private equity and hedge funds 12

Christoph Wetzel, managing director of CACEIS Bank Deutschland

Dieter Bernhard, head of Domestic Custody Services for Deutsche Bank in Germany

Angelos Gregoriades, Head of Tax and Corporate Services of KPMG Cyprus

Ulf Noren, Global Head of Sub-Custody at SEB

European Custody is the flip side of this issue of ISJ

33 Analyse This Automation

34 Fund Focus on Cyprus - sponsored section

36 The ISJ Profile Gary Probert

38 Restoring Confidence to our Capital Markets by John Trundle, Chief Risk Officer at Euroclear

40 gains and losses Mandate NewsJohn Lewis JP Morgan JP Morgan Hewitt MandateKLP Northern Trust Mandate Citi Japan Mandate Quis Custodiet? RBC Singapore Mandate BBH Win Underlines Renewe UOBAM Turns To BNYM BNYM Seadrill BNYM and Fuh Hwa

44 out and about Pugilism and Paintings

48 Directory of services


Custody services with a broader horizonAre you looking for a single point of entry to the Nordic and Baltic region? Or do you have your eyes set on a specifi c 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.



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A global player in asset servicing...Offering leading value in investor services demands constant

evolution. At CACEIS, our strategy of sustained growth is helping

customers meet competitive challenges on a global scale. Find out

how our highly adapted investor services can keep you a leap ahead.

CACEIS, your comprehensive securities servicing partner.

... and climbing.

Custody-Depositary / TrusteeFund AdministrationCorporate TrustCACEIS benefits from an S&P AA- ratingwww.caceis.com

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swings and roundabouts New People, New Positions

Recent bulletins to emerge from BBHÕ s Boston redoubt related the appointment of Shawn R. McNinch, Senior Vice President, as Global ETF Product and Sales Head. Before joining BBH in late 2009, Mr. McNinch worked at Barclays Global Investors (BGI) where he was a Senior Principal within the iShares (ETFs) Product Strategy Group.

Mr. McNinch worked on numerous strategic initiatives for the iShares business including assisting with the launch of new ETFs, working on the development of an ETF distribution strategy, conducting a technology assessment to position business for ETF growth, and assessing numerous new business opportunities. Also in March, BBH confi rmed the expansion of its securites lending presence in Asia, assigning Robert Lees and Richard Meek to the Hong Kong offi ce, in the respective roles of Head of Securities Lending Trading and Head of Securities Lending Relationship Management for the Asia Pacifi c region. Mr. Lees reports to Jeff OÕ Neill, Global Head of Securities Lending Trading, and Mr. Meek to Elizabeth Seidel, Global Head of Securities Lending Relationship Management, Business Development Strategy and Marketing. Both work closely with Andrew Tucker, Partner, who is responsible for the Asia Pacifi c region and BBH’s Markets business, which includes Global Securities Lending.

Six Of One, Half A Dozen Of The Other HSBC Securities Services (HSS) has announced the following

managementappointments to its New York team. Scott Karp has been

hired as the Head of Fund Accounting and Financial Reporting in the US.Thomas Higgins joined the business in April 2010 as Head of the Regional Pricing Team Ð Americas, reporting to Karp. Roman Osidach recently joined the Fund Services team as a Senior Fund Administration Manager reporting to Karp. Gregory Cahaly was hired as US Head of Operational Risk at the start of the year, reporting to Marianne Motley, Fund Services Chief Administration Offi cer.Gerald Donaghy was recently hired as a Global Tax Manager, reporting to John Crager, Global Head of Tax Fund Services - Alternatives. Robert Crowley has joined the Fund Services team as Head of US Tax Reporting for the fund services business, responsible for the US tax reporting of global clients. Karp is responsible for the accurate and timely delivery of all fund accounting and fi nancial reporting services delivered to alternative fund clients serviced from the US. He joined at the end of 2009 and reports to Tanya Nystrom, US Country Head. Karp has spent approximately 19 years in the fi nancial services industry and was previously Director of Financial Accounting and Reporting for a multinational private investment fund group. Prior to that he was a senior manager at PricewaterhouseCoopers. Higgins has been in the fi nancial services industry for 14 years having spent the majority of his career

atCitigroupÕ s markets and banking group. His most recent roles included the market risk management responsibility of the Municipal and Rates business (swaps, OTC and exchange-traded options, structured note creation, mortgage pass-through trading, government and agency trading). Osidach is responsible for the accurate and timely delivery of all fund accounting services delivered to alternative fund clients. With 18 years of fi nancial services experience, his most recent role was as an Executive Director, Portfolio Services Manager for Morgan Stanley supporting the alternative investment team in their fund of hedge funds and private equity/real estate fund of funds business. Cahaly is responsible for ensuring that an effective framework is in place to further manage and mitigate operational risk. His appointment additionally enhances the current team. With over 14 years in the fi nancial services industry, he was most recently with Citi-Global Wealth Management Investments as a Director of Risk and Compliance with the Portfolio Management Group. With over six yearsÕ tax experience, with his primary focus on the asset management sector, Donaghy will be providing tax reporting services to HSSÕ global fund clients. Prior to joining HSS, Donaghy was a tax manager in Ernst & YoungÕ s Financial Services Offi ce where he concentrated on hedge fund, fund of fund and international clients. Crowley, who reports to Crager, has over 14 yearsÕ experience with the Big Four public accounting fi rms. Scott Epstein, Head of Fund Services and Global Custody Ð Americas for HSBC said: Ò These are

great appointments for our business. The recent hires are in line with our strategy to build on our current success and grow our business, allowing HSS to more effectively support our clients as they navigate the current environment by adding to our capabilities and strengthsÓ .

Congratulations Patrick Colle

BNP Paribas Securities Services (BP2S) has lined up Patrick Colle as CEO to succeed Luxembourg-born Jacques-Philippe Marson. Patrick joined BP2S in 2006 and has been Head of its UK business since March 2008. Jacques-Philippe Marson was quietly but summarily removed from his post several months ago in a manner which has never been satisfactorily explained, but which some say relate to taking part in non-BP2S commercial activities. Patrick Colle has over 24 years of experience in the industry, of which four within BNP Paribas Securities Services. As head of the UK business, he has led BNP Paribas Securities ServicesÕ successful development in this key fi nancial centre. Prior to this, Patrick Colle was at JPMorgan Chase which he joined in 1986 and where he held several positions in cash management, securities clearing and custody in Paris and New York before becoming Global Head of ADRs in London in 2001.

Laurent Vanderweyen is leaving RBC Dexia Investor Services SA in Luxembourg, where he was Managing Director and Chairman of


A global player in asset servicing...Offering leading value in investor services demands constant

evolution. At CACEIS, our strategy of sustained growth is helping

customers meet competitive challenges on a global scale. Find out

how our highly adapted investor services can keep you a leap ahead.

CACEIS, your comprehensive securities servicing partner.

... and climbing.

Custody-Depositary / TrusteeFund AdministrationCorporate TrustCACEIS benefits from an S&P AA- ratingwww.caceis.com

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the Executive Committee. He will join J.P. Morgan Bank Luxembourg as General Manager in July. In that role he will have executive responsibility for the Luxembourg office, will serve as a Board member of J.P. Morgan Bank Luxembourg, and will lead J.P. MorganÕ s Worldwide Securities Services business in Luxembourg.

Wallace Takes Charge: Standard Chartered names Sean Wallace as Group Head of Origination and Client Coverage (OCC)Standard Chartered, incoming £20m a year shirt sponsor of up-for-sale Liverpool Football Club, has appointed Sean Wallace as Group Head of Origination and Client Coverage (OCC) with immediate effect (April 19 2010). Reporting to Mike Rees, CEO of Wholesale Banking, Sean will lead the BankÕ s Origination and Client Coverage Group, which shapes the client-centric strategy of deepening client relationships across its key markets. He will continue to be based in Singapore. Sean succeeds V Shankar, who has been appointed the BankÕ s CEO, Middle East, Africa, the Americas and Europe. Commenting on the appointment, Mike Rees, CEO of Wholesale Banking, Standard Chartered Bank, said: Ò We are pleased to be able to draw from such a strong internal pool of talent. Sean has been instrumental in accelerating the growth of our highly successful Corporate Finance business. SeanÕ s focus and commitment to Standard CharteredÕ s clients make him an ideal choice for this key role. His international background and industry experience will further enhance our strategic

engagement with clients.Ó As Group Head of Corporate Finance, Sean led the business in delivering record performances. For the full year 2009, Corporate Finance delivered 74% year-on-year growth, underpinned by the rollout of new products and geographic expansion. Before joining Standard Chartered Bank, Sean Wallace was Managing Director at JP Morgan where he spent almost 10 years. At JP Morgan, he was the Head of Capital Markets, Asia Pacific and before that was the Co-Head of Investment Banking, Asia Pacific ex-Japan. Before transferring to Asia, Sean was head of JP MorganÕ s North American Telecom Group. Sean graduated from Harvard College with an A.B. in History and Economics (more usually described as Bachelor of Arts) and holds an MBA from Harvard Business School.

Mustoe Goes PerpetualInvesco Perpetual has named Nick Mustoe as its new Chief Investment Officer (CIO). Nick will take up his new role on 7 June 2010 and will work closely with Invesco PerpetualÕ s current CIO Bob Yerbury to ensure a smooth transition of responsibilities. Nick has over 25 years experience as an investment professional starting with Phillips and Drew Fund Management as a UK Equity manager and more recently as CIO of Pictet Asset Management, where he was responsible for the equity investment teams, and CIO of Hermes Pensions Management, where he was responsible for all asset classes including equities, fixed income, property and alternatives. Bob Yerbury will continue

to work with CEO James Robertson in his role as a Senior Managing Director of Invesco and as part of the Invesco Perpetual management team.

Andy Hughes: From Microsoft To OmgeoOmgeo announced the addition of Andy Hughes to the position of executive director, partners. This strategic hire marks OmgeoÕ s commitment to facilitating end-to-end trade processing by partnering with leading independent software vendors (ISVs) and technology providers around the world. Hughes joins Omgeo from Microsoft Corporation, where he held a variety of positions. Most notably, he was responsible for the creation and execution of a global partner strategy across financial services. This covered the selection and recruitment of ISVs and systems integration partners to create high margin, solution based revenue streams built on MicrosoftÕ s core technology platform. He also worked extensively on developing partner based solutions focused on the buy-side of capital markets, especially in the areas of order management, portfolio management and accounting systems, and trade compliance. Prior to Microsoft, Hughes worked at Bloomberg in sales and sales management, as well as Dow Jones Telerate in sales and sales support. He holds an Honours Degree in Business Studies and a Chartered Institute of Marketing Diploma. Hughes is based in Boston and reports to Tim Keady, managing director, global sales and relationship management at Omgeo.

Karim Ben Rais joined Euroclear as Managing Director and Head of its SinglePlatform Modules division in early May. Prior to joining Euroclear, Karim Ben Rais worked internationally as an independent consultant. Until the end of 2007, he was Managing Partner of Accenture Insurance Services, where he was responsible for all technical and operational services for the Accenture unit and more than 2,000 staff located in on- and off-shore locations. At the start of his career in 1987, Ben Rais joined Accenture (previously Andersen Consulting) where he spent more than twenty years working on cost reduction, operational performance improvement, supply chain and IT transformation programmes, as well as off-shore arrangements.

swings and roundabouts New People, New Positions

Koger, Inc. releases latest version of NTAS in time for Fund Forum in Monaco. Koger, Inc., a provider of software and services for the fund administration industry, has launched the next version of NTAS, its transfer agency solution. NTAS 10.1 introduces a number of enhancements and new features that expand the tools available to the administrator making the fund administration process more robust, faster and more automated. Ô We are very pleased with the enhancements and new features in NTAS 10.1. Our customisable workflow screens make NTAS even more user-friendlyÕ , says Ras Sipko, COO.


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news review African Custody

BNP Paribas Securities Services is incorporated in France with Limited Liability and authorised by the French Regulators (CECEI and AMF). BNP Paribas Trust Corporation UK Limited and Investment Fund Services Limited are authorised and regulated by the Financial Services Authority. BNP Paribas Securities Services London Branch is authorised by theCECEI and supervised by the AMF and subject to limited regulation by the Financial Services Authority. Details on the extent of our regulation by the Financial Services Authorityare available from us on request. BNP Paribas Securities Services is also a member of the London Stock Exchange.

securities.bnpparibas.com

BNP Paribas Securities ServicesTHE CLOSER WE ARE, THE BETTER YOU PERFORM

With our precise understanding of each market’s internal workings, you maximise your market and investment opportunities.

At BNP Paribas Securities Services, the closer, the better.

ISJ 267x203_28May:BP2S Ad 28/05/2009 11:53 Page 1

Does Standard CharteredÍ s agreement to acquire the African custody business of Barclays Bank mark the end of an era, one that still resonates with echoes of colonialism? Those will likely be the fi rst thoughts of anyone of an age advanced enough to remember the days when the names of those two institutions were synonymous with banking in exotic markets. In fact, older observers say they recall the words colonies and dominions were still being rather freely bandied around in the early 1980s. But maybe itÍ s the effects of growing senescence as they inch towards their twilight years, and their thoughts turn away from White Mischief and towards stairlifts, bath chairs and ear trumpets. Or is Barclays just doing what most banks eventually do? Flog off a business that has become a bit of an orphan,

even an embarrassment, to concentrate on gouging real money out of the developed markets? Hard-working staff in the credit card divisionÍ s fraud investigation service, after all, having contributed to the Barclays GroupÍ s reported £11.6bn profi t in 2009 by reducing fraud by around 28% in a single year, found themselves rewarded with the transfer of a number of core jobs to India. Barclays stated, incidentally, with a

straight face, in notices to its staff breaking the news, that this formed part of its plans to create a global centre of fraud excellence. Why soldier on with a business that is probably time-consuming and labour-intensive, and needs signifi cant investment to deliver even a meagre return, when much easier pickings are to be had elsewhere?

Pop-Eyed OptimismThe press release announcing the transfer of the custody business touches upon none of this speculative context, of course. Rather, as is par for the course, it views the deal with the kind of pop-eyed optimism that Hugh LaurieÍ s character exhibited in Blackadder Goes Fourth, defending the eponymous hero against charges of being The Flanders Pigeon Murderer. Standard Chartered states that the transaction will provide it with custody capabilities in its markets across Africa (which qualifi es handsomely as a statement of the blatantly obvious). It adds that the acquisition is subject to certain regulatory and other approvals, though even after much head-scratching it is diffi cult to see (a) who could possibly object and (b) who else would possibly want to buy it. Standard Chartered says it expects the deal to be completed in 2010. The African custody business forms a key part of Standard CharteredÍ s build-out of international custodian services, alongside existing capability in Asia and the Middle East. The acquisition adds direct custody capabilities in eight African markets (Botswana, Ghana, Kenya, Mauritius, Tanzania, Uganda, Zambia and Zimbabwe) and indirect capabilities in a further eight markets (Egypt, Cote dÍ Ivoire,

Malawi, Morocco, Namibia, Nigeria, Tunisia and South Africa) provided through a network of third party sub-custodians via an operations hub in Mauritius. The new business will strengthen Standard CharteredÍ s regional product offering for both international and regional businesses, strengthening client relationships, whilst providing an additional source of liquidity to the Group.Rapid Development PlansCommenting on the deal Karen Fawcett, Group Head of Transaction Banking at Standard Chartered, said: ñ We are very pleased to have secured the acquisition of BarclaysÍ African Custody business. This deal will enable Standard Chartered to rapidly develop our custody capabilities in our core markets across Africa. We are already seeing ongoing demand for regional and international investment services across this region. Standard Chartered remains committed to providing clients with an integrated set of solutions that promote ongoing growth of this industry. With this acquisition, we will enhance our custody offering and continue to gain a strong foothold as Core Bank to our clients in Africa.î

Barclays Bank PLCÍ s African custody business has been consistently recognised as the Best Custodian Bank in Africa. The worldÍ s most jaded cynics might argue that this is like being voted the best looking member of Wayne RooneyÍ s family, but awards are awards, and facts are facts. Barclays says that the African custody business had gross assets of £1.9 million and assets under

custody of £3,862 million as at 31 December 2009. The sale is expected to be completed in 2010, subject to regulatory approvals and other customary conditions. Barclays exited the global custody business outside Africa in 1998. It says the remaining custody business in Africa is profi table but would benefi t from the synergies a global operation could provide. The sale realises value for its shareholders while not impacting BarclaysÍ long-established banking business in Africa, it explains. Vinit Chandra, Chief Executive, Barclays Africa said: ñ We will work closely with Standard Chartered to ensure the transition does not impact our clients and employees and remain fully committed to growing our banking operations in Africa.î Standard Chartered says that the acquisition is another demonstration of the signifi cant investment it has been making in its African franchise over the last few years, following its recent purchase of First Africa (a leading African mergers and acquisitions advisory business) in 2009, and the opening of its new representative offi ce in Angola, its fourteenth African market in early 2010. We wish them nothing but the very best in their renewed endeavours, likewise to Barclays as it looks ahead rather than back, and we look forward to having any jaundiced interpretations of the deal being duly rebutted. ISJ

“We will work closely with Standard Chartered to ensure the transition does not impact our clients and employees and remain fully committed to growing our banking operations in Africa.”

The African custody business forms a key part of Standard Chartered’s build-out of international custodian services, alongside existing capability in Asia and the Middle East.

Barclays Exits African Custody: End Of An Era?


BNP Paribas Securities Services is incorporated in France with Limited Liability and authorised by the French Regulators (CECEI and AMF). BNP Paribas Trust Corporation UK Limited and Investment Fund Services Limited are authorised and regulated by the Financial Services Authority. BNP Paribas Securities Services London Branch is authorised by theCECEI and supervised by the AMF and subject to limited regulation by the Financial Services Authority. Details on the extent of our regulation by the Financial Services Authorityare available from us on request. BNP Paribas Securities Services is also a member of the London Stock Exchange.

securities.bnpparibas.com

BNP Paribas Securities ServicesTHE CLOSER WE ARE, THE BETTER YOU PERFORM

With our precise understanding of each market’s internal workings, you maximise your market and investment opportunities.

At BNP Paribas Securities Services, the closer, the better.

ISJ 267x203_28May:BP2S Ad 28/05/2009 11:53 Page 1


10

In Conversation With... Giles Elliott, Global Product Head, Securities Services, Standard Chartered Bank

ISJ: How much did Standard Chartered pay for the business? Giles Elliott: I am afraid this information is confidential and has not been disclosed. We felt that the business was great value to us not only in terms of filling an important gap in our network coverage, but most importantly in terms of the staff that we will bring into Standard Chartered and the depth of client base across Africa and internationally. We see this business growing strongly and becoming an important growth sector across our banking services in Africa.ISJ: What is the amount of assets under custody?Giles Elliott: The acquisition will include $6.2 billion of client assets across 16 markets. We will look to take on all 66 staff employed by Barclays. ISJ: Is it just custody or are there other services involved?Giles Elliott: It is primarily custody, and includes sub-custody to foreign brokers and global custodians, local custody to domestic funds and insurance companies and regional custody to foreign investment funds and other local funds investing across Africa. ISJ: What on earth is the attraction?Giles Elliott: There are three core reasons for this acquisition:

i. It fills an important strategic gap for us. The Bank’s focus is to be the leading banking in Asia, Africa and the Middle East for targeted client segments. This covers investors locally, investors from these regions and investors investing into these regions. We are building our business footprint in the Middle East organically, but had a gap in Africa and this presented a special opportunity to accelerate our entry with a leading client base; ii. Our focus is to leverage the depth of our banking services in Africa to provide a unique set of investor solutions. The expansion of our financial markets business in Africa in the last 2 years has already seen growing opportunities and demands from the investor client segment, and coupled with the depth of our cash and FX capabilities we are able to bring to the table a comprehensive set of investor solutions. iii. Africa is evolving rapidly and we have seen extensive investment in markets infrastructure, pension fund reform and growth of the capital market sector. There is a gradual shift away from the debt markets to equity as a mechanism for financing growth and the stronger capital markets infrastructure is driving more confidence in this area. This has translated into higher growth rates than

we have seen in Asia or the Middle East over the past three to four years.

ISJ: Surely Africa is so poor that even a large business there is small beer by standards elsewhere?Giles Elliott: In relative terms you are correct, however, the complexity of the environment makes the margin opportunities attractive. Africa is a significant contributor to Standard CharteredÍ s performance with 7% of our revenues and 9% of our profits coming from Africa. Africa is a $1.1 billion business for Standard Chartered and growing at a rate of over 20%. We feel that this is an important client segment in Africa and therefore key to our growth agenda on this continent. Standard Chartered is present in 14 countries in Africa, with over 600 staff and 170 branches. We recently opened an office in Angola as we continue to deepen our commitment to growing this business in Africa. ISJ: By how many years does this accelerate SCÍ s growth plans in Africa?Giles Elliott: Within the Securities Services business, we had looked at different entry options for Africa and recognised that the business between players is largely stable. An organic entry option would have taken many years to execute growth to a material size and we saw merits in a faster time to market, especially with the depth of interest that we are seeing from investors seeking greater African exposure. ISJ: Who initiated the deal? Standard Chartered or Barclays?Giles Elliott: Standard Chartered and Barclays had discussed this business in early 2009 and Barclays initiated the sale process later in the year. We saw this as a perfect fit against our strategy and business focus, and Barclays is a bank with strong cultural alignment to our own that would make clients and staff transition more easily. ISJ: Were there any independent advisers involved?Giles Elliott: None that played a notable role. We have a strong Group Corporate Development function in-house. ISJ: Are you still on the lookout for further acquisition opportunities?Giles Elliott: We are very much open to more acquisitions if they align strongly with our strategic agenda and priority focus areas. Our strategy is very clear and our core growth will be organically driven, but we are absolutely focussed on leveraging opportunities that give us acceleration along the strategic path that we have set. ISJ: How long will the integration take?Giles Elliott: Integration will be finished before the end of the year, and will involve clients transitioning onto our core IT platforms and staff joining Standard Chartered. ISJ: What areas will need most attention?Giles Elliott: We do not feel that there are any notable areas that need urgent attention. This is a very well run business, with strong staff and excellent client service disciplines. We will be migrating the clients onto our core platforms so clients will see the same benefits from this and with our Straight 2 Bank web instruction and reporting capability. Naturally client integration will take a lot of focus during the year, but we have seen excellent feedback to the deal and clients recognise the commitment that Standard Chartered has for this business and future benefits that we can bring to the table. ISJ

news review African Custody

Giles Elliott, Global Product

Head, Securities Services, Standard

Chartered

Euroclear is making cross-border settlement an obsolete term. We will help clients

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Platform, spanning a wide range of securities and markets. Together with harmonised

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© 2010 Euroclear SA/NV, 1 Boulevard du Roi Albert II, 1210 Brussels, Belgium, RPM Brussels number 0423 747 369

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Investor Service Journal 27/04/10 14:14 Page 1


Euroclear is making cross-border settlement an obsolete term. We will help clients

reduce their back-office costs, risks and complexities with our multi-currency Single

Platform, spanning a wide range of securities and markets. Together with harmonised

market rules and practices, all markets covered by Euroclear will operate as one.

Eliminate cross border from your settlement vocabulary.

© 2010 Euroclear SA/NV, 1 Boulevard du Roi Albert II, 1210 Brussels, Belgium, RPM Brussels number 0423 747 369

A new word forcross border

Investor Service Journal 27/04/10 14:14 Page 1


12

Outsourcing for Investment Managers, Pack Your Bags, Visit Your Vendor by John Sandman

Outsourcing has at once become a fixture in the financial services industry yet one that continues to mature and evolve at the same time. Investment operations have increasingly become an opportunity both for some providers and firms, as investment managers seek solutions that aren’t available in-house. Some of the most significant stumbling blocks are en-countered at the start of the project, something that can needlessly extend the timeline. Investment managers who contract with outsourcing firms should make sure they are vendor-ready before work begins. Defining Touch Points“Defining the touch points between the two organisations, the testing strategy and having an equal involvement from the stakeholders is key,î said Steve Reydel, Boston-based head of State Street Bank’s global programme office, at the International Securities Association for Institutional Trade Communications forum and vendor show in Boston on March 22. ñ Stick to the agreed model. Once we get started

and the client comes to us with changes to things that we believed were resolved, a lot of risk is created.î If the client onboarding process takes longer than expected, critical staff could move elsewhere by the time the project gets underway, leading to the unplanned ad-dition of temporary resources and possibly more delay. ñ The

client has to be ready,î said Patrick Schena, principal of Headstrong, a Boston-based outsourcing firm. “Think about the expectations and time horizon. If the time frame is the next 12 months, youÍ re probably trying mainly to get cost re-lief. We encourage a three- to five-year horizon. Don’t think about it in immediate terms. None of us wants to go through a second conversion in the time that was allotted for one.îReplication = Trouble Even if investment managers outsource for all the right rea-sons, they run into trouble if they try to replicate their current environment, which is what caused the problems that led them to seek an outsourcing solution to begin with. Losing sight of the fundamental reason for outsourcing can move a solution further into the distance. “One of the first questions I ask a prospective client is what the internal service level agreements are between the front and back office,” said Reydel. ñ Knowing you can hand the project over to some-one else and say ‘here is exactly what we expect a firm to reproduceÍ is key.î As outsourcing has expanded, firms that seek outsourced solutions are no longer limited only to large institutions. Service providers have to understand the differences be-tween large and medium-sized firms, especially when acting as a solution provider for both. ñ As you get smaller, the level of complexity has to come down,î said Reydel. ñ The market

is still trying to figure out how to play in each size. We’ve come a long way in a couple of years and thereÍ s been success across the board, confidence that this is happen-ing. WeÍ re in a large market thatÍ s more complex, so we create different versions of that product.î

Watch Out For Duct Tape Regardless of the size, outsourcers are likely to confront similar continuity problems. “You will find gaps in workflow and process,î said Schena. ñ There are still lots of duct tape and manual workarounds for workflows that didn’t work out.” Component outsourcing has emerged as an alternative to full service or a one-size-fits-all approach that is especially problematic with clients of differing size. Some firms only do component outsourcing. For example, portfolio record keeping for an investment manager’s back office is a key function. Some firms will only out source components on the back end of that and not always to same service providers. State StreetÍ s Reydel mentioned transaction management and reconciliation as opportunities for component outsourc-ing but added, ñ As you get further into the accounting aspect and start to customise services, you have to normalise lots of data into that environment. Even on Requests for Proposals (RFPs) for component outsourcing, firms issuing those RFPs ultimately want a full range of services. You end up bidding on custody, fund accounting, transfer agent services on an a la carte basis,î he said.

Standardisation Still An Issue The attempt to standardise messaging across the trade life-cycle, which has been going on for more than a decade and touches on trade execution at the front end to clearance and settlement at the back, continues to be an outsourcing issue, especially when proprietary formats are used. ñ If a message comes in thatÍ s not FIX, Swift or FpML, weÍ ll have to deal with it,î said Reydel. He added that if the inbound message is proprietary, the outbound message will require a workaround. ñ It depends on the clientÍ s environ-ment,” he said. “We have clients in the middle office space

US focus Outsourcing

From Maybe To Must Have“Outsourcing is crucial to the success of hedge funds and other alternative investment companies because of the increasingly important issue of independence in the wake of the recent financial crisis, the Madoff scandal and the current political climate. If they don’t outsource the administrative function, which includes independent valuations, then investors may not look at allocating to such funds,”says Andrew Rubio, chief executive officer of Throgmorton, a specialist provider of outsourcing services to the industry. “They need to rebuild trust and it makes sense to outsource as part of their efforts in that direction. The question of outsourcing has gone from ‘maybe’ to ‘must’. Fund administration work that has been done internally must now ideally be done externally, as the use of external administrators ticks a very big box for asset allocators.”

“Defining the touch points between the two organisations, the testing strategy and having an equal involvement from the stakeholders is key,” said Reydel

Powerful corporate actions solutionsfor a complex world

As the most experienced vendor in the industry,

Fidelity ActionsXchange has delivered flexible, technology-driven

corporate actions solutions to the worldwide financial services

marketplace for more than 10 years.

Leveraging our unparalleled expertise, technology

and service, we offer solutions that source, enhance, compare and

validate corporate action announcements, giving our clients the

highest degree of control over their global event information.

Learn more at www.actionsxchange.com

For more information contact us at 877.777.5838

Work with a recognized leader and trusted partner to:

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FAX_Fullw_ISJ_081309.qxd 8/13/09 3:06 PM Page 1


Powerful corporate actions solutionsfor a complex world

As the most experienced vendor in the industry,

Fidelity ActionsXchange has delivered flexible, technology-driven

corporate actions solutions to the worldwide financial services

marketplace for more than 10 years.

Leveraging our unparalleled expertise, technology

and service, we offer solutions that source, enhance, compare and

validate corporate action announcements, giving our clients the

highest degree of control over their global event information.

Learn more at www.actionsxchange.com

For more information contact us at 877.777.5838

Work with a recognized leader and trusted partner to:

REDUCE COSTS | MITIGATE RISK | INCREASE CONTROL

ENHANCE TRANSPARENCY | GAIN EFFICIENCIES

FAX_Fullw_ISJ_081309.qxd 8/13/09 3:06 PM Page 1


14

US focus Technology, Same day affirmation, ISITC Boston

Although the tagline for the Same Day Affirmation panel at the International Securities Association for Institutional Trade Communication (ISITC) forum in Boston last March went from the World Wrestling Federation to a wistful Lennon and McCartney tune, the underlying issue remained: can Same Day Affirmation improve trade settlement in the securities industry and at what cost? WhatÍ s the downside of maintaining the status quo as opposed to a proactive attempt at risk reduction? And is same day matching„o r a variant of

it„t he answer? Same Day affirmation involves verifying the details of a trade between a broker dealer and the institutional side of the market on the day the trade took place, ensuring that both sides agree

on what is being traded before settlement. ñ About 11% of all the trades that settle are not affirmed prior to settlement date,î said Hal McIntyre, managing partner of the Summit Group, a New York-based consultancy. ñ So weÍ ve got a lot of questions about what that 11% consists of. One of the primary reasons for fails is securities lending shorts - people who have a securities lending transaction they can’t fulfill. That causes fails.î “Overall, the goal is less risk and more efficient processing,” said McIntyre. “But is same day affirmation really the answer to increasing efficiency and removing risk? Should we mandate this process or should a best practice be established with voluntary compliance? If a new approach surfaces, whether itÍ s mandated or not, should it be provided on a central basis or bilaterally? Should the process happen on trade date through same day affirmation, or is it sufficient to have it occur prior to settlement?î

Lurking In The Background Lurking in the background is the abandoned attempt to move to T+1, or next-day settlement. Is the industry ready to revisit a shortened settlement cycle? ñ T+1 has been discussed on and off ever since the late 1990s when the market last considered it,î said Lee Cutrone, New York-based manager of industry relations at Omgeo. ñ At that point, same day affirmation was identified as one of the

building blocks that needed to be in placeî before moving to a shortened settlement cycle. The catalyst this time around, Cutrone stated, was the credit crisis of 2008 and the need to find ways to mitigate risk. ñ We know that thereÍ s going to be a new regulatory landscape,î he said. ñ We want to re-introduce the concept that you need to look not only at the front office, but the middle and back office also. In the opinion of many, shortening the affirmation period will make that happen.” Cutrone said SDA rates in the US have already gone to around 36% from 21% five years ago, but added, “SDA will not happen without a mandate. You shouldnÍ t be focusing on same day but mandatory matching to settle. If you go to a match-to-settle environment, do you have to have regulations in place to affirm matching? Having 11% of your trades unaffirmed in a match-to-settle environment is too burdensome.î

Dirty Data?Most industry sources believe the necessary technology exists. Ironically, clean, normalised data, a part of almost any automated solution, was identified by panelists as a piece that is consistently missing. Jeff Zoeller, VP of T. Rowe Price expressed his support for SDA along with a concern about data quality. ñ You have to make sure your data is clean and available early enough in the day. If a trade is executed today, it gets entered and shows up the next morning to provide accurate trade information.î Zoeller also cited the need to support overseas clients in different time zones and that the loan recall process is a major cause of failure. ñ There are still broker/dealers running batch processing until after the close of the cycle,î Zoeller noted. ñ ThatÍ s going to get in the way of same day matching. Mandating SDA raises the stakes in terms of the burden on the industry.î Russell Stamey, VP of operations and technology at Northern Trust also had data concerns. ñ One of the big issues for custodians is that we are very dependent on timely and accurate data,î said Stamey. ñ Performance reporting, performance monitoring, securities lending, corporate actions, cash management„a ll these functions are dependent on getting good timely data from investment

One of the primary reasons for fails is securities lending shorts

SDA: Suddenly It Doesn’t Seem So Far Away by John Sandman

that have taken it upon themselves to be SWIFT-compliant. Moving to a common platform and a common standard reduces our costs as well as theirs.î There are likely some things that should never be out-sourced by investment managers. Near the top of the list, said Schena, is trading and compliance. ñ Probably any-thing thatÍ s client-facing shouldnÍ t be outsourced,î said he said. Reydel suggested that a firm’s core competency and anything propriety should not be outsourced, but everything else was on the table. ñ I think trading could be outsourced, but it depends on the strategy of the firm.” he said. “My experience is that weÍ ve found friction between trading desk

and portfolio management. If this is something that canÍ t be resolved in-house, outsourcing is something to consider.î

Practical Advice A practical course of action for investment managers? Pack your bags and visit your outsourcing service provider early and often. Make sure you have a monitoring team in place that has the support of management.

John Sandman, ISJ’s US Correspondent, has covered operations, compliance and technology in the securities and banking industries in New York for 15 years.


15

US focus Technology, Same day affirmation

“I just don’t think SDA will happen unless there’s a mandate,”

managers. Before entertaining solutions, he said, ñ We have to look at the true cost of handling manual transactions, of reclaims and DK trades.î DK, or ñ DonÍ t Know,î is a trade that has been uncompared and rejected. ñ For me, the second piece is we need a pre-match settlement environment for US trades,î said Stamey. ñ And as part of that, weÍ d be remiss if we didnÍ t look at T+0 or same day affirmation or match as a best practice. But all this should be put in the context of the broader, longer term issue of shortened settlement cycles.î Same Day Matching

wonÍ t be easy, another pass at T+0 notwithstanding. To do it right, Stamey said, ñ IÍ d like to see progress without a regulatory mandate to push it forward. But I think we also need some well-defined goals.”

Mandate NeededMcIntyre suggested that, left to its own devices, the industry probably wouldnÍ t willingly migrate to SDA and that a mandate of some kind was necessary. ñ Some people look back to when we went from T+5 to T+3 and the settlement rates did not improve,î said McIntyre. ñ So many say that the people who were screwing up at T+5 just continued to screw up in T+3. If we have an SDA best practice, will those people change of their own volition?î ñ I just donÍ t think SDA will happen unless thereÍ s a mandate,î said Cutrone. ñ Our industry hasnÍ t shown a willingness to make short term sacrifices for long term benefits. What they’re really going to respond to the threat of regulation. ThatÍ s the only thing that will get it going.î

Canada is the first national market to require same day affirmation, where it’s being phased in. ñ Their fail rates have gone from 3 percent to 1 � � SHUFHQ W� � VDLG� &XWURQ H� ñ But I donÍ t think anyone is arguing that

this is completely attributable to same day affirmation.” The problem with Canada is that there is no penalty behind the mandate, said Zoeller. ñ You have to make sure thereÍ s a matching requirement. Squeezing the definition of what constitutes a day will put further pressure on moving off T+3. If we stay in T+3, do we get any benefit from an earlier affirmation? Another way of looking at that is if we do same day affirmation, does it matter if we stick to T+3.” Forcing The US IssueOverseas regulation may force the US to act. OmgeoÍ s Cutrone noted that the EU, has been promoting a T+2 settlement cycle, parallel with the Target2 Securities settlement and has to harmonise settlement across the EU, with the German T+2 cycle being the driver. ñ They have to go to T+2,î Curtone said. ñ T+3 would mean Germany would have to roll back their settlement cycle.î Cutrone predicted that T+2 in the EU would force the US to adopt. The other tendency is to stand pat on the grounds that budgetary constraints remain significant. ñ The cheaper it is to fail trades,î said Stamey, ñ the less incentive there is to change.î Once the industry is forced to change, however, he saw a silver lining for firms with high touch processing. “Matching to settle is going to force SDA,î said Stamey. ñ Firms that start this from scratch wonÍ t have to take legacy systems out of production.î ISJ

“We have to look at the true cost of handling manual transactions”

McIntyre

Cutrone

Reydel

Stamey


16

US focus Corporate Actions

XBRL, Swift and DTCC Take Another Run at Automating Corporate Actions by John Sandman

Will the joint effort by XBRL US, Swift and the Depository Trust and Clearing Corp (DTCC) to automate succeed where previous efforts failed? The industry is, once again, seeking an answer. In the past decade, various attempts have been made to auto-mate these back office processes, only to be abandoned when new solutions were not equal to the task. While they fell short for a number of reasons, chief among them was the limitations of ISO 15022, the Swift messaging stand-ard which replaced ISO 7775 in 2002. As a source with knowledge of Swift put it, ñ 15022 was a good start. It began the automation process between the intermediaries, includ-

ing custodians, transfer agents, the fund administrators and their users. But 15022 never went the whole way." Now Swift and the DTCC have joined forces with XBRL US to capture electronically corporate actions data from the offerors or issuers at the point the an-

nouncement is made in a standardised format. XBRL, or the Extensible Business Reporting Language, is a standard based on the extensible mark-up language (XML), with data elements known as taxonomies that are similar to the data elements in ISO 20022, which is also XML-compatible. The two will inter-operate to form a corporate actions taxonomy to be used by the DTCC. About 200,000 corporate actions are announced each year in the U.S. by publicly traded com-panies, involving merger announcements, stock splits, bond redemptions, dividends and other corporate events.

Secret SauceWhether or not XBRL is the secret sauce that was missing in the past, the XML tag-based standard has come a long way since being introduced as an accounting standard in 1999 under the aegis of the American Institute of Certified Public Accountants. It has become a reporting tool used by regulators worldwide,

with the Securities and Exchange Commission mandating that public companies file their 10K reports in XBRL by 2011. ñ We are currently working through the taxonomy which we want to release for public review in July,î said Campbell Pryde,

chief standards officer at XBRL US. “We’ll get feedback from DTCC, Swift and the members of XBRL who will have 30 days to review it followed by a 90-day public review. The goal is for the corporate actions taxonomy to be used in any jurisdiction. ItÍ s predominantly US-based now but thereÍ s no reason it couldnÍ t be extended elsewhere. WeÍ ve also added functionality for the tax consequences of corporate actions.î Pryde added, ñ We have different entry points where the

user can, based on the kind of corporate action they have, omit fields that are irrelevant and use mapping software that can automatically convert XBRL into ISO 20022,î he said. ñ ThereÍ s also the possibility of creating templates in standard Word documents.î ñ ISO 20022 captures the data of a security that will have an impact on distribution of shares, the cash distribution a shareholder gets or a combination,î said Pryde. ñ ThatÍ s the information weÍ re trying to collect.î Included are stock splits, dividends, re-organisations, tender offers, mergers, bank-ruptcies„t hings that affect distributions to stockholders or that affects the value of their holdings.

Scrubbing DataCorporate actions processing in the United States still involves a routine of scrubbing data at the DTCC, where securities are held and settled. In describing the data, Max Mansur, global market manager, Swift, said ñ Today itÍ s all proprietary. You go to a DTCC terminal and transform the data into your own format.î “The firms that have the least amount of automation are the investment managers and are the most used to handling manually processed data,ñ said Mansur, adding, however, that the investment managers are not the sole laggards and that the poor consistency and quality of data received from their custodians had a significant impact in general and in the cost of automating corporate actions. The DTCC would not comment on the extent of proprietary formats now in use. Robert Epstein, vice president of DTCC Asset Services said, ñ The DTCC will publish corporate ac-tions announcements using the industry standard ISO 20022 business modeling beginning in April 2011.î Epstein added, “At the same time, support we support existing DTCC files until a cut-off date in 2015 or sooner.î

Unique IDAs part of the process, the DTCC is creating a unique ID for each corporate action announcement that will be understood between the parties in the transaction. An issuer, for exam-ple, will be able to capture electronically data during a re-organisation using a corresponding ID. The precise number of corporate actions the DTCC would support was not clear, although a DTCC spokesperson said there were nearly one hundred and that some will be more widely used than others. The corporate action taxonomy does not include the proxy statement, which typically contains a lot of alphanumeric text. ñ We have a separate taxonomy for proxy statements that weÍ ve been working on but itÍ s not included in the corpo-rate actions taxonomy,î said XBRLÍ s Campbell Pryde. ñ The way that has been prepared is based on looking at the proxy statements and whatÍ s typically reported and whatÍ s required by law to report. We have a structure built up for the proxy.î Even if paper is the bane of the back office, Swift’s Mansur stressed that ñ WeÍ re not trying to retire all paper-based data. The stakeholders, which include the transfer agents, the exchanges such as New York Stock Exchange, the central securities depositories, the broker dealers and fund manag-ers, have told us that they all want the same process, where electronic records will complement paper records. It will be similar to what happened for financial reporting. Electronic data will have a paper counterpartî which acts as a fail-safe against potential litigation. The narrative sections of a corporate action are where the bulk of alphanumeric data is located and, in general, is the most resistant to automation. Mansur stated that ñ for 95%

Our role is to extend data, regardless of the geographic domicile or format.

About 200,000 corporate actions are announced each year in the U.S. by publicly traded companies


17

Laura Pollard on ISJ.tv

US focus Corporate Actions

of the CA messages, narratives arenÍ t needed.î The vast majority of those are found in the MT 564 and the 568 mes-sage types. He described the 568s as being able to catch the narrative overflow from the 564s. Taxonomy Taxonomyñ The corporate actions taxonomy does not necessarily cap-ture all the details and make them completely automatable,î said XBRL’s Pryde. “Text fields that resist automation can be captured. YouÍ re never going to have a taxonomy with a list of tags for every single thing possible.î Whether corporate actions are automated or not, ñ Things slow down when you have to stop the process and read the corporate action to

determine, for example, what the tax implications of an event are,î said Mansur. ñ There will always be some aspect of a corporate action that cannot really be coded and will require a manual solution. ItÍ s the redundant scrubbing of data that XBRL can eliminate.î That doesnÍ t minimise the need for automation, however. ñ I hope eventually that the processing of corporate actions will start to resemble clearance and settlement,î said Mansur. ñ When you have cleaner, better data, it spells more efficiency and reduced cost. Ideally, the costs to reconcile data and implement risk prevention will be correspondingly lower. ISJ

In Conversation With

Investor Services Journal caught up with Laura Pollard, Executive Vice President of Cambridge, Massachusetts-based Fidelity Actions Xchange, who chatted with John Sandman about their products and their support for automating Corporate Actions ISJ: Where does Fidelity sit within the XBRL-Corporate Action vendor scheme of things and whatÍ s your approach to supporting automation?POLLARD: We support multiple formats, including XBRL and will be ready to support the migration to 20022 protocols. Our role is to extend data, regardless of the geographic domicile or format, to support broader risk mitigation solutions delivering greater levels of control, operational efficiencies and lower operational cost to our clients.

XBRL represents a critical industry initiative to address a long-standing need to standardise and harmonise information supporting a broad range of corporate disclosures, including those surrounding corporate action events. XBRL involves a standard process for electronic tagging of financial and related disclosure information and key data. Issuers can certainly support the electronic tagging of traditional paper-based announcements and disclosure documents in-house, but frequently utilise XBRL translation and tagging services provided by those firms who support their traditional financial communication services.

While we believe the effort to standardise corporate actions announcements utilising common standards at the issuer source is critical, it is largely limited to the electronic tagging of data and does not address the scope of complexities involved in the interpretation, validation and analysis.

ISJ: Are translations or conversions from XBRL instance documents to ISO 20022 something that is or will be in demand? Is there likely to be an ongoing market for this or is it going to be commoditised once automation of corporate actions around XBRL and ISO 20022 becomes more widely implemented? POLLARD: While industry efforts to standardise corporate action messaging should remain a critical imperative, these efforts represent only a partial solution to a comprehensive risk mitigation process. To further mitigate risk, firms need to access technology, tools and content expertise. This better positions the organisation to control, interpret, communicate and take action on specific corporate events across multiple businesses, related asset servicing and trading groups as well as other interested parties. We see little that would lead us to believe the nature of corporate action events being structured by issuing firms will decrease in the levels of complexity.

ISJ: The DTCC says it has identified close to 100 different types of corporate actions. Which ones does Fidelity support? Do you offer template-driven solutions?POLLARD: The world of corporate actions is not static and announcements are subject to increasing complexity not limited asset class, presentation requirements and myriad other factors beyond pure data management. We do support all types of corporate actions and template-, business rule and workflow driven solutions but again, we believe guidance, interpretation and understanding nuisances are essential in analysing the complete picture.

ISJ: XBRL US and Swift have provided functionality to automate the reporting of the tax consequences of a corporate action. Is this something your products support?POLLARD: Tax information is increasingly complex as issues of domicile, tax treaties, domestic and foreign withholding and eligibility and new cost basis rules, are constantly changing and involve highly specialised skills As experts in corporate actions, we are working with tax specialists as best in market solutions to create comprehensive, valued and effective tax support. ISJ


18

Under the Microscope UCITS VI

UCITS: Surprise, Surprise!It can come as something of a surprise to those outside the financial services industry that some investment houses only just become compliant with the European CommissionÍ s UCITS III directive. There has been so much talk in recent times of its successor, UCITS IV, and indeed early mutterings about the possibility of UCITS V as the appetite to regulate grows, that it can be easy for non-specialists to think the industry is further advanced than it actually is.

This is understandable. Investment managers and those who provide them with essential services and support, have long known that running fast in order to stand still relative to their respective peer groups

is a fact of everyday life. This is arguably truer today than ever before. Given the events that have affected the financial services industry since July 2007, it is a racing certainty that even as it finally becomes UCITS IV-compliant, a new set of

requirements will soon be unveiled. Some believe that the industry will inevitably find its goalposts being shifted once more. Others, such as insists Jean-Michel Loehr, Chief Industry & Government Relations at RBC Dexia, believe that the 20-year evolutionary process that has brought UCITS to the brink of its fourth incarnation will continue in a slow and stately fashion. ñ This slow pace is part of the reason for the long-term success of the project, allowing appropriate levels of consultation to determine market needs,î he says.

Centre of AttentionFor the moment, though, UCITS IV remains the centre

of attention, and it is difficult to overstate its impact on investment management. It is nothing less than the trigger for much technical and operational change around the world. Much has been written

about the European CommissionÍ s UCITS IV directive in recent months. Much more will be written before it comes into effect (member states are required to implement it by July 1 2011). Asset managers who havenÍ t already addressed the implications that the directive will have for them, and what they will need to do to prepare themselves fully, are already running out of time, warns 6HEDVWLHQ � ' DQ OR\ � � JOREDO� KHDG� RI� VDOHV�DW� 6RFL� W� �

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The innovations that SGSS has already introduced to enhance its capabilities and product ranges in certain locations, including Luxembourg, illustrate the extent to which UCITS IV is impacting upon the industry. The potential for change as a result of UCITS IV is vast. Asset managers could benefit greatly for at least four reasons.

One, the newly simplified procedure to launch a cross-border fund in the European Union could remove an entire layer of costs by reducing dependence on consultancy services. Two, in cases where asset managers opt to merge funds across borders, they will need fewer staff to manage those that remain. Three, they will need fewer service providers, capable of providing securities services globally as well as locally. Four, the new ability to leverage a single management company across Europe will enable asset managers to close down those domestic asset management companies that they have traditionally been required to incorporate to comply with local regulatory requirements.

In this environment, providers which understand how the industry will need to change to meet client needs will have a competitive edge. Those which haven’t, will find themselves reconsidering their very presence in the new landscape. UCITS IV, says Sebastien Danloy, will be a step too far for some.

Top Of The AgendaLooking at the other side of the equation, asset

managers rather than their service providers, the UCITS IV survey published by RBC Dexia Investor Services and KPMG last autumn looks if anything even more relevant today than when it first saw the light, insists Jean-Michel Loehr. ñ As we move further into the implementation phase the complexities that we identified earlier are being confirmed,” he commented to ISJ. “This is one of the top items on my own agenda.î

The main findings of the report, which shows how some of EuropeÍ s largest asset managers plan to capitalise on UCITS IV and identifies how these reforms will contribute to wider changes across the investment fund landscape, echoing and elaborating upon topics already noted above. They can be summarised as follows: the vast majority of UCITS managers are taking a proactive approach to UCITS IV; the number of management companies

“This slow pace is part of the reason for the long-term success of the project.”

The potential for change as a result of UCITS IV is vast.


20

will decrease; a new wave of fund mergers lies ahead; Master/Feeder structures will be key for new markets/client segments; Immediate cost savings are expected.

Peter De Proft, Director General of the European Fund and Asset Management Association (EFAMA), commented at the time, ñ The fund industry is currently facing numerous challenges in these turbulent economic

times that have impacted assets under management and profitability across the industry. One of the important strategic steps for players in the UCITS industry is to fully explore how to take advantage of UCITS IV.î Culling Companies

The results highlight how managers will reduce the number of management companies and will need to consider the location of a centralised management company carefully, taking into account concerns surrounding tax regime (49%), the regulatory framework (44%) and the availability of qualified personnel (33%). Luxembourg (43%) and Dublin (18%) will be likely winners but also the location of the group headquarters (23%) is

an important consideration. The study also revealed that 49% of respondents

plan to restructure their fund ranges, with sub-optimal fund size and high costs to investors being key drivers. While UCITS IV will facilitate cross border fund mergers the market may also see a large number of new feeder funds which, as highlighted in the survey, will be used for targeted fund distribution and enable managers to enter new markets and segments. Again Luxembourg (81%) is the favoured location for consolidating assets in master/feeder fund structures.

By far the most important advantage to UCITS IV for those asset managers polled is cost savings (43%). Easier access to markets (24%) and increased competitiveness (21%) were also highlighted as positive outcomes of the new framework. Only 2% of respondents said that UCITS IV brings no advantages, while 45% acknowledged the absence of a tax framework as a key issue.

The survey polled 52 asset managers with UCITS funds established in their principal location in the European Union (EU) as well as in the cross-border business centres of Luxembourg and Ireland. The 52 asset managers surveyed manage 54 % of the assets (UCITS and non-UCITS) domiciled in the cross-border centres of Luxembourg and Ireland.

Embracing The Opportunityñ It is clear that the market is already readying itself

to embrace this latest phase of UCITS and has made significant inroads in identifying the broad range of opportunities UCITS IV creates,î commented Jean-Michel Loehr, on publication. ñ As ever, education remains key to ensuring that the market continues to capitalise on regulatory changes.î Vincent Heymans, Partner at KPMG in Luxembourg, and co-author, added: ñ The current economic environment has presented the fund management industry with numerous challenges. It is therefore crucial that, now more than ever, fund managers fully realise the efficiency and consolidation opportunities found within UCITS IV, which allow for cost savings and improved efficiency of operations.” But Regulatory Barriers Persist

Following a more recent poll, the results of which were announced out of Hong Kong in April 19, RBC Dexia Investor Services said that despite the success of UCITS funds in Asia, regulatory barriers continue to make local market entry difficult for the fund industry. RBC Dexia’s latest industry poll also points to increased dependence on third-party service providers as a key trend for the Asia Pacific fund industry in the wake of the global financial crisis.

Regulatory barriers to specific local market entry are a major concern of the Asian Pacific fund industry, with 85% of respondents indentifying this as a significant challenge. Local laws and regulations across the region can make local market entry and cross-border fund distribution complex and costly.

The success of UCITS in the region also shows no sign of slowing. In fact one in three (33%) respondents believed the upcoming implementation of UCITS IV would make UCITS even more attractive. The flexibility, sound regulation and strong brand reputation of these products has won strong appeal in Asia as three-quarters of the poll respondents either already offer UCITS funds (62%) or intend to do so in the near future (12%).


Hedge Fund Umbrella Launch

Merchant Capital launched a UCITS III umbrella structure earlier this year, designed to provide hedge fund managers, including small- to mid-sized firms, with a seamless and cost-effective vehicle for running their own UCITS III funds.

Merchant Capital claims this will enable a faster route to market for managers. Historically, it has taken between three and six months to construct and bring to market a UCITS product. Funds using Merchant Capital will take approximately four to six weeks, while also significantly reducing the high fees the process normally incurs and fulfilling all necessary counterparty requirements. The first user of the umbrella was unveiled as Tressis SV, Spain’s leading independent distributor of investment funds, structured products, fixed income and other financial products.

Hedge fund managers using Merchant Capital will not be required to pay a standard minimum entry fee and will also benefit from significantly reduced legal and administrative costs. The UCITS III umbrella structure will also allow the manager the freedom to seek competitive swap rates in the market place and take advantage of competitively-priced agreements in place with some of the market’s leading providers.Additionally, the company will enable investors and managers alike to reduce the counterparty exposure inherent in partnering with a single institution; a manager using an existing platform offering the full range of services under one roof can be subject to significant counterparty risk. Merchant Capital will supply hedge fund managers with all the controls and systems required to manage a UCITS III fund. As well as risk management and middle office support, Merchant Capital also provides company management, regulatory infrastructure and compliance oversight.

CRAFTING THE vision FOR THE securities industry

FOR ADDITIONAL INFORMATION VISIT www.isitc.org390 Amwell Road, Suite 402, Hillsborough, NJ 08844

Phone +1 (908) 359-1184 Fax +1 (908) 359-7619 E-mail [email protected]

ISITC June 2010 Industry Forum & Working GroupsJune 6 - 8, 2010

Four Seasons Hotel, Scottsdale, AZ

This conference will consist of Forums and Working Group Sessions.

Please visit www.isitc.org to register.

Don’t miss the chance to represent your firm and participate inISITC’s ongoing industry forums and working groups.

We look forward to seeing you in Scottsdale!

The Essential Work of ISITC Continues.

ISITC ISJ June:Layout 1 4/22/10 11:59 AM Page 1


CRAFTING THE vision FOR THE securities industry

FOR ADDITIONAL INFORMATION VISIT www.isitc.org390 Amwell Road, Suite 402, Hillsborough, NJ 08844

Phone +1 (908) 359-1184 Fax +1 (908) 359-7619 E-mail [email protected]

ISITC June 2010 Industry Forum & Working GroupsJune 6 - 8, 2010

Four Seasons Hotel, Scottsdale, AZ

This conference will consist of Forums and Working Group Sessions.

Please visit www.isitc.org to register.

Don’t miss the chance to represent your firm and participate inISITC’s ongoing industry forums and working groups.

We look forward to seeing you in Scottsdale!

The Essential Work of ISITC Continues.

ISITC ISJ June:Layout 1 4/22/10 11:59 AM Page 1


22

Third-Party Help Needed!Thiepoll suggests that third-party support is needed for

a fund manager to better understand the complexities of local markets and to provide detailed local knowledge and expertise to guide them through the sometimes murky waters of cross-border or regional distribution, argues Scott McLaren, Head of Asia Pacific Sales and Distribution at RBC Dexia. ñ It will become increasingly important for service providers to become catalysts in market evolution with the introduction of UCITS IV and increased technology and automation becoming the standard.î

The survey indicates the widespread adoption of third-party service (65%) amongst regional asset managers

with only a small percentage (20%) which did not see the idea of outsourcing non-core functions as an option. The balance of 15% responded that they would be looking to use third-party providers for non-core functions in the near

future, most probably (12%) within in the next 12 months.When asked what their priority for improvement

was across the markets of Asia Pacific, over half of the respondents (56%) said fund distribution was their top priority. Fund administration and risk analytics and reporting were also important, mentioned by one in four (24-26%). Less important (15-18%) were custody,

outsourcing support and transfer agency.

Managing ExpectationsManaging the expectations that are mounting about

UCITS is an important consideration for George Cadbury, Director, Merchant Capital, whose perspective is tilted towards hedge funds. One of the asset management industryÍ s major focal points this year has been the rapid increase in hedge fund managers implementing the UCITS III fund structure for their own offshore investment vehicles, he observed in a recent essay on the subject published in Investment Week. The adoption of UCITS by absolute return managers has coincided with a period when confidence in what are regarded by some as opaque investment funds has never been lower.

He pointed to a recent survey carried out by Kepler Partners, an independent fund marketing and research adviser, which estimates that approximately $30 billion is invested in hedge fund strategies that sit within a UCITS III structure. Official figures from the European Fund and Asset Management Association show that the total global UCITS market stands at about $7 trillion. If we compare these overall market figures to the offshore market, where there are over 10,000 hedge funds competing for a capital pool estimated to be a little above $1 trillion, it is clear why hedge funds managers are starting to take UCITS seriously, he observes. These figures, twinned with the fact that investing institutions and retail investors are increasingly turning to UCITS as they seek the lower volatility and higher return characteristics of hedge funds, show there is great growth potential at this nexus point between alternative and ï traditionalÍ investment.

Post-Madoff/Nadel ClampdownThe Madoff and Nadel sagas prompted governments

to explore new ways of clamping down on hedge fund activities; with UCITS there is a structure already in place which addresses many governmental concerns. Although to some extent the hedge fund industry has been used as a political scapegoat and the ï survival biasÍ is an argument that funds which came through the recent turmoil are carrying the crosses for those that did not, there is still a need for the alternative investment industry to mature as it moves into the mainstream.

With this trend in mind, it is unsurprising that swathes of managers are exploring the possibilities of launching one of their products within a UCITS structure. However, dangers lurk for managers and investors alike when it is their intention to simply replicate a strategy that may have served them well as an offshore structure.

If a manager decides not to launch a cell (a version of an offshore strategy in an onshore framework within a UCITS platform) and instead do it themselves, this can be an expensive proposal. A UCITS III fund offering weekly liquidity with indicative daily pricing, compared with monthly pricing and quarterly liquidity for a typical offshore fund, will incur higher administration costs alone, placing upward pressure on the Total Expense Ratio.


It’s Official!UCITS is an important piece of legislation that is essential

to the integration of the financial markets in Europe and to the benefits of its citizens. European investors need to have access to efficient and reliable savings products, all the more so with our ageing population. The UCITS label has become a great European success story, renowned for its transparency towards the investor, its reliability and performance

even beyond Europe.The objective of the fourth version of UCITS is to provide

a tool box to ensure the competitiveness of the European asset management industry and to benefit European investors. It promises more choice, greater efficiencies and greater protection – at less cost. It will also reinforce the competitiveness of the UCITS label around the world.

The general principles of the legislation (Level 1 measures) have already been defined and approved by the European Parliament and the Council of Ministers. The outstanding details of the implementing measures (Level 2) will now be discussed, with an objective to finalise the text by July 2010. The directive will come into force in July 2011 after national transposition.

To make the most of the UCITS IV Directive, the industry will need to continue to work on a number of important issues, in particular to make fund processing simpler and more automated. More generally, both politics and industry have to address pension issues and the future role that UCITS investment funds could play to meet the challenges ahead. These challenges include: how to limit the risk of UCITS investments, how to ensure inflation-neutral returns and how to adapt the UCITS tax treatment for old-age pension provisions, in order to foster a savings culture. Industry and politicians will have to deal with these challenges collectively.

The path to the single European market may be long and complex but it is well under way and UCITS IV is a great milestone in its advance.

Dr. Wolf Klinz, Member of the European Parliament, Chairman of the Special Committee on the Financial, Economic and Social Crisis, writing in UCITS IV, The Transforming Event for European Asset Managers and Distributors, a research publication from BNP Paribas Securities Services.

www.pensionfundsonline.co.uk is the online source for pension fund information created by the publishers of Pension Funds and their Advisers (AP Information Services Ltd.) and the joint publishers of International Pension Funds and their Advisers (AP Information Services Ltd. and IPE magazine).

This innovative online product has been developed to compliment the use of both our pensions print directories Pension Funds and their Advisers and International Pension Funds and their Advisers.

With options ranging from read-only to fully downloadable, www.pensionfundsonline.co.uk gives you fully up-to-date information on 6,500 UK and international pension funds at any time during your 12-month subscription.

www.pensionfundsonline.co.uk gives you access to:

Over 6,500 UK and international pensions funds and over 4,600 key advisers to these funds

Easy-to-use and flexible search facilities allowing you to make selections by fund sizes (in various currencies), adviser, country and industry*

Hypertext links allowing you to skip between major funds and their advisers with many hotlinks to company websites also available

On the fully downloadable version your search results can be output as csv files. * industry searches UK version only

For further information including read-only and fully downloadable options for this website, please contact a member of our data sales team on: +44 (0)20-8349 9988.

www.pensionfundsonline.co.uk The Online Source for UK and International Pension Funds

AP Information Services Ltd. Tel: +44 (0)20-8349 9988

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London N1 7JQ, UK Web: www.apinfo.co.uk

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Tel: +44 (0)20-7566 8255Fax: +44 (0)20-7608 1163Email: [email protected]: www.wlrstore.com/apinfo

www.pensionfundsonline.co.uk is the online source for pension fund information created by the publishers of Pension Funds and their Advisers(AP Information Services) and the joint publishers of International PensionFunds and their Advisers (AP Information Services and IPE magazine).




� Over 6,500 UK and international pensions funds and over 4,600 keyadvisers to these funds

� Easy-to-use and flexible search facilities allowing you to make selections byfund sizes (in various currencies), adviser, country and industry

� Hypertext links allowing you to skip between major funds and their advisers with many hotlinks to company websites also available

On the fully downloadable version your search results can be output as csv files.


Pension Funds Online ad:Layout 1 01/03/2010 15:24 Page 1


www.pensionfundsonline.co.uk is the online source for pension fund information created by the publishers of Pension Funds and their Advisers (AP Information Services Ltd.) and the joint publishers of International Pension Funds and their Advisers (AP Information Services Ltd. and IPE magazine).




Over 6,500 UK and international pensions funds and over 4,600 key advisers to these funds

Easy-to-use and flexible search facilities allowing you to make selections by fund sizes (in various currencies), adviser, country and industry*

Hypertext links allowing you to skip between major funds and their advisers with many hotlinks to company websites also available

On the fully downloadable version your search results can be output as csv files. * industry searches UK version only


www.pensionfundsonline.co.uk The Online Source for UK and International Pension Funds

AP Information Services Ltd. Tel: +44 (0)20-8349 9988

2nd Floor Fax: +44 (0)20-7324 2343

6-14 Underwood Street Email: [email protected]

London N1 7JQ, UK Web: www.apinfo.co.uk

5,500 key

+44 (0)20-7566 8255.

Tel: +44 (0)20-7566 8255Fax: +44 (0)20-7608 1163Email: [email protected]: www.apinfo.co.uk

AP Information Services Ltd. 2nd Floor 6-14 Underwood Street London N1 7JQ, UK

AP Information Services2nd Floor 6-14 Underwood Street London N1 7JQ, UK

Tel: +44 (0)20-7566 8255Fax: +44 (0)20-7608 1163Email: [email protected]: www.wlrstore.com/apinfo

www.pensionfundsonline.co.uk is the online source for pension fund information created by the publishers of Pension Funds and their Advisers(AP Information Services) and the joint publishers of International PensionFunds and their Advisers (AP Information Services and IPE magazine).




� Over 6,500 UK and international pensions funds and over 4,600 keyadvisers to these funds

� Easy-to-use and flexible search facilities allowing you to make selections byfund sizes (in various currencies), adviser, country and industry

� Hypertext links allowing you to skip between major funds and their advisers with many hotlinks to company websites also available

On the fully downloadable version your search results can be output as csv files.


Pension Funds Online ad:Layout 1 01/03/2010 15:24 Page 1


24

Investors BewareAdditionally, methods of investor protection that limit

gearing, particularly within non-sophisticated funds, could curtail a managerÍ s ability to match their performance in the offshore fund. Due to the very nature of UCITS III and its liquidity constraints, private equity, real estate and distressed debt are not compatible as strategies with the structure. Investors should therefore be wary of managers who have had to make significant changes to their portfolio in order to ‘fit into’ UCITS. Although the directive’s guidelines are flexible, they are likely to continue to encourage participation predominately by equity long/short and global macro funds.

Aside from the considerations of a specific strategy, it is important the proper infrastructural support is in place to ensure that the diversification mechanisms, embodied by the 5/10/40 rule*, and again this can be expensive.

This brings us on to what the regulators state is the most important component of managing a successful UCITS IXQ G� � � WKH� ULVN� P DQ DJHP HQ W� SURFHVV� � 5 0 3 � � � 7KH� JOREDO�financial crisis exposed significant weaknesses in the risk management practices of many funds and investors are now demanding that funds implement stronger RMPs. Merchant Capital, for its part, has employed what it believes to be the most efficient solution by hiring a global professional risk and valuation services firm – Kinetic.

Related to this, if a fund does not have a sophisticated pre-trade compliance tool and an experienced compliance officer in place, there is not only an inherent risk borne by the company, but also an opportunity cost due to time spent by the fund manager ensuring their weightings are correct. The fundÍ s performance will undoubtedly be affected if the manager is perpetually concerned about position sizes. Far better for the investment specialist to be able to concentrate their expertise where it is best applied, knowing that the necessary systematic support and personnel are in place.

Risk And RegulatorsIn addition to performance attribution, value-at-risk

(VaR) analyses and stress testing, regulators want to address issues such as OTC valuation, liquidity, leverage and counterparty risk, all areas that in some cases were conspicuous for being inadequately monitored recently. To do so, managers must implement an internal framework if they are to stand up to regulatory due diligence. It would be impossible for a fund to launch a UCITS fund without these systems in place and managers must be cognisant of the costs involved.

Greater transparency, improved liquidity terms and counterparty exposure controls are becoming more important as features of the maturing absolute return fund industry. There is a growing audience that believes that the UCITS directive, which lays greater importance on these features, can re-invigorate the investment communityÍ s interest in these strategies. Nonetheless, although the UCITS liquidity, transparency and diversification requirements offer much more protection than their offshore counterparts, investors would be wise to look out for warning signals from managers who struggle to match the performance of their existing offshore funds or have not fully adapted to the UCITS world. In saying that, Merchant Capital expects the majority of managers to thrive under the UCITS umbrella by offering institutional and retail markets the greater returns they are so keenly seeking now with appropriate

risk management. Looking ahead to UCITS IV and beyond to a putative

UCITS V, rather than back at UCITS III, Merchant Capital director Christopher Day opines that Europe has a an opportunity, after ï onlyÍ 25 years of development of a consistent harmonised approach, to leave the US behind. Advances made since the original UCITS directive in 1985 should not be understated. And the UCITS IV addition to the family represents the final nail in the coffin for those European countries that like to make life more difficult.

ñ If you had mentioned the words ï hedge fundÍ in Spain 10 years ago youÍ d have been thrown out of the country,î jokes Christopher Day. He continues in a more serious vein. ñ As long as politicians donÍ t break it [UCITS IV], you have something that is ahead of its time globally. It is well ahead of the US where they are still trying to get to grips with the regulation of hedge funds. Politicians and other authorities should nurture it, not kill it. LetÍ s hope theyÍ ll be too worried about offshore hedge funds to worry unnecessarily about UCITS. That will give it time to settle down, and potentially become the regulatory framework of choice. EuropeÍ s funds could become as big as the USAÍ s, delivering hitherto unimagined economies of scale, both in terms of cost and expertise.î

He warns, though, of the possible repeat of the carbon trading scenario, when Europe threw away a similar chance. ñ Europe had the potential to lead the world until governments cheated, snatching defeat from the jaws of victory,î he concludes. *a UCITS structured fund may invest no more than 10% of its net assets in transferable securities or money market instruments issued by the same body, provided that the total value of transferable securities or money market instruments held in issuing bodies in each of which it can invest more than 5% is less than 40%.

ConclusionsThe UCITS IV Directive should lead to a more efficient and competitive European Union asset management industry. The Directive will most likely result in a shift from the current situation of asset management companies being organised in vertical silos to one where the set-up is more pan-European, centralised and horizontal. Today, an asset manager which distributes in six countries, needs to have six management companies, handle six funds, and use six depositaries. Under UCITS IV, the same asset manager can choose to have only a single management company, two funds, two feeder funds, and use four depositaries, for the same distribution coverage. Opportunities for asset managers will differ from country to country, and by asset manager business model and size. Options will open up across the various markets depending on the local culture and tax system. The trick for the asset managers is to approach each country bearing in mind their investorsÍ needs and the characteristics of their own organisations. By the same token, local expertise in an asset-servicing provider will continue to be desirable as accounting rules, tax treatment and regulatory reporting will remain country-specific. In order to take advantage of UCITS IV, asset managers will need a strategic approach. Those dealing with UCITS and non-UCITS funds also have to consider similarities and differences between the AIFM and UCITS Directives. This will allow regulatory arbitrage.Asset managers will need to decide on the types of investors and markets to target, first within and then outside the European Union. ISJ


To Register: Call +44 (0) 20 7017 7200. Fax: +44 (0) 20 7017 7807. Email: [email protected] For the latest programme, please visit: www.icbi-fundforum.com

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26

ñ In emerging markets investment, it is necessary to be optimistic since the world belongs to optimists; the pessimists are only spectators.î

Frankly, while there are certainly numerous technical skills one can learn to aid in making investments or managing a fund, investing is still a large percentage psychological. Both buyers and sellers are acting on a combination of instinct, information and logic. It is important not to forget the key role that development of certain

personal characteristics can contribute to your investment success.

Hard work and disciplineSomeone asked me once if I could condense the most important qualities needed for a good investor into five words and I replied: ñ Motivation, humility, hard work and discipline.î

It stands to reason that the more time and effort is put into researching investments, the more knowledge will be gained and wiser decisions will be made. Humility is needed so you are able and willing to ask questions. If you think

you know all the answers you probably donÍ t even know the questions.

CommonsenseI think to think that commonsense is most important when making investment decisions, since the word

“commonsense: implies the clarity and simplification required to integrate successfully all the complex information with which investors are faced.

CreativityA significant amount of creativity is required for successful investing, since it is necessary to look at investments from a multifaceted approach, considering all the variables that could negatively or positively affect an investment. Also creative thinking is required to look forward to the future and forecast the outcome of current business plans.

Independence

The ISJ Profile Mark Mobius Templeton Investments

Mark Mobius on The Secrets of

Investment Success, Cycling In Chile and Bikini-Clad Beauties

Mark Mobius, emerging markets investment specialist at Templeton Investments for the past 23 years, is arguably the best known name and face in the emerging markets investment world. As has been pointed out more than once, he bears a striking resemblance to the late movie star Yul Brynner. As has also been pointed out more than once, he spends most of the year traveling from one exotic location to another, in search of new investment opportunities and to monitor existing investments.

Mark Mobius, Ph.D., executive chairman, joined Templeton in 1987 as president of the Templeton Emerging Markets Fund, Inc. He currently directs the analysts based in Templeton’s 16 emerging markets offices and manages the emerging markets portfolios. Dr. Mobius has spent more than 40 years working in emerging markets all over the world. In that time he has been perfectly happy to share with the wider world his ‘secrets of success’ frankly and openly. Investor Services Journal is delighted to be the vehicle this time round.

CYCLING SUCCESS

Both buyers and sellers are acting on a combination of instinct, information and logic.

If you think you know all the answers you probably don’t even know the questions.

Mark Mobius Cycling In Chile


27

A number of successful investors have commented on the importance of independence and individual decision-making. If one buys the same securities as other people, one ends up with the same results as others. It is impossible to produce a superior performance unless one does something different from the majority.

Risk-takingInvestment decisions always require decisions based on insufficient information. There is never enough time to learn all there is to know about an investment and even if there were, equity investments are undergoing continuous change making it impossible to obtain the most updated information. There always comes a time when a decision must be taken and a risk acquired. The ability to take that risk based on the best diligently gathered available information is the mark of a good investor.

FlexibilityIt is important for investors to be flexible and not permanently adopt a particular type of asset. The best approach is to mitigate from the popular to the unpopular securities or sectors. ItÍ s also an attribute, which keeps one from holding on to a stock out of loyalty – flexibility allows one to change as times change and new circumstances present themselves.

Well these are the key personal qualities that affect investment-making decisions, the following are important investment attributes that will benefit your investments.

DiversificationIt is actually possible to have all your eggs in the wrong basket at the wrong time, especially in emerging market investment. To reduce oneÍ s vulnerability to this eventuality, every investor should diversify. This is particularly important in emerging markets where individual country or company risks can be extreme. Even given the risks, however, global investing is always superior to investing in only your home market or in one market. If you search worldwide, you will find more bargains and better bargains than by studying one nation.

Timing and staying investedI love to reply to those who ask when they should invest in equities by using the provocative answer provided by Sir John Templeton: ñ The best time to invest is when you have money.î The reality is that market timing is impossible, and since equity investing is the best way to preserve value, rather than leaving money in a bank account, it is best to just get going, rather than wait for the fabled perfect moment. A corollary to the question of when to buy is, of course, when to sell. My feeling on that issue is that investments should not be sold unless a much better investment has been found to replace it.

Long-term viewI know how unsatisfying it is for investors who invested in a fund or a stock only to see the net asset value or price do down, or not make the fast gains they were expecting, to hear that they should be in it for the ñ long-term.î But itÍ s the truth. As investment managers, we have a policy of looking to the long-term because experience has shown us that if we try to make short-term gains the result will work against outstanding performance. Since most investors look at the short term, then we certainly should not do that. By looking

at the long-term growth and prospects of companies and countries, particularly those stocks, which are out of, favor or unpopular, the chances of obtaining a superior return are much greater. To minimize discomfort or disappointment, investment averaging should be undertaken.

Investment averagingAnother point that should be remembered by investors is the importance of investment averaging by purchasing consistently in a measured and periodic pattern. Investors who establish a program from the very beginning to purchases shares over a set period of time have the opportunity to purchase at not only high prices, but also low prices, bringing their average cost down.

Accepting market cyclesAny study of stock markets around the world will show that bear or bull markets have always been temporary. It is clear that markets do have cyclical behavior wit pessimistic,

skeptical, optimistic, euphoric, panic and depressive phases. Investors should thus expect such variations and plan accordingly. We have all adopted the belief that the time of maximum pessimism is the best time to buy and conversely the best time to sell is the moment of maximum optimism. As often noted, if itÍ s possible to see the light at the end of the tunnel, then it is probably already too late to buy.

And Is There Still Time For Play?All work and no play would make Mark a dull boy, though, and he is certainly not dull. A keen cyclist, he takes advantage of every chance to climb into the saddle and see more of the world than just airports, factories and balance sheets. He has many a tale to tell that might make lesser mortals go green with envy.ñ Every time we come to Vina del Mar, a two-hour drive from

Mobius Rules: The Bust Box

• When you tap into an attitude in any country that says ‘we’re number one, we’re the best, no-one can beat us’…that’s the right time and the right country to SELL.

• When everyone else is dying to get in, get out.

• When everyone else is screaming to get out, get in.

• If a broker starts giving you the hard sell, never buy.

• The best time to buy is when everyone else is screaming that there’s blood on the streets.

• In times of crisis, people on the ground start coming to their senses.

• Easy times make people go soft. Hard times get people going.

• What goes down usually goes back up, if you’re willing to be patient, and don’t hit the panic button.

• The problem with recoveries is that they don’t make good copy.

• Market meltdowns make headlines. Market recoveries make money.

• A liquid stock market is one that’s easy to get out of, not just easy to get in.

Source: Passport To Profits.


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Santiago airport in Chile, and one of my favourite places in the world, we take our folding bicycles for a short cycle to the art deco casino and the town where there is good shopping

and restaurants. This time we extended our cycling for two hours past the Army Academy with its collection of antique cannons and then further on to the delightful beaches with stylish beachfront cafes.î

In and around Vina del Mar, there are many houses and even a seaside castle built by entrepreneurs who got rich from exploiting saltpeter resources in northern Chile, an observation he makes that underlines how embedded is business in his DNA. He recalls that the boom began when in 1840, a French scientist discovered that sodium nitrate for use as fertilizers and explosives could be derived from both guano and caliche Desert bordering Chile, Bolivia and Peru. Chile fought and won the 1879 to 1883 War of the Pacific over those mineral deposits against Bolivia and Peru and acquired control of those countriesÍ border provinces. One result which still rankles the Bolivians was that Bolivia lost its Pacific port province and thus became landlocked with no access to the sea. For a long time those nitrates were ChileÍ s largest export and attracted Europeans and others eager to get rich on the valuable mineral. However when synthetic nitrates were developed in the beginning of the twentieth century

ChileÍ s leading export became, and still is, copper.

Bikini-clad BeautiesThere were all kinds of events on this particular visit, he relates, including a local pisco promotion featuring bikini-clad beauties cavorting on a temporary stage. ñ Pisco is the local clear brandy,î he explains. ñ ItÍ s great when made into a picso sour, a delicious mixture of lemon juice, egg white (creating the tempting white foam at the top of the glass), sugar and, of course, the powerful pisco. Peruvians and Chileans each claim to have the best pisco but after one pisco sour, who cares!î Oddly enough, some might feel unfortunately, thereÍ s no further elaboration on the subject of bikini-clad beautiesƒ

ñ In the evening we took the new Metro fast train to the heart of old Valpariso and found a quaint restaurant, ñ Porto Viejoî which served delicious fish. Since the restaurant is mainly for locals, the waiter didnÍ t speak English but we were rescued by the ownerÍ s American educated cool gangly young son with a cute girlfriend. The food was great but so were the quantities and we staggered out. After dinner we decided to take a little walk to the funicular railway going to the top of the mountain overlooking the city very much like Hong KongÍ s Peak Tram. Walking up the cobblestone streets and alleyways we encountered architectural and cultural sites at almost every corner. No wonder the city has been named a UNESO World Heritage Site. Climbing up a high stairway leading to the funicular rail station we found that it

The following is an edited reproduction of an interview on 25 April 2010 with CNBC Asia

CNBC ASIA: The shadow on Wall Street, of course, is this finance-related bill. The senate will vote on whether or not to subject the biggest financials to more scrutiny and give regulators more powers to seize controls of firms going belly-up or hoping to avoid another global financial crisis. Dr Mark Mobius, executive chairman of Templeton Asset Management says that it is about time.

MOBIUS: The question now is why it wasn’t done previously. If you remember, Mrs. Bourne, who is the head of the futures commission warned everyone about derivatives and wanted to regulate them. But, Greenspan, Rogan, Larry Summers were against it – they didn’t want the regulation to take place so it could have happened but it didn’t. The SEC has lots of powers to regulate but they didn’t, so the proof would be in what happens at the regulatory administrative level to implement what is passed in congress. But I think generally speaking, what we have to look at is the incentives. Where are the incentives? In the case of financial derivatives, I personally think there should be a small tax, a small fee, put on financial derivatives, maybe 10 basis points, so that you’ll have exposure – if you have a tax, then you’re going to have exposure. You must have liquidity, you must have a transparency. We need to put those kinds of reforms in place.CNBC ASIA: What is the risk that they are going to over-regulate?

MOBIUS: I don’t think that’s going to happen. The forces

against regulation are very strong in Washington. There’s $600 trillion of derivatives outstanding; lots of money is being made with derivatives. It’s not going to go away; I don’t think that regulators will kill that golden goose.

CNBC ASIA: I’ve heard that if you take a very extremist view of things, or maybe even not that extremist a view, that the cowboy days – the wild wild west days in the financial industry are looming, and that they are going to become like utilities – water companies, electric companies, gas companies - is that what could possibly happen in the financial industry? How would that affect your view, of whether or not you want to engage in this space?

MOBIUS: Well, I mean, my feeling is that if stock exchanges, savings banks, and those institutions became utilities, I’m all for it because that’s the service that has to happen properly and regulated for the market to work. But I don’t think volatility will go away; I don’t think turnover will go away; I don’t think trading will go away. This will continue because everybody realises, including the administration, that this is essential for the workings of a free economy.

CNBC ASIA: Let’s bring it back to this neck of the woods, finally. Could this be the beginning of a break out, for emerging market financials? Asian banks, for example. I mean, if Wall Street is going to go through another raising, another round of this, what could happen to like the major Chinese banks –could there be heightened interest?

MOBIUS: There already is. I mean a lot of money has been pouring into emerging market funds, particularly in Asia. Half of all money going into emerging market funds is in Asia so there’s heightened interest because if you look at the credit default swaps, spreads for Greece and Portugal are

The ISJ Profile Mark Mobius Templeton Investments

Peruvians and Chileans each claim to have the best pisco but after one pisco sour, who cares!”


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higher than China, far higher, so people are more confident in putting money into these banks. The danger is that the lessons we’re learning now in the west are not learnt in Asia. Hopefully, they’ll adopt some of the regulatory mechanisms that are now being learnt.

CNBC ASIA: Despite the fear on the streets of Thailand’s capital, you still see plenty of value in the country?

MOBIUS: Thailand has to change; it has to be an accommodation between the mass of people in the rural areas and people in Bangkok in control…the elite. That kind of change does not come easy. It often means violence, as we’ve seen; it takes time, but when it comes – and I believe it will come - you’re going to see a much changed and improved Thailand.

CNBC ASIA: You are accumulating, right now?

MOBIUS: Yes

CNBC ASIA: In the midst of all this violence

MOBIUS: In the midst of the violence, if prices come down enough. We are frankly surprised that prices have not come down more. We, of course, would like to see prices correct more substantially. But we would be buyers.

CNBC ASIA: You buy the market? Or you have to be careful, going bottom?

MOBIUS: Of course, we think bottom up; we look at stock picks and of course as you know, our big areas are commodities which mean the oil companies, anything related to consumers – whether it be housing or retailing and so forth.

CNBC ASIA: What specifically do you do to leverage the concept of higher rate of participation in the growth of the economy?

MOBIUS: Well, the way we leverage is by getting exposure to consumers, directly or indirectly. For example, it’s not only that we think that oil prices will continue at a higher level, it’s also because these companies have exposure to consumers; consumer have to travel, have to move, have to have more cars and therefore we want to get exposure that way. We want exposure to the banks because they are becoming more consumer banks. The consumer banking revolution has hit Thailand and that would become more and more important.

CNBC ASIA: You recently spent some time in Korea, and you’ve elevated your view, your optimism over Korea, especially in the manufacturing space, and you’re also very bullish on Vietnam as well, in terms of thrift and value. Can you address those two markets for me?

MOBIUS: In the case of Korea, we’re seeing another transformation taking place. Besides the fact that the country’s really growing at something like 5%...so you’ve seen a real recovery in the economic development of the country. But what you’re also seeing – and it’s taking a long

time, it’s going to be gradual, a reform of the market, is that the Chaebols are reforming. There’s a growing realisation that they cannot continue to have this so-called Korean discount. Korean companies have generally been cheaper than other markets on a price-earnings basis. And the reason, in my view, for that is the Chaebol obstruction of the market, and the fact that they don’t pay dividends as well as other parts of the world. Because what they’re doing, in a Confucian way, is looking at not this generation, but two or three generations down the road. So they are continuing to invest.

CNBC ASIA: There is a lot of locked up value.

MOBIUS: A lot of locked up value. Vietnam is a frontier market for us. And the big frontier markets in our portfolio, frontier portfolios, are Vietnam, Ukraine, Kazakhstan and Nigeria. Vietnam is very, very cheap. However, the way the market is run is a mess, because what happens is that we as final investors have to inform everyone what we’re going to buy and when we’re going to buy it and how much we’re going to buy in advance. In addition, we must use only one broker. So you can understand what happens – a tremendous amount of front running takes place. In addition, of course, that would not be so bad if the liquidity was there, but their liquidity is very poor. So we must nibble, we must use tactics to get into the market slowly and gradually, but the valuations are definitely there. With Kind Permission

Honours, Books and AwardsDr. Mobius earned bachelor’s and master’s degrees from Boston University, and a Ph.D. in economics and political science from the Massachusetts Institute of Technology. He is the author of the books “Trading with China,” “The Investor’s Guide to Emerging Markets,” “Mobius on Emerging Markets,” “Passport to Profits,” “Equities - AnIntroduction to the Core Concepts,” “Mutual Funds - An Introduction to the Core Concepts” and “Mark Mobius - An Illustrated Biography.” Dr. Mobius has received numerous awards. He was named by Asiamoney magazine in 2006 as one of “Top 100 Most Powerful and Influential People.” Asiamoney said: “Boasts one of the highest profiles of any investor in the region and is regarded by many in the financial industry as one of the most successful emerging markets investors over the last 20 years. Despite tough times during the financial crisis that erupted in the late 1990s, he still commands a strong following in the investment world and is influencing the direction of billions of investment dollars.” Other awards include: (1) “Emerging Markets Equity Manager of the Year 2001” by International Money Marketing, (2) “Ten Top Money Managers of the 20th Century” in a survey by the Carson Group in 1999, (3) “Number One Global Emerging Market Fund” in the 1998 Reuters Survey, (4) “1994 First in Business Money Manager of the Year” by CNBC, (5) “Closed-End Fund Manager of the Year” in 1993 by Morningstar and (6) “Investment Trust Manager of the Year 1992” by Sunday Telegraph. He was appointed joint chairman of the Global Corporate Governance Forum Investor Responsibility Taskforce of the World Bank and OECD (Organisation for Economic Co-operation and Development).


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OTC Derivatives Enhancements NeededThe soundness, resilience and transparency of OTC derivatives markets should be enhanced. In particular, the establishment of sound infrastructures for OTC derivatives should be promoted. This is just one of a number of lessons that have been learnt from the fi nancial crisis according to a just-published report from the European Central Bank•. The fi nancial crisis encouraged securities regulators and overseers to consider adopting consistent regulatory and oversight measures to promote safety, resilience and transparency of OTC derivatives markets and to support private sector initiatives in this fi eld, observes the ECB report. In line with the respective G20 mandate, regulatory initiatives regarding OTC derivatives markets are currently under consideration across jurisdictions. One area of focus is the establishment of market infrastructures for the trading, clearing and settlement of OTC derivatives, as the fi nancial crisis highlighted severe shortcomings in the bilateral organisation of these processes.

ECB Recommends Follow-up Action• Establishment of a sound infrastructure for OTC derivatives. An immediate priority identifi ed by the ECB is to progress towards enhanced use of CCPs for OTC derivatives eligible for central clearing. In addition, measures are being considered to strengthen risk management for contracts not eligible for central clearing, as well as to promote reporting of OTC derivatives contracts to trade repositories (TRs). In the EU, the European Commission issued a Communication on future actions to improve the resilience of OTC derivatives markets in October 2009. Legislative proposals are expected to be delivered by mid-2010. As part of the legislative package envisaged, the Commission intends to develop comprehensive EU legal frameworks for CCPs and trade repositories to ensure the safe and effi cient functioning of these infrastructures and to limit the potential for possible regulatory arbitrage across jurisdictions. Such legislation is expected to build on the recently fi nalised ESCB-CESR Recommendations for CCPs in the EU, which consider the specifi c risks inherent in the clearing of OTC derivatives. Regulatory reform along similar lines is being considered in the United States, where possible measures were outlined in May 2009. Given the global nature of OTC derivatives markets, global convergence of the regulatory measures adopted in the various jurisdictions will be essential. This work is supported by the review of the CPSS and IOSCO of the application of the 2004 CPSSIOSCO recommendations for CCPs to clearingarrangements for OTC derivatives, launched in June 2009. With the impetus and support of regulators, several private sector initiatives to enhance the functioning of OTC derivatives markets are also underway. These involve the

effective implementation of CCPs and trade repositories for OTC derivatives, enhanced standardisation of the legal and economic terms of OTC derivatives contracts, portfolio compression and reconciliation, the resolution of settlementand restructuring issues related to credit events, and operational improvements in the fi eld of electronic trading and trade matching/confi rmation.• Report on the Lessons Learned from the Financial Crises with Regard to the Fuctioning of European Financial Market Infrastructures. European Central Bank April 2010.

Regulation OTC Derivatives, Market Risk in EU

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· Securities Lending· Repo· Synthetic Finance· OTC Derivatives Collateral Management

Finace is currently the only fully integrated solution which supports the future business models within the area of Securities Finance and Collateral Management. The architecture of Finace is based on a stable, leading edge technology platform which was developed with performance and robustness as the focus of design. With flexibility at its core, customer-driven extensions and modifications can be quickly and easily applied to the standard component set.

COMIT AG, Pflanzschulstrasse 7, CH–8004 Zürich, Phone +41 (0)44 298 92 00 [email protected], www.finacesolution.com

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EU Bank’s Market Risk Now Hear This! Moody’s Says Impact of New Market Risk Regulation on European Banks ManageableMoodyÍ s Investors Service has provided a preliminary assessment of the impact on selected European banks of the changes to Basel regulations for market risk due to be implemented by the end of 2010. In a Special Comment published on April 15, the agency says that it expects the short-term impact of the changes to be ratings-neutral, but longer term challenges remain. MoodyÍ s says its estimates show that the impact of the regulatory changes on banksÍ capital ratios will be material in some cases. ñ For banks with sizeable investment banking activities, MoodyÍ s expects that the implementation of the market risk amendments will lower capital ratios by up to 17%. However, this appears to be manageable in most cases, given the increase in capital and the deleveraging that took place during 2009,î says Alessandra Mongiardino, a London-based Vice President, Senior Credit Offi cer and the main author of the report. Second-tier banks with sizeable market risk activities may also be affected by these regulatory changes. ñ Second-tier players could be under pressure and may review their continued presence in certain market-related activities, and may decide to concentrate on their core activities, a development that might be credit-positive,î she adds. The report also notes that, in the longer term, there are other elements that need to be taken into account when looking at banksÍ creditworthiness in light of the new regulatory environment, in particular as they relate to the so-called Basel III proposals. MoodyÍ s believes that a more accurate refl ection of the risks inherent in these activities, with capital levels better aligned with the risks, is a credit-positive given that it improves banksÍ resilience to economic shocks. ñ However, banks will be under pressure to fi nd ways of enhancing profi tability to meet shareholders ROE expectations,î says Mongiardino. ñ They may therefore increase their risk profi le again in order to achieve these objectives. The way that banks will handle these opposing requirements will likely affect their creditworthiness.î A fi nal element to consider is that each country must translate the Basel CommitteeÍ s recommendations into amendments to the local market risk framework. This leaves open the risk that the amendments might not be applied consistently across banks headquartered in different jurisdictions. Given the highly globalised nature of capital markets, any regulatory arbitrage will have negative consequences for the stability of the fi nancial market and for bond investors, says the report.


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The state-of-the-art IT solution for:

· Securities Lending· Repo· Synthetic Finance· OTC Derivatives Collateral Management

Finace is currently the only fully integrated solution which supports the future business models within the area of Securities Finance and Collateral Management. The architecture of Finace is based on a stable, leading edge technology platform which was developed with performance and robustness as the focus of design. With flexibility at its core, customer-driven extensions and modifications can be quickly and easily applied to the standard component set.

COMIT AG, Pflanzschulstrasse 7, CH–8004 Zürich, Phone +41 (0)44 298 92 00 [email protected], www.finacesolution.com

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Technology Releases Thomson Reuters Elektron / BNY Melllon Dashboard

Data: The Next Generation If latency is reduced much further, we’ll be travelling back in time.If latency is reduced much further, weÍ ll be travelling back in time. That is one flippant reaction to the latest news from the frontline of the acceleration and automation of trading, with the announcement from Thomson Reuters that it is seeking to transform financial markets with the launch of Elektron, which it describes as a unique global fabric delivering supreme performance, unrivalled access and connectivity to power trade automation. WeÍ ll give Thomson Reuters time and space to elaborate on their own terms in a moment or two. But it is important to place its ambitions firmly in the context of developments over the past two to three years arising from the implementation of the EUÍ s MiFID directive, which has spurred the creation of alternative trading venues such as Chi-X, Turquoise and BATS Europe, to name but a few. The proliferation of these venues, and the increasing use the industry makes of dark pools of liquidity, has increased complexity, increased fragmentation of liquidity, raised important questions about transparency of trading strategies and correctness of pricing, and changed the very nature of demand. In that time, electronic trading has stopped being the preserve of an elite few with the necessary black boxes. Today it is almost mainstream, within the reach of Everyman. ñ Algorithmic trading is much more widespread today, as we have adapted to the demands for automation and high performance,î Mike Powell, Head of Global Enterprise Information at Thomson Reuters, told ISJ. ñ More and more people want to indulge in high-frequency trading, not only in North America and Europe, but elsewhere. Look at the creation of Chi-X Australia, SBI Japan Next and Chi East, a tie up between Chi-X and the Singapore Stock Exchange. Elektron takes away a lot of the complexity and cost of connecting to multiple markets. It levels the playing field and opens it up to more hedge funds and smaller players. A single connection to our cloud gets you access to low latency, and the full depth of a market, whether locally or regionally.î In its own words, Thomson Reuters reports that Elektron is a global, ultra-high speed network and hosting environment that enables financial firms to access and share information faster and more cost effectively. Hedge funds, asset managers, banks, brokerages, exchanges and other participants will for the first time be able to connect to the world’s largest financial community and securely reach trading partners over the network. Thomson Reuters Elektron enables firms to trade faster, using the most complete coverage of real time financial information available, connect to more markets and interact freely across a global, resilient and secure cloud. Firms of all sizes will benefit from significantly lower operational costs and drastically reduced time to market, plus the opportunity for the open exchange of data, transactions and new business opportunities. The launch of Elektron marks a performance step-change for financial information networks, argues Thomson Reuters. Benchmark testing indicates that Elektron delivers information up to 20 times faster than traditional aggregated data networks. The fabric includes strategically located proximity and co-location hosting centres, initially in New York, Chicago, London, Frankfurt, Tokyo and Singapore. Later this year additional centres will open in Hong Kong, India and Brazil. Clients that have already moved their

financial applications into the Elektron hosting centres have experienced significant cost reduction and superior performance. Using this open and neutral network, clients, exchanges, brokers and other liquidity providers will be able to publish messages and content directly to their discrete counterparties and subscribe to service providersÍ analytics, algorithms, risk models, as well as post trade facilities and reference data resources. Thomson Reuters says that Elektron builds on this by being fully compatible with its existing middleware, metadata and commercial model. Third parties can move all the applications they have built on Thomson Reuters market data system seamlessly to Elektron. Jon Robson, President, Enterprise, Thomson Reuters adds: ñ This is a time of extraordinary innovation for Thomson Reuters, our customers and our partners, as together we respond to and shape a rapidly evolving financial marketplace. Elektron is designed to enable this innovation. It marks a step-change in empowering customers, enabling them to innovate and connect to the markets and to each other across a neutral, global and content rich infrastructure. We are responding to the needs of a new era in the financial industry, one which requires that all participants benefit from increased transparency and equal access to markets. Firms of all sizes will be able to connect via Elektron, benefiting from greater speed, lower operating costs and flexibility that will enable the markets to work and evolve freely.î ISJ

Dash It All: BNYM’s New FunctionalityBNY Mellon Asset Servicing reports that it has introduced new dashboard-style reporting functionality to help asset owners and asset managers gain greater visibility into their securities lending portfolio. The new reports, it says, provide both detailed and executive summary-level information on earnings, loan values, credit quality and other account activity designed to help decision-makers evaluate performance and potential exposures across their securities lending positions. Available to clients through BNY MellonÍ s Workbench reporting platform, the new lending dashboard offers web-based access to comprehensive and customisable data, including:Month-to-Date Lending Revenue Analysis� � � SURYLGHV�P RQ WKO\�earnings by security, including average market value available, market value on loan, utilisation percentage, total and client spreads,and client earnings;Executive Reinvestment Portfolio Summary - details fund characteristics, floating rate index information, credit quality, asset class distribution, maturity schedule, top 10 issuers, daily rating changes, and exposure by industry;Executive Lending Summary� � � GHVLJQ HG� IRU� H[HFXWLYH�management and presented in graphical format, shows lending utilisation by security and top five borrowers by security type. It also provides daily average returns, volumes and collateral percentages by loan type; earnings by asset class; cash versus non-cash collateral held by loan type; and top 10 earnings by security. ñ Asset holders are clearly devoting more attention to risk and demanding greater transparency in their reinvestment accounts,î said Kathy Rulong, global head of securities lending for BNY Mellon. ñ Our lending dashboard offers them a wide range of actionable data and key metrics with just a few clicks. The new reporting format provides clients with at-a-glance insight into their lending portfolio, supporting the decision-making they do daily to manage and maximise their planÍ s objectives.î ISJ


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Analyse This Automation

Has Automation Become Automatic?The mutual fund industry appears to be embracing automation. Dan Llewellyn, Director of Market Innovation at Calastone, reflects on some of the key industry developments and drivers and looks ahead to what the industry can anticipate.

Over the past three years, the mutual fund industry seems to have woken up to the potential of automation processing. This may have been driven by evidence of successful post-MiFID equities markets initiatives. It may have resulted from an awareness of the limitations of having a single incumbent transaction processing provider. We believe it is certainly driven by regulatory awareness. Not only in the form of RDR, but from a desire for cross-border transaction harmonisation in the form of UCITS. Setting a common goal for ISO20022 has helped. Many firms are figuring out how they can become ISO20022-compliant yet in reality they can become compliant today without needing any investment in new processes or technology. The regulatorsÍ attention on risk reduction is no passing fad. They, like the industry associations, are keen to find ways to make processes more efficient, ways designed to help the entire market - whatever their size, location or communication preference. The settlement model has been addressed. Historically mutual fund settlement has been conducted on a secondary market model. Now the industry can transact RQ � D� SULP DU\� P DUNHW� P RGHO� � � RQ H� ZKLFK� KHOSV�SDUWLFLSDQ WV�transact more efficiently and with greater certainty. Business processes are being reviewed and amended. In the automation of historically manually-handled processes, manual processes should not simply be mirrored using technology. Sometimes they need to be re-thought, such as the automation of reconciliations. In line with EFAMA recommendations for greater automation and fund processing efficiency, and the IMA’s proposed principle for automation of reconciliation reporting, processes have now been fully automated to meet previously resource-intensive regulatory requirements. So what’s next? We believe the most significant developments focus on benefiting from international transaction processing interoperability, truly cross-border trading and more efficient post-trade services. So often, we are asked how quickly other domestic and international fund providers, distributors and transfer agents can be connected so that participants can extend their reach. Firms will quickly reap the benefits of order processing and settlement scale, ensuring that they - and the regulators - can be confident that more flow does not mean more risk.

How can data management systems produce the right translations for the middle office?Stuart Plane, Director, Cadis

Judging by the recent flurry of local-language releases, data management providers have stepped up translation to try and support the global ambitions of banks and asset managers. But many firms are still left wanting. These enhancements provide basic data translations, but nothing deep enough for the specific requirements of middle offices. Local-language capabilities that are built into data management software from the ground up are the answer to getting the level and flexibility of translation needed. The good news is they do exist.The weaknesses of basic translation capabilities are exposed by double-byte languages in Asia. Data management systems which offer generic Kanji or Chinese translations will provide one character when, in reality, multiple variations are needed by the different desks, asset classes and offices. In addition, middle offices can’t rely on poorly translated data to produce suitable client and regulatory reports. Where a Western-educated risk officer can bridge the gap caused by a mistranslated character, a rural investor probably canÍ t.A data management system which has had double-byte or other language support simply added on will need to be customised to account for local variations; even then, translations still may not be detailed enough. In cases where the technology is legacy, IT databases would have to be completely restructured. At a minimum this extra work will include manual workarounds to format data, increasing the risk of mistranslation and operational error.So, the answer? A data management system that has language support built into it from the ground up. This is already optimised to deliver user-specific translations. When translation capabilities are built into the technology, data management systems are able to support the languages inherent in the userÍ s underlying databases. Translations are no longer limited to the word/character scope of the data management solution; instead the user dictates the depth of the language support.Building local-language capabilities from the ground up provides added benefits, like operational efficiency. Offices from around the world can rapidly source golden copies for local operations while working from the same data master. Minimal manual intervention is needed to take data from a master set in English and input it into the format a user in Hong Kong or Italy wants. Any middle office user can easily get data - with the terms and labels they want - across the life of a transaction. No firm with global aspirations should expect their middle offices to put up with poor translations or a language they’re not used to. Where basic translations fail, the ground-up approach to local-language support makes data work for the user and delivers real benefit to the business.

AnAlyseTHIS


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Fund Focus on Cyprus - sponsored section

KPMG in Cypruspartner in businessCyprus as a financial centreCyprus is an attractive financial centre combining the advantages of a traditional offshore centre with those of a full member of the European Union. Despite the global economic slowdown, by May 2009 more that 6,000 new companies had been registered. Cyprus has an excellent infrastructure allowing clients to add real substance to their tax planning in the form of fully-fledged operations in the island. With a population of approximately one million, Cyprus is much larger than the other financial centres of Bermuda, the Caribbean, the Channel Islands, the Isle of Man, Malta or Luxembourg and has a large number of talented professionals available to work in the financial services industry. Yet it is still possible to contact directly the government and legislators in the jurisdiction, without having to deal with the layers of bureaucracy that tend to exist in more mature and more complex financial centres.

KPMG’s profileKPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 144 countries and have 137,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss cooperative. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG in Cyprus traces its origins back in 1948 and today, it is one of the largest and most reputable audit and advisory firms in the Cyprus market. KPMG classifies the services offered into three functions, each of which includes a wide range of specialized services aiming at providing our clients with the service that best suits their individual needs. These three functions are:• Audit• Tax• Advisory For each of these core functions, KPMG has specialized departments with highly skilled professionals, headed by partners with extensive experience.

KPMG’s Tax and Corporate ServicesOne of KPMG’s fastest growing departments is the one focusing on tax, both local and international. The tax department of KPMG in Cyprus provides full tax support and compliance services, as well as tax planning and advisory services to a significant number of local and multinational companies. KPMG’s tax department comprises a team of proficient tax advisors who are highly experienced in the field of local and international tax as well as accounting issues.Among the core functions of KPMG’s tax advisory department, is the provision of specialized tax opinions in:• Corporate Taxation;• International Executive Services (I.E.S) and Personal

Income Tax;• Value Added Tax (VAT);• Capital Gains Tax (CGT);• Stamp Duty Tax.

Tax Compliance servicesCorporate TaxationCorporate tax compliance services relate to the interpretation

of current tax laws and regulations stemming from Cyprus’ accession to the European Union. Preparation and annual review of tax returnsIn the course of KPMG’s tax advisory services, the tax department undertakes the preparation and submission of corporate and personal tax returns, Special Contribution for the Defence calculations, Capital Gains computations, VAT returns, PAYE matters, as well as Immovable Property issues.Due DiligenceThrough due diligence services, KPMG provides reports that address the detection and correction of issues that are inconsistent with the tax legislation. KPMG provides alternative solutions to the business’s management and advice on the possible tax implications that may arise from each course of action. Tax and Social Insurance withholding from Salaried IncomeKPMG provides services to companies and individuals in relation to the tax management of expenses and income, the correct withholding and remittance of PAYE and social insurance contributions as well as the structuring of the most tax beneficial retirement plan.Tax services to staff seconded to CyprusKPMG provides the following services and the relevant support to the company as well as to the seconded individuals:• Support in the settlement of foreign citizens in Cyprus,

including issues relating to the Social Insurance Legislation,• Support for the settlement of Cypriot citizens in a foreign

country,• Provision of tax advice at the arrival of employees as well

as at their departure from Cyprus,• Preparation and submission of tax returns,• Advice on tax planning opportunities and the provision of

written tax opinions, and• Provision of tax advisory services regarding income tax

and capital gains tax issues of private pension tax and life insurances.

• Tax Advisory Services• International corporate taxation • KPMG provides the following tax advisory services:• Thorough examination of the tax consequences in relation

to inbound and outbound investments,• Tax planning regarding the implementation of efficient tax

structures through Cyprus,• Tax planning regarding exit strategies and efficient

repatriation of profits,• Analysis of the tax implications analysis resulting

from intra-group cross-border capital movement as well as from the cross-border charge and/ or fees collection, tax rights and dividends under the angle of bilateral conventions and the European Tax Law. Transfer Pricing

KPMG, with many years of experience on complex international and cross border transactions can provide the following services:• Planning the implementation of transactions between

related companies,• Compliance with Transfer Pricing principles and

preparation of the relevant documentation.• Review of agreements and other relevant documentation

for ensuring compliance with Transfer Pricing principles.

Corporate ServicesIn line with KPMG’s long-standing market reputation for providing integrated and flexible business methodologies, the Corporate Advisory Services practice is involved in a broad


35

range of corporate and commercial work for a wide variety of clients, both domestic and international. The advice and services we offer in the commercial arena are client-driven and are often provided in conjunction with other KPMG services.

KPMG’s Corporate Advisory Services include:• Corporate and Commercial• Company Secretarial Practice• Banking and Financial• Capital Markets• EU, Competition Law and Regulatory• Private Client services• Intellectual Property• Real estate• Employment Law

Present tax environment in CyprusThe excellent present tax environment in Cyprus is best illustrated by the results of a KPMG survey of European tax jurisdictions. Cyprus, Ireland, and Switzerland are the top three countries in a league table of European tax systems, compiled by KPMG International, in which major business organizations across Europe assessed the attractiveness of their domestic tax regimes. All three countries were rated highly for their combination of consistency in interpreting tax legislation, stability in resisting frequent changes to tax laws, and comparatively low tax rate. These views were compiled from more than 400 interviews of tax professionals in multinational companies across Europe. Survey participants were asked how attractive they believed their country’s tax regime was compared with other European states. The survey explored participants’ attitudes to particular aspects of their home tax regime, including consistency, stability over time, volume of legislation, the tax rate and relations with tax authorities. Taking the percentage of respondents who thought key aspects of their domestic systems were attractive and subtracting those who felt they were unattractive gives a net attractiveness score for each country. Cyprus came out on top, with 90% of the participants giving positive responses, leaving behind established rival holding jurisdictions, such as Ireland (89%), Switzerland (83%), Malta (81%), Luxembourg (61%) and the Netherlands (59%).The unique advantages of a Cyprus holding companyAlthough there is a number of countries that have been established as reputable Financial centers in the European Union and are in a position to offer some very attractive tax advantages, none of these countries has managed to combine together these benefits to the same extent as Cyprus, which in addition to the wide network of double tax treaties and the full application of the EU directives, firmly put Cyprus in an enviable position both in the European Union and world-wide. Cyprus, a full member of the European Union since 2004, has the lowest corporate tax rate in all Europe at 10%. This low corporate rate of tax is possible mainly due to the small size of Cyprus and consequently the size of the budget of the Republic of Cyprus and the fact that smaller in size EU members, that cannot compete in heavy industry-technology can only compete by finding ways to attract foreign investment. Cyprus has over the last two decades, been used extensively for International Tax planning by multinational companies from all over the world including the United States, Canada, major European countries like Germany, the UK, Denmark and Sweden. It is a fact that most of the investment that went

into Central/Eastern Europe and Russia was routed through Cyprus because of the very advantageous tax treaty network.

Cyprus also offers excellent infrastructure facilities and services, such as banking, telecommunications and human capital. Professional services are of a very high standard in Cyprus, with a considerable English influence. Many Cypriot lawyers are members of the United Kingdom Inns of Court or graduates of British universities and are well-versed in the developments of international commercial law.

The standards of the accountancy profession are equally high since the majority of its members are qualified Chartered or Certified Accountants of the UK or Certified Public Accountants of the USA and International Accounting Standards and International Standards on Auditing are strictly adhered to. The international attractiveness of the Cyprus tax regimeThe main features that determine the attractiveness of Cyprus for international clients seeking optimization of their tax structures are:• lowest corporate tax rate in the EU – 10%• no withholding taxes levied on outgoing overseas

payments• infinite profit parking and carrying forward of losses• minimal exemption requirements on dividends received

from overseas subsidiaries or permanent establishments• no taxation of profits from disposal of securities• extensive Double Tax Treaty network• OECD “white list” status• access to all EC directives aimed at reduction of intra-EU

taxation• an advanced tax ruling system

Cyprus attractiveness to institutional and private equity clientsCyprus is becoming a destination of choice for fund managers seeking new locations to conduct their business. Its credibility as a reliable specialist center for funds is growing steadily. Characteristically, an important advantage of Cyprus’ fund management service is that it is relatively flexible and quick to set up a fund once you have all the necessary information and documentation in place. It is also easy for an existing fund management firm or financial services entity to obtain authorization to operate in Cyprus on the basis of “passporting” an existing license from another EU jurisdiction. Cyprus funds are regulated by the Central Bank of Cyprus. There are several different types of funds that can be registered in Cyprus, each suited to different needs. International Collective Investment Schemes can be set up under a number of legal structures:• A variable capital investment company (SICAV equivalent).• A fixed capital investment company (SICAF equivalent).• A unit trust.• A limited partnership.• The non-UCITS funds of Cyprus usually take one of three forms:• Experienced investor fund.• Private scheme with a focus on risk capital investment.• Retail fund. The “can-do” culture of the practitioners and the accessibility to the regulator are further reasons for choosing Cyprus as an alternative jurisdiction for registering and licensing a fund.

By Angelos GregoriadesBoard Member, Head of Tax and Corporate Services

of KPMG Cyprus

Fund Focus on Cyprus - sponsored section


36

The ISJ Profile Gary Probert

From the East End to the East SideWhat do the East End of London, Boston and New York City all have in common? The answer is that they are all important places in Gary ProbertÕ s career. From the Boleyn Ground in East London (West Ham United Football ClubÕ s home ground), to Boston, Massachusetts, to Wall St, one lively and animated connecting thread is the current Chairman of ISITC (The International Securities Association for Institutional Trade Communications). Born in Stratford and raised in East Ham in the London Borough of Newham, Gary moved to Boston in 1983 with his wife Laura, whom he met in London. The move to New York City followed in 2000 after he was hired by the then Salomon Smith Barney to run its equities middle office. After moving to Boston he found employment at Bank of Boston, then at Fidelity Investments, before the move to New York. Today, he is Managing Director and a global product manager with the Citi Electronic Markets team., within CitiÕ s Securities and Fund Services. He focuses primarily on Execution to Custody, an initiative that links CitiÕ s trading execution capabilities with its custodian network. Gary is an avid fan of West Ham United but after moving to the States, was faced with a new challenge. Many British expatriates fail to adapt to life outside the UK, but with little or no information readily available in the US about British sport, Gary became Ô enamoured of US sports. Ò I became a big Boston sports fan,Ó he recalls. Ò The Red Sox (baseball), the Patriots

(American football), the Celtics (basketball) and the Bruins (ice hockey).Ó He also ended up at Charles River Rugby Club in Boston, where he played until the mid 1990s Gary is focused on the dedicated work of ISITC on a daily basis as it pursues its mission: to improve the quality of communication and the percentage of straight-through-processing throughout the trading life cycle. He calculates that he spends the equivalent of two to three days a month on the ISITC job, with the full support of his employers. He became Chairman at the start of January this year, and his two-year stint in the role will end on December 31 2011. Comprised of 1,500 individuals from 350 companies worldwide, ISITC provides members with the means to revolutionise the securities trading process. ISITC brings together broker/dealers, custodians, investment managers, vendors/utilities and other industry professionals to develop proposed standards that are designed to enhance efficiencies in trade processing and related communications. ISITCÕ s members work hand-in-glove to reduce inefficiencies, lower risk and build shareholder value while developing and promoting the global securities industry. Further information can be found on its website: www.isitc.org. Gary is supported by the ISITC Board of Directors, comprising several members from major financial institutions. The Board includes First Vice Chair Jan Snitzer (of Loomis, Sayles & Company), Second Vice Chair Norman Papazian (of State Street Corporation), Immediate Past Chair Genevy Dimitrion (of State Street Corporation), Treasurer Tom Murphy (of Citibank Global Markets), and Secretary Jocelyn Flaherty (of Omgeo). ISITC is comprised of several Working Groups who focus on specific areas, including Derivatives, Payments, Reconciliation, Settlements, and Corporate Actions. These Working Groups work closely together to help develop best practices for the industry in an effort to promote efficiency. The most recent evidence of this work is the recently released Market Practice Recommendations for Mutual Fund Trailer Fee Payments, released in early February this year. Mutual fund trailer fees are the fees paid by mutual fund companies to distributors for marketing or shareholder servicing of funds. The Market Practice focuses on two primary challenges surrounding trailer fee payment processing: the ability to identify payments as being specific to trailer fee processing, and a defined method for including required payment calculation details, which are needed to reconcile each of the payments. The recommendations explain how market participants can leverage the ISO 200022 payment clearing and settlement message to deliver trailer fee payments and required supporting detail information in all currencies. This is the first Market Practice addressing messaging in support of such payments. The ISITC Payments Working Group developed these guidelines to improve payment processing across the mutual fund industry, it reminded us at the time of launch. Ò Historically, trailer fee payments have been processed manually, and there has not been a high degree of transparency or efficiency in executing and receiving them,” notes Norman Papazian, Executive Sponsor of the ISITC Payments Working Group. Ò We developed this Market Practice to address these shortcomings in the industry, and we encourage firms to adopt these standards in order to improve the industry’s workflow as a whole.” By adopting the Market Practice standards, mutual fund distributors would benefit from increased transparency into payments and a better understanding of the calculation methodology being used to determine the payment amount. In addition, the non-USD currency payments process would become more automated and in turn, eliminate the use of paper statements and checks. “ISITC is continually focused on the issues facing financial institutions today and how to address these issues head-on,Ó says Gary Probert. Ò This Market Practice was developed through the valuable input of our member firms, who represent the world’s largest mutual fund companies. It is only through their insight and hard work that we are able to continue identifying and solving our industryÕ s challenges.Ó ISITC strives to continue to raise market standards. Ò There are many different processes we can improve, and our subject matter member experts are committed to implementing data & business standards to increase the efficiency of trade processing,” concludes Gary Probert. GSL Global

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Hedge Funds Understanding Hedge Funds post Madoff Era 18 Feb - 19 Feb Hedge Fund Strategies 3 Mar - 4 Mar Due Diligence on Hedge Funds 16 Mar Managing Hedge Fund Risk 23 Mar - 24 Mar Credit Derivatives and Hedge Funds 17 May Prime Brokerage 7 Jul - 8 Jul Performance Measurement of Hedge Funds 1 Sep - 2 Sep

Securities Finance International Securities Lending 20 Jan - 21 Jan Equity Finance & Structured Products 25 Feb - 26 Feb Bond Financing (Repo) 15 Apr - 16 Apr

Securities Services Understanding Basel II 16 Feb - 17 Feb Securities Operations Clearing & Settlement 30 Mar - 31 Mar Global Collateral Management 27 Apr - 28 Apr

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FinTuition world tour ad blue no lines.indd 40 18/01/2010 12:521-47 main text Final ISJ47.indd 36 04/06/2010 17:27

The Global Series of International Securities Lending SeminarsStarting with Stockholm, Sweden 27 Jan 2010. One day seminars giving insight into the world of securities lending as background to GSL Summit Series. The course is designed for professionals looking for a solid fun-damental understanding of this business.

In association with

EXPERT TUITION

INDUSTRY RELEVANT

TARGETED TRAINING STAY AHEAD

SPECIALIST KNOWLEDGE

CUTTING EDGE MARKET

LEADING

For more information visit:

Book your place onlineor call us today on:

Hedge Funds Understanding Hedge Funds post Madoff Era 05 - 06 October Hedge Fund Strategies 12 - 13 October Due Diligence on Hedge Funds 25 May Managing Hedge Fund Risk 09 - 10 June Prime Brokerage 07 - 08 July Performance Measurement of Hedge Funds 01 - 02 September

Securities Finance Equity Finance & Structured Products 07 - 08 June Bond Financing (Repo) 02 - 03 November International Securities Lending 07 - 08 September

Securities Services Understanding Basel II 22 - 23 June Securities Operations Clearing & Settlement 24 - 25 November Global Collateral Management 22 - 23 September

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38

The recent financial crisis hit confidence in and within the financial sector – very quickly. The public outrage at the sector is disturbing, but not surprising. Many of the questions that stakeholders and the public are now asking are valid. How could it have happened? How can we ensure that such a crisis will not happen again? How can we trust any financial institution again?

The sector also lost confidence in itself, as seen in the collapse of the interbank market. A semblance of trust has

returned, but confidence remains fragile, the focus has moved from senior members of financial institutions to sovereign debt valuations. Despite the bail-out package for Greece, markets remain very jittery. The restoration of confidence in and within the capital markets will be a long journey.

Leveraging a robust infrastructureNot all the news is bad. Baron Lamfalussy, a leading figure in the financial markets, summed up the pivotal role of exchanges, central counterparties (CCPs) and central

securities depositories (CSDs) during the crisis in 2008: “The clearing, settlement and payment systems deserve particular praise. Few people, including financial market participants, let alone governments and the general public, are aware of the amount of effort that has been invested over the past 20 years into enhancing the crisis resistance of

these systems. The investment has been rewarded by high returns.”

Major credit-related events, such as the collapse of Lehman Brothers, rigorously tested risk models and infrastructure service providers. They underscored the need to have resilient risk management policies and programmes in place for all types of financial institutions, including

Euroclear capital markets and risk

So how were the knock-on impacts of Lehman contained? The primary factor is that 99% of all credit extended by Euroclear Bank to its clients is backed by collateral.

Restoring Confidence to our Capital Markets by John Trundle, Chief Risk Officer at Euroclear


39

Euroclear capital markets and risk

infrastructure service providers. The most constructive realisation to come out of this crisis is that infrastructure service providers such as Euroclear Bank, the only ICSD with which Lehman chose to do business, have been able to test and prove the effectiveness of their crisis and risk management procedures.

So how were the knock-on impacts of Lehman contained? The primary factor is that 99% of all credit extended by Euroclear Bank to its clients is backed by collateral. The remaining 1% is typically extended to very high quality counterparties like central banks. Thus, Euroclear Bank’s

credit exposure on Lehman Brothers was fully covered and closed out without any credit loss, or disruption to clients or the market. The single-purpose bank status of Euroclear Bank, i.e. intra-day credit is granted exclusively to avoid settlement fails, means that credit risk is very short term, transaction related and managed precisely.

Other market infrastructures proved to be equally robust. In the foreign exchange settlement area, CLS (Continuous Linked Settlement) withstood the turmoil, having processed a peak of over 1.5 million instructions, representing over 95% of all global foreign exchange activity, on a single day in September 2008. CCPs like LCH.Clearnet successfully and relatively quickly wound down Lehman Brothers’ OTC interest rate swap positions, which represented a notional value of around USD 9 trillion encompassing over 65,000 trades in five major currencies. Lessons have been learnt in managing the process, but the overall picture is very encouraging.

Renewed regulatory focus Regulators worldwide want to extend the benefits of

well-constructed infrastructure further by pushing more OTC derivatives transactions through a central clearer. This can increase resilience, but is not a silver bullet. Such legislation must not compromise a CCP’s ability to manage counterparty and systemic risks. The CCP needs to be able to protect its own position and, accordingly, clear instruments only where it can price and margin them reliably. The challenge for regulators will be to balance the extension of a new range of securities with the need to protect the CCP itself.

Another initiative to boost confidence in financial institutions is the level of capital a firm should hold as Tier 1. This will rise. There is no single right answer, not only

because of measurement problems in assessing risks, but also because it depends on how safe the regulators want the system to be. There are trade-offs to consider in setting new and higher thresholds. Yes, higher Tier 1 ratios would strengthen a firm’s

ability to withstand adverse credit events. But, higher capital adequacy thresholds will increase the cost of intermediation and reduce financing needs, which may have an adverse affect on jobs, economic growth and social welfare.

One of the important challenges facing national governments and financial supervisory authorities is

the need to take a globally co-ordinated approach when implementing such changes. Failure to do so will undoubtedly result in regulatory arbitrage where financial centres with more onerous regulations will find themselves at a disadvantage to markets where regulations are more relaxed. Efforts are underway to co-ordinate within Europe, between Europe and the US, and globally though Basel and the G20. The widest possible agreement will be needed if the measures are to be effective.

Governance rolesPublic outcry over financial market failure has been exacerbated by perceived excesses and arrogance shown by some bankers – and the most potent symbol has been their sizeable bonuses. Regulators want to ensure individual incentives are aligned with the long-term interests of the firm. The financial industry is seeking to resolve these compensation imbalances, which will be crucial in restoring public confidence in the financial industry.

Ultimately – whether talking about regulatory effectiveness or financial institution management – there is no substitute for good judgement. This requires countering views, especially the voices of caution, to be heard loudly at the top tables.

Risk management no longer resides within a specific division that produces quarterly reports for management or the Board. Risk management needs to be part of the corporate culture, undertaken by all areas of the organisation. Risks need to be managed within a comprehensive risk framework, with policies related to each of the relevant risks and a

governance structure that makes clear the responsibilities for monitoring and control. Formal but pragmatic processes must be in place covering both day-to-day business practices and the necessary control processes, which include the identification, monitoring and mitigation of risks, and incident management processes. But, the single most important factor in good risk management is the tone from the top. National central banks have played a crucial role in bringing some stability back to our capital markets during the recent crisis. But, they need to address and implement their exit strategies to enable the markets to function properly. It will take time. Trust, when lost, is not easily restored. It will require a large number of small measures and a prolonged period of providing reliable financial services to the wider community. Infrastructure can play its part by maintaining its resilience and adapting its services to evolving market needs.

John Trundle is the Chief Risk Officer at Euroclear SA/NVFinancial Services Brussels Area, Belgium and a member of the Euroclear Group Management Team. John Trundle’s previous positions include Head of Business Continuity Division at Bank of England, Head of Market Infrastructure Division at Bank of England, and the Governor’s Private Secretary

Public outcry over financial market failure has been exacerbated by perceived excesses and arrogance shown by some bankers.

Regulators want to ensure individual incentives are aligned with the long-term interests of the firm.

National central banks have played a crucial role in bringing some stability back to our capital markets during the recent crisis. But, they need to address and implement their exit strategies to enable the markets to function properly.


40

John Lewis Anoints J. P. MorganJ.P. MorganÍ s Worldwide Securities Services business has finally made it to the top. It has been anointed by John Lewis, EnglandÍ s favourite retailer. J.P. Morgan will provide custody, accounting, performance measurement, FX, compliance, cash sweep and securities lending services to The John Lewis Partnership Pensions Trust, which has in excess of £2 billion in total assets under management. The securities lending programme has been specifically designed to meet The John Lewis Partnership Pensions Trust requirements; the complex transition required global coordination with J.P. MorganÍ s borrower network to immediately meet the client’s collateral investment funding requirements. “We found J.P. Morgan’s offering to be superior to its competitors, including the scope of its securities lending, accounting and performance measurement services, and have been very impressed with its highly efficient on-boarding programme,” said Andrew Chapman, The John Lewis Partnership’s Pension Investment Manager. The John Lewis Partnership operates 28 UK department stores, 225 Waitrose supermarkets and Greenbee.com. The business has an annual turnover of over £7.4bn. It is the UK’s largest example of worker

co-ownership where all 70,000 staff are Partners in the business. It was also recently the subject of a very friendly three-part fly-on-the-wall documentary series shown on BBC2. Oh, and one other thing, it is arguably best known not just for its quality of service, but for its motto: ‘Never Knowingly Undersold’. This means that it will match any lower price that a customer can reasonably find for the same item elsewhere. ISJ can’t help wondering whether that same principle applied in the beauty contest for this particular mandate.

HewittJ.P. MorganÍ s Worldwide Securities Services business has been awarded a mandate to provide custody and related services to pan-European defined benefit pension schemes advised by Hewitt Delegated Consulting Services. J.P. Morgan will provide custody, transition management, accounting, performance measurement, FX, compliance, securities lending and trustee services to support Hewitt pension fund clients throughout Europe, three of which, with a total of more than £450 million in assets under management, are already using J.P. MorganÍ s services. Hewitt Delegated Consulting Services allow pension scheme investment specialists to manage and execute a scheme’s investment policy efficiently. The trustees still set the strategic framework and provide regular oversight, but the service then manages and executes the investment strategy against strict parameters. As a result, a scheme benefits from rapid responses to changing market and/or solvency conditions, and can take opportunities to lock in gains.

KLP Awards Global Custody and Depositary Bank Mandate to Northern Trust and Handelsbanken PartnershipKommunal Landspensjonskasse (KLP), one of Norway’s largest life insurance companies, appointed Northern Trust and Handelsbanken to provide custody and depositary services for assets managed on behalf of its funds and insurance businesses. In 2004, Northern Trust became the first global custodian to partner with a pan-Nordic bank to provide custody and related services to a mutual fund. KLP was the first Norwegian mutual fund to select Northern Trust and Handelsbanken for their innovative mutual fund solution.

Citi Japan MandateCitibank Japan Ltd Securities Services has been appointed by Interactive Brokers Securities Japan, Inc. (IBSJ) to provide third-party clearing services for IBSJ’s Japanese equities trades on the Tokyo Stock Exchange (TSE) with immediate effect. CJL will handle all of IBSJ’s clearing and settlement obligations in this market and will implement a linkage to Japan Securities Depository Center, Japan’s central securities depository, as required by local regulations. The move follows Interactive Brokers’ 2008 acquisition of Japan’s Moriai Securities, a fully-licensed broker-dealer, which was subsequently renamed IBSJ.

gains and losses Mandate News

Quis Custodiet Ipsos Custodes? Who Guards The Guardians is the usual literal translation of the Roman poet Juvenal’s oft-quoted question: Quis Custodiet Ipsos Custodes? It suddenly became relevant to the modern world when the Guardians of New Zealand Superannuation announced in mid-April that they had terminated the global equity, non-US small-cap equity and multi-strategy equity mandates managed by GMO. GMO was appointed in June 2004 to manage a non-US small-cap mandate, in February 2005 to manage a growth-oriented global equity portfolio and in June 2006 to manage a multi-strategy equities mandate. ISJ immediately asked the Guardians for further background to their actions, asking politely bluntly why the mandate has been terminated. Is it for performance-related or other reasons? We are still waiting for an answer. In the meantime, GMO Renewable Resources Ltd continues to manage the Fund’s New Zealand timber assets. This decision does not affect the New Zealand Superannuation Fund’s strategic asset allocation to global listed equities, the NZSUPERFUND tells us. The New Zealand Superannuation Fund, which commenced investing at the end of September 2003, is designed to reduce the tax burden on future New Zealand taxpayers of the cost of New Zealand superannuation. An ageing population means the cost of providing New Zealand superannuation is expected to double over the next 50 years. To prepare for this, the Government has made contributions to the Fund while the cost of superannuation is relatively low. The Fund will invest the money on a prudent but commercial basis and the Government will begin to make withdrawals from 2031, when the cost of superannuation has increased. As at 28 February 2010 the value of the Fund was NZ$16 billion. The Guardians work with investment managers around the world to execute the strategy for investing the Funds. A list of investment managers, now, presumably, minus GMO, can be found on the Fund’s website www.nzsuperfund.co.nz.

GLOBALFUNDS Ireland


“Ireland now deservedly stands out as a global centre for funds.” Brian Lenihan, T.D.Minister of Finance

Editorial features include:

Annual Global Funds - full review of the IFIA’s Conference

The risk reward - why Ireland appeals to the new hedge fund investor

Return to growth - advisor bottlenecks and technology catch up

Ucits IV, the next chapter Ucits IV, the next chapter in the Ucits story, is due to be effective mid-2011. In anticipation of the Ucits IV era, tax considerations are dominating the agenda and in this respect Ireland has already progressed to consideration of the tax issues as they relate to Ucits management companies, master feeder structures and fund mergers. In his budget speech finance minister Brian Lenihan high-lighted the industry-led activity to prepare the tax environment for the new Ucits era to ensure that the rationalisation opportunities included in Ucits IV bring with them tax certainty and no adverse tax implications for the funds concerned and their underlying investors. So, what has the evolutionary tale of Ucits together with the in-dustry activity in Ireland to enhance the efficiencies of Ucits got to do with the AIFM directive? Simply to demonstrate how, when the fundamentals are correct, a firm foundation for a truly internation-al investment fund structure can be established, which can evolve to reflect changing conditions and requirements and whose scale of operation will encourage the pursuit of operational efficiencies. A similar opportunity now exists in the non-Ucits space and if col-lectively we can prepare the architecture, the extent of the prize is known. However, should we fail to achieve or fall short in our efforts it will certainly be an opportunity missed.

Gary Palmer, chief executive of the Irish Funds Industry Association

Fund Facts...Irish Regisitered UCITs Funds (Net Asset Value - Euro Mn)

1991 776

1992 2,212

1993 6,311

1994 8,053

1995 11,829

1996 14,762

1997 20,749

1998 42,987

1999 94,502

2000 145,399

2001 214,888

2002 238,467

2003 285,642

2004 343,377

2005 465,339

2006 582,737

2007 647,469

2008 517,702

2009 (Aug) 571,845

2010 ?

KEYNoTES- MINISTER oF FINANCE- EURoPEAN UNIoN- IFIA- NICSA

FEATURES- USA & UCITS- ADVISoR SURPISE- ASIA- PIIGS oR SoUTHERNERS?

PEoPLE- INDUSTRY LEADERS- FUND MANAGERS- FUND ADMINISTRAToRS

DIRECToRY- FUNDS AND SERVICE PRoVIDERS IN IRELAND

GLOBALFUNDS Ireland

New format supplement out with the next issue of ISJ


42

gains and losses Mandate News

The Benche is a web community for professionalswithin trade finance, cash management and custody.Its purpose is to encourage sharing of knowledgeand experience, open discussions and networking.

Join us at www.theBenche.com

Tap into the brains of your industry colleagues.

Supported by

Singapore SlingRBC Dexia Investor Services has extended its relationship with Aisling Analytics, a hedge fund in Asia, to include custody, fund administration and transfer agency for the Merchant Equity Fund, its recently launched long-short resource equity fund. RBC Dexia said the mandate strengthens its position as an end-to-end service provider in Singapore in both the long only, long-short, and alternative investment space.”We have a longstanding back office outsourcing relationship with RBC Dexia”, Michael Coleman, Managing Director of Aisling Analytics reminds regular readers.

BBH Win Underlines Renewed Focus on Reputation in Modern MarketsOut of the Dublin offices of Brown Brothers Harriman comes news that BBH has been appointed as custodian, administrator and transfer agent to Neuberger Berman Investment Funds PLC. Launched in December 2000, Neuberger Berman Investment Funds PLC is a Dublin-domiciled UCITS offering investors access to a broad range of equity and fixed income asset classes. The range of nine sub-funds includes US, China and global equity funds, as well as high yield and currency funds. The range offers 75 share classes registered for distribution in the United Kingdom and other major European jurisdictions including France, Germany, Italy, Netherlands, Spain, Sweden, and Switzerland. Underlining the renewed focus on trust, credibility and reputation that has developed in recent trubled times is the otherwise anodyne PR-driven quote from Dik van Lomwel, head of Neuberger Berman Europe and Middle East: “We are committed to delivering an exceptional service for our clients and were impressed by BBH’s experience, expertise and ability to meet our international business requirements. A reputable service provider is key in the current economic environment and we are confident in their capacity to ensure the safekeeping of our assets.” Established in 1939, Neuberger Berman is one of the world’s largest private, independent employee-controlled asset management companies, managing approximately $173 billion in assets as of December 31, 2009.

UoBAM Turns To BNYMUOB Asset Management has named BNY Mellon Asset Servicing as the trustee, fund administrator and custodian of its Cayman-domiciled United Asia Bond Multi Currency Fund. This Fund is part of UOBAM’s United Multi Asset Strategy Fund and as at 31 March 2010, the United Asia Bond Multi Currency Fund had approaching JPY5 billion (US$50 million) in assets under management. UOBAM is headquartered in Singapore, with regional business and investment offices in Malaysia, Thailand, Brunei, Taiwan and Japan. UOBAM has more than 20 years of experience in investing in equities and fixed income instruments of regional and global markets. “We chose BNY Mellon as our fund administrator as they are highly regarded in the industry for having a robust global infrastructure which can support our

administration needs in Asia as well as those of our global investor base,” said Masashi Ohmatsu, Senior Director & CEO at UOBAM Japan. “The enhanced functionality and efficiencies which BNY Mellon’s appointment brings will enable us to deliver even greater value to our clients.”

Seadrill Digs BNYMBNY Mellon (BNYM) has been appointed transfer agent for Seadrill Ltd, an international offshore drilling company. Seadrill is listing its common shares on the New York StockExchange in addition to its listing on the Oslo Stock Exchange. BNY will provide transfer agent and cross-border share transfer services for the NYSE-listed shares. BNYM’s mandate started on April 15, the date on which Seadrill’s new listing took effect. “BNY Mellon’s global network of resources for cross-border securities servicing was an important reason for their selection”, said Jim Dåtland, Seadrill’s Vice President of Investor Relations. “BNY Mellon helped us identify and work through unforeseen obstacles in the process. We now look forward to realising the benefits of a US-based listing, including enhanced liquidity for our securities.”

BNYM - Fuh Hwa Completes Trio of WinsBNY Mellon Asset Servicing has been appointed as global custodian by Fuh Hwa Securities Investment Trust (Fuh Hwa) for its new mutual fund, Fuh Hwa Global Commodity Fund. The new Fund launched on 6 April 2010. Fuh Hwa was established in June 1997 and claims to be the largest securities investment trust in Taiwan with assets under management totalling approximately US$6 billion as at 26 February 2010. “We chose BNY Mellon not only because of their sophisticated custody platform, but because it was vital to choose a partner who has a strong balance sheet and high credit ratings to ensure the safekeeping of our investment assets,” said Anne Mao, Associate Vice President at Fuh Hwa “The underlying fundamentals of Asia appear relatively strong and the consensus is that Asia’s long term growth advantage will lead to the region increasingly becoming the engine of the world’s growth,” said Chong Jin Leow, Head of Asia, BNY Mellon Asset Servicing. “The rising number of investment vehicles is, in turn, fuelling the need for services from custodians who can provide strong infrastructures which are transparent, cost-effective, and help institutions manage risk in the global markets.” BNY Mellon has had a presence in Taiwan for almost four decades. It provides products and services to Taiwanese institutional investors including treasury services, asset servicing, depositary receipts and foreign exchange services. The Taipei branch is one of the oldest foreign banks in Taiwan having been in operation since the early 1970s. One cannot help wondering if perhaps Chiang Kai-Shek, the loser in the battle for control of mainland China after the Second World War, who then became President of the Republic of China and served as Director-General of the Kuomintang, was one of its early customers.

Please send details of mandate wins to [email protected]


The Benche is a web community for professionalswithin trade finance, cash management and custody.Its purpose is to encourage sharing of knowledgeand experience, open discussions and networking.



Supported by


44

Please visit the event website for a full list of sPeakers and to register your Place today.

22-24 June 2010 | Adlon Kempinski, Berlin, Germany

international securities lending conference

19th Annualin association with

ParticiPants will be able to:

• determine how new regulations might impact on the future growth of the market for both the supply and the demand side

• assess whether there will be any substantial changes in the market infra-structure

• learn how tighter rules on bank capital and liquidity affect the terms on which borrowers do business

• debate with beneficial owners: Do they consider the risk/return profile of securities lending to be worth it?

This is the only event of its kind in Europe, attracting in excess of 400 senior market participants

from banks, broker dealers, asset managers, pension funds, hedge funds and policy makers.

keynote sPeaker:

AlAstAir CAmpbell, former Advisor to Tony Blair

www.afme.eu/isla2010

sPonsors and exhibitors

for more information Please contact: Michala Kocurova +44 (0)20 7743 9337 [email protected]

find out how to get involved: Fleurise Luder +44 (0)20 7743 9361 [email protected]

ISLA_ad203x267v2.indd 1 6/3/10 9:46:02 AM

out and about Pugilism and Paintings

Bankers Up For A Fight: Is Combat Training The Next Big Thing?

You may think that bankers are only interested in fat bonuses, but according to combat training expert Tim Larkin they are increasingly interested in learning how to fi ght! Larkin, from Las Vegas, is the creator of ‘Target Focus Training’ (TFT) and teaches entrepreneurs and bank executives how to protect themselves using ‘extreme’ violence. He has just launched a publicity offensive (no pun intended). Giiven the scraps with Governments and regulators that look likely to lie in wait for banks in the wake of the allegations of fraud recently laid at the door of Goldman Sachs, it probably couldn’t be better timed. “I have senior executives from banks like Credit Suisse, Goldman Sachs and J.P. Morgan Chase enrolled on my courses,” he says. He organises training workshops to demonstrate self-defence techniques which help bankers and other professionals to recognise when they’re in dangerous situations and the techniques to protect themselves when attacked. The workshops teach practical ways to stop an armed attacker to increase personal safety, especially when travelling in higher-risk continents such as Africa or Latin America. Corporate clients principally attend Mr Larkin’s TFT seminars, which include instruction in how to kill. But this is not any old killing, which is bad. This is killing people for protection when they are visiting markets in emerging countries, which has an altogether different moral tone. “Most people feel very uncomfortable with the idea of violence because we have stigmatised it so much,’ he explains. ‘But I try to impress on students that violence is just another tool. You need visions in your head so you can replicate them when you try to do them.” His publicity material cites as an example Krista Waddell, the CEO of Ounces2Pounds. She has enrolled on the courses for four-and-a-half years. She travels extensively, organising gold parties in the UK, US and Australia, which gives her something of an incentive to learn how to look after herself. “Sometimes I walk out of a gold party with £2,000 worth of gold and it can be dangerous especially because I travel on my own,” she said. Armed with that knowledge, fi nance ministers the world over might well be keeping an eye out for her wending her way home after future parties. Waddell, who is also a black belt in Tae Kwon Do, says that she has found TFT very effi cient. ‘He teaches you the basics on how to survive,” she said. As well as learning TFT for protection some executives have discovered that combat training can improve their business decision-making. Tim Larkin reports that he was recently engaged to train traders at the New York Mercantile Exchange; not to improve their capabilities for violence but to help them clarify their aims when trading (ISJ, for what it’s worth, fails to spot any signifi cant distinction between the two!). “Many of them were telling me that they became paralysed before making a trade by the amount of information and research going round their head. The combat training somehow helped them focus their priorities and read the situations better,” he said. Tim Larkin claims also to have trained the US Navy SEALs, Scotland Yard,

FBI Hostage Teams, US Border Patrol and US Treasury offi cers. He is no less than ‘The Man’ that these agencies consult when training for a ‘kill-or-be-killed’ situation. He is co-author of the book, How to Survive The Most Critical 5 Seconds of Your Life (which in terms of strict publishing style should really be called How to Survive The Most Critical Five Seconds of Your Life, because the numbers one to nine are normally spelled out in full while numbers above 10 are expressed in digital terms, but that is sheer pedantry, practised at a safe distance from ‘The Man’). He also co-authors the online newsletter, Secrets for Staying Alive When Rules Don’t Apply.

Out and About BNY Mellon Van GoghHats off to BNY Mellon for its sponsorship of The Real Van Gogh: The Artist And His Letters exhibition which has just fi nished its three-month run at the Royal Academy on London’s Piccadilly. Following the events that have unfolded since July 2007, it takes guts for any fi nancial institution to be doling out money to projects that lie so far beyond their non-core business, and especially to projects that some Philistines will no doubt label elitist. The exhibition provided a near once-in-a-lifetime opportunity to see signifi cant volumes of the work of this remarkable artist up close and personal, and to discuss his often misunderstood ‘madness’ with sympathetic modern listeners. “He was a manic depressive,” commented one particularly empathic journalist from the north of England in a strong accent reminiscent of the hard-working and versatile actress Jane Horrocks. “If he’d had the right medication he would have been all right!” We tip our hats too in the direction of the Scylla and Charybdis of the security world on duty to prevent impatient reporters, and BNY Mellon employees, from gaining entrance a second or two ahead of the allotted time on the special viewing evening on April 12. There is always, though, a way round such minor obstacles for the committed and thirsty. The exhibition proved well worth the effort, and the booty bag that BNYM gifted to visitors included a jaw-dropping book on the exhibition, but ISJ would like to offer a suggestion, and pose one small question. The suggestion? Keep speeches short. Steve Potter of Northern Trust’s is the model to follow on nights such as these. “Hello, good evening, welcome, enjoy the evening, the food and the drink,” is basically his entire speech. A leisurely stroll through the history of the planning exhibition, in what seemed like real-time, was not the note to strike. And the question? Is the serving of prosecco rather than champagne a sign of these straitened times???


Please visit the event website for a full list of sPeakers and to register your Place today.

22-24 June 2010 | Adlon Kempinski, Berlin, Germany

international securities lending conference

19th Annualin association with

ParticiPants will be able to:

• determine how new regulations might impact on the future growth of the market for both the supply and the demand side

• assess whether there will be any substantial changes in the market infra-structure

• learn how tighter rules on bank capital and liquidity affect the terms on which borrowers do business

• debate with beneficial owners: Do they consider the risk/return profile of securities lending to be worth it?

This is the only event of its kind in Europe, attracting in excess of 400 senior market participants

from banks, broker dealers, asset managers, pension funds, hedge funds and policy makers.

keynote sPeaker:

AlAstAir CAmpbell, former Advisor to Tony Blair

www.afme.eu/isla2010

sPonsors and exhibitors

for more information Please contact: Michala Kocurova +44 (0)20 7743 9337 [email protected]

find out how to get involved: Fleurise Luder +44 (0)20 7743 9361 [email protected]

ISLA_ad203x267v2.indd 1 6/3/10 9:46:02 AM1-47 main text Final ISJ47.indd 45 04/06/2010 19:38

NEW Academic & IndustryResearch For 2010

� More Institutional Investors Than Ever Before – Meet moreendowments, pension plans and foundations than at any otheralternatives event.

� New Special Focus Investor Groups – Hear from Latin AmericanInvestors, Nordic Investors, Middle-Eastern Investors, RetailsDistributors & Fund Platforms.

� New UCITS & Managed Account Investor Summit – This separately bookable summit (14 June) focuses on the new generation of liquid and transparent products

� New Asset Allocation & Manager Selection Focus Day – Discoverhow top end investors (Wellcome Trust, Barclays Pension Fund,CERN Pension Fund) are changing their asset allocation.

� Hone Your Business Skills At 3 New Inspiring Mini-Workshops: 1. How to deliver the perfect pitch for investment; 2 Mastering theart of rational decision making under pressure and 3 Using behavioural indicators to detect deception & uncertainty.

� New Range Of Hedge Fund Strategies In Focus: Including GlobalMacro, Fixed Income, CTAs, Systematic Trading, Credit, DistressedDebt, Environmental & SRI, Commodities.

� New Academic Research On Hedge Fund Asset Allocation Byrenowned Hedge Fund Expert Professor Randy Cohen Of MITSLOAN

� New Enhanced Ways of Connecting & Promoting Your Fund(please turn over for more information)

Grimaldi Forum, Monaco

14 June: UCITS & ManagedAccounts Summit

15-17 June: Main Conference

Professor Randy CohenMIT SLOAN

Author Of New Research On

Asset Allocation

Nassim TalebPrincipal

UNIVERSA ASSETMANAGEMENT

Author Of New Research On Crowd Behaviour &

Risk Perception

Lawrence MacDonaldLehman Eyewitness

Author Of “A Colossal Failure of

Common Sense”

Yariv ItahCASEY QUIRK &

ASSOCIATESAuthor Of New

Research On Key Industry Trends

For 2010

Achieve Your Business Goals At The World’s Largest Hedge Fund Event

Hedge Fund Goals

• Meet 300+ Active Investors In TheAlternatives World In Just One Week

• Use Our Unrivalled Structured Networking ToMeet The Right Investor For Your Fund

• Learn From The Top Hedge Fund Brands & The Renowned Industry Stars

Investor Goals

• Discover 2010’s Top Performing Hedge Funds& Hedge Fund Strategies

• Take Part In Our Structured Networking ToMeet Funds Of Interest To You

• Benefit From Our New Investor-Driven &Comprehensive Programme

Danny TruellTHE WELLCOME

TRUST

Michael PowellUNIVERSITIES

SUPERANNUATIONSCHEME

Gerlof de VrijALL PENSIONSGROUP (APG)

Tony BroccardoBARCLAYS PENSION

FUND

Theodore EconomouCERN PENSION

FUND

Larry KochardGEORGETOWN

UNIVERSITY

Ricardo WeissFAPES-BNDES

PENSION FUNDBRAZIL

Diego IcazaBBVA PRIVATE

PENSION FUND,PERU

Meet More End Investors Than Ever Before

Mike NovogratzFORTRESS

INVESTMENT GROUP

Bernard OppetitCENTAURUS CAPITAL

Byron WienBLACKSTONE

ADVISORY SERVICES

Rick Sopher LCF ROTHSCHILD

ASSETMANAGEMENT

Elena AmbrosiadouIKOS

Peter ClarkeMAN GROUP PLC

Hugh HendryECLECTICA ASSET

MANAGEMENT

Steve FriedmanEOS PARTNERS

Hear From The Industry’s Biggest Stars

Mario TherrienCAISSE DE DÉPÔTET PLACEMENT DU

QUÉBEC

Olivier CouvreurAA ADVISORS

Jose Galleano3A

Mussie KidanePICTET WEALTHMANAGEMENT

Join Our UCITS & Managed Accounts Investor Summit

What’s New For 2010?

14 June 2010Answering The Needs

Of The Post- CrisisInvestor:

New Thinking OnLiquidity & TransparencyIn Hedge Fund Investing

The Exclusive Benefits Of Attending� Meet NEW Investors & Asset Allocators Active In

UCITS & Managed Accounts� Discover How To Fine-Tune Your Strategy� Pitch Your Fund During The UCITS & Managed

Accounts QuickFire Showcase � Receive An Exclusive Pass To The Investor Drinks

Reception & Meet The GAIM Investor CommunityIn Advance Of The Main Conference

NEW

EXCLUSIVE: Meet New Hedge Fund Investors

www.icbi-gaim.com

READER OFFER15%

DISCOUNTQuote VIP:

KN2240ISJAD

Free For

End Investors

KN2240ISJAD 203X267:Layout 1 20/4/10 10:29 Page 1

The Landmark London

Thursday 1st July 2010

Presented by

GSL Global SecuritiesLending|

On 1st July 2010 GSL will host the inaugural Securities Lending Awards.

The best and brightest in the industry will be rewarded for their work over the previous year.

The purpose of the Awards is to provide the industry and its customers with a benchmark or best practice via recognition with meaning and integrity.

For tables and sponsorshipcontact [email protected]

The Securities Lending Industry Awards 2010

TheSecurities Lending IndustryAwards

Securities Lending IndustryAwards

GSL2010

Vote NOW for the Best Securities Lending Industry Participants at www.gsl.tv/awards/vote - Your Vote Counts!

All industry practitioners can register to vote – the industry decides on the industry winners.

Voting closes, Friday 11th June 2010

We hope you are looking forward to the awards ceremony as much as we are and will join us there in supporting rugby's Wooden Spoon charity.

ISJ magazine ad - voting.indd 1 04/06/2010 18:151-47 main text Final ISJ47.indd 46 04/06/2010 19:38

NEW Academic & IndustryResearch For 2010

� More Institutional Investors Than Ever Before – Meet moreendowments, pension plans and foundations than at any otheralternatives event.

� New Special Focus Investor Groups – Hear from Latin AmericanInvestors, Nordic Investors, Middle-Eastern Investors, RetailsDistributors & Fund Platforms.

� New UCITS & Managed Account Investor Summit – This separately bookable summit (14 June) focuses on the new generation of liquid and transparent products

� New Asset Allocation & Manager Selection Focus Day – Discoverhow top end investors (Wellcome Trust, Barclays Pension Fund,CERN Pension Fund) are changing their asset allocation.

� Hone Your Business Skills At 3 New Inspiring Mini-Workshops: 1. How to deliver the perfect pitch for investment; 2 Mastering theart of rational decision making under pressure and 3 Using behavioural indicators to detect deception & uncertainty.

� New Range Of Hedge Fund Strategies In Focus: Including GlobalMacro, Fixed Income, CTAs, Systematic Trading, Credit, DistressedDebt, Environmental & SRI, Commodities.

� New Academic Research On Hedge Fund Asset Allocation Byrenowned Hedge Fund Expert Professor Randy Cohen Of MITSLOAN

� New Enhanced Ways of Connecting & Promoting Your Fund(please turn over for more information)

Grimaldi Forum, Monaco

14 June: UCITS & ManagedAccounts Summit

15-17 June: Main Conference

Professor Randy CohenMIT SLOAN

Author Of New Research On

Asset Allocation

Nassim TalebPrincipal

UNIVERSA ASSETMANAGEMENT

Author Of New Research On Crowd Behaviour &

Risk Perception

Lawrence MacDonaldLehman Eyewitness

Author Of “A Colossal Failure of

Common Sense”

Yariv ItahCASEY QUIRK &

ASSOCIATESAuthor Of New

Research On Key Industry Trends

For 2010

Achieve Your Business Goals At The World’s Largest Hedge Fund Event

Hedge Fund Goals

• Meet 300+ Active Investors In TheAlternatives World In Just One Week

• Use Our Unrivalled Structured Networking ToMeet The Right Investor For Your Fund

• Learn From The Top Hedge Fund Brands & The Renowned Industry Stars

Investor Goals

• Discover 2010’s Top Performing Hedge Funds& Hedge Fund Strategies

• Take Part In Our Structured Networking ToMeet Funds Of Interest To You

• Benefit From Our New Investor-Driven &Comprehensive Programme

Danny TruellTHE WELLCOME

TRUST

Michael PowellUNIVERSITIES

SUPERANNUATIONSCHEME

Gerlof de VrijALL PENSIONSGROUP (APG)

Tony BroccardoBARCLAYS PENSION

FUND

Theodore EconomouCERN PENSION

FUND

Larry KochardGEORGETOWN

UNIVERSITY

Ricardo WeissFAPES-BNDES

PENSION FUNDBRAZIL

Diego IcazaBBVA PRIVATE

PENSION FUND,PERU

Meet More End Investors Than Ever Before

Mike NovogratzFORTRESS

INVESTMENT GROUP

Bernard OppetitCENTAURUS CAPITAL

Byron WienBLACKSTONE

ADVISORY SERVICES

Rick Sopher LCF ROTHSCHILD

ASSETMANAGEMENT

Elena AmbrosiadouIKOS

Peter ClarkeMAN GROUP PLC

Hugh HendryECLECTICA ASSET

MANAGEMENT

Steve FriedmanEOS PARTNERS

Hear From The Industry’s Biggest Stars

Mario TherrienCAISSE DE DÉPÔTET PLACEMENT DU

QUÉBEC

Olivier CouvreurAA ADVISORS

Jose Galleano3A

Mussie KidanePICTET WEALTHMANAGEMENT

Join Our UCITS & Managed Accounts Investor Summit

What’s New For 2010?

14 June 2010Answering The Needs

Of The Post- CrisisInvestor:

New Thinking OnLiquidity & TransparencyIn Hedge Fund Investing

The Exclusive Benefits Of Attending� Meet NEW Investors & Asset Allocators Active In

UCITS & Managed Accounts� Discover How To Fine-Tune Your Strategy� Pitch Your Fund During The UCITS & Managed

Accounts QuickFire Showcase � Receive An Exclusive Pass To The Investor Drinks

Reception & Meet The GAIM Investor CommunityIn Advance Of The Main Conference

NEW

EXCLUSIVE: Meet New Hedge Fund Investors

www.icbi-gaim.com

READER OFFER15%

DISCOUNTQuote VIP:

KN2240ISJAD

Free For

End Investors

KN2240ISJAD 203X267:Layout 1 20/4/10 10:29 Page 1

The Landmark London

Thursday 1st July 2010

Presented by

GSL Global SecuritiesLending|

On 1st July 2010 GSL will host the inaugural Securities Lending Awards.

The best and brightest in the industry will be rewarded for their work over the previous year.

The purpose of the Awards is to provide the industry and its customers with a benchmark or best practice via recognition with meaning and integrity.

For tables and sponsorshipcontact [email protected]

The Securities Lending Industry Awards 2010

TheSecurities Lending IndustryAwards

Securities Lending IndustryAwards

GSL2010

Vote NOW for the Best Securities Lending Industry Participants at www.gsl.tv/awards/vote - Your Vote Counts!

All industry practitioners can register to vote – the industry decides on the industry winners.

Voting closes, Friday 11th June 2010

We hope you are looking forward to the awards ceremony as much as we are and will join us there in supporting rugby's Wooden Spoon charity.

ISJ magazine ad - voting.indd 1 04/06/2010 18:15 1-47 main text Final ISJ47.indd 47 04/06/2010 19:38

48

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 knowledgeable and experienced. In addition, DnB NOR provides a wide range of value-added services for foreign clients such as Securities Lending, Income Collection, Proxy Voting, Tax Reclaim, and MIS reporting. As the largest commercial bank in Norway, DnB NOR offers clients full services in securities trading, registration, foreign exchange and Money Market.

T: +47 22 94 92 95F: +47 22 48 28 46Contact: Bente I. Hoem, Head of Global Relations & NetworkE: [email protected]:www.dnbnor.com

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 Services in CEE since 1994 and we will continue our ongoing pursuit of excellence through new technology. Innovation and client focus are the key drivers to service our clients the best way.Other activities of ING Wholesale Banking Securities Services are Paying Agency Services and web-based management of employee stock option & share plans.ING is your local partner in: Belgium, Bulgaria, Czech Republic, Hungary, Poland, Romania, Russia, Slovak Republic and Ukraine.

For further information please contact Lilla Juranyi, Global Head Custody at + 31 20 7979 435 or contact her by email: [email protected]

Custody & Clearing

BHF Asset Servicing GmbH comprises the custody, depotbanking and securities services of BHF-BANK Aktiengesellschaft. With around 250 members of staff, approx. EUR 270 billion in assets under administration and a depotbanking volume of EUR 85 billion, BHF Asset Servicing GmbH is one of Germany’s leading specialists in depotbanking and custody business. It develops innovative and high-class services for investment companies, institutional investors and foreign banks, and excels at tailoring solutions to the individual needs of its clientele. Assets under Administration: EUR 270 bnNo of funds: 478

Strahlenbergerstraße 45; 63067 Offenbach a.M. Germany•Contact: Moritz Ostwald •Phone:+49 69 667744 838•Email: [email protected]

Directory of Asset Servicing VendorsTo be listed,

contact: [email protected]

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 dealing with Nordic and Baltic securities. Due to the unique history of being formed from four established banks, Nordea is the only Nordic custody provider with strong local presence and expertise in all four markets. Nordea combines Nordic competence with local expertise, and has proven ability to deliver high quality services that meet 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.

Contact:Nina GrothHead of Sub-custody and ClearingTel: +45 3333 6124E-mail: [email protected]

Intesa Sanpaolo’s Transaction Services include :• Sub Custody, Derivatives and Remote Membership Clearing• Global Custody and Depository Bank for mutual funds,

pension funds, real estate funds, private equity funds and hedge funds

• Fund Administration for mutual funds, pension funds, real estate funds, private equity funds and hedge funds

• Paying Agent for foreign funds and sicavs• Cash and Payment services like swift to checks, mass

payments, checks and cash letters

Piazza della Scala 620121 Milan, ItalyT: +39 02 8794 2466F: +39 02 8794 1519W: intesasanpaolo.comC: Riccardo LamannaE: riccardo.lamanna@ intesasanpaolo.com


raw Directory ISJ47.indd 48 03/06/2010 20:13

49

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 growing your funds and business. Our main focus is to provide a ‘Best in Class’ administration service, we work in partnership with you to innovate, increase efficiency and provide the high level of customer 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.

Fund Administration

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 most dynamic markets. Building on a rich banking heritage, Standard Chartered is noted for a client-focused approach to business, unmatched on-the-ground expertise and a solid track record of innovative, award-winning financial services solutions, reflecting our continued commitment to power our clients’ ambitions. 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.

C: Giles Elliott, Global Head, Securities ServicesP: +65 6517 0134E: [email protected]: www.standardchartered.com

Leah Cox +44 (0) 207 954 9559 [email protected] www.capitafinancial.com.

Santander is Spain’s leading financial institution and the largest bank in the euro zone by market capitalization. Our commitment and contribution to the securities industry is well established after more than a century of providing services in this field.Santander’s cutting edge technology enables it to offer a comprehensive array of innovative services in a broad range of 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.

T: Europe: (34) 91 2893932 / 28T: USA: (1212) 350 39 02 W: santanderglobal.comE: globalsecurities@ gruposantander.com

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 EUR 500 bn and provide services in more that 80 markets, 11 of them under the SEB name (Sweden, Norway, Finland, Denmark, Luxembourg, Germany, Estonia, Latvia, Lithuania, Russia and Ukraine). We offer a full range of securities services including corporate action and information services, securities lending and services to remote members of the Nordic and Baltic stock exchanges. We are also General Clearing Member on all CCP´s covering Nordic securities. 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 150 years in the securities industry; we know the market and our clients well.

C: Goran Fors T: +46 8 763 5770 E: [email protected]: http://www.seb.se

Société Générale Securities Services offers institutional investors, asset managers and financial intermediaries a comprehensive range of financial securities services: custody, clearing & trustee services, fund administration, asset servicing and transfer agency. SGSS currently ranks 3rd European custodian and 9th worldwide custodian (Source: Globalcustody.net) with EUR 2,580* billion in assets held and valuates 4,354* funds representing assets of EUR 405* billion (as of June 2007).

Sébastien DanloyGlobal Head of Sales,Investor ServicesSociété Générale Securities ServicesT: +33 (0)1 41 42 98 65E: [email protected]: www.sg-securities-services.com

RBC Dexia Investor Services offers a complete range of investor services to institutions worldwide. Our unique offshore and onshore solutions, combined with the expertise of our 5,300 professionals in 16 markets, help clients grow their business and sustain enhanced performance through efficiency improvements and robust risk management practices. Equally owned by RBC and Dexia, the company ranks among the world’s top 10 global custodians with USD 2.5 trillion in client assets under administration. RBC Dexia’s innovative solutions include global custody, fund and pension administration, shareholder services, distribution support, securities lending and borrowing, reconciliation services, compliance monitoring and reporting, investment analytics, and treasury services.

71 Queen Victoria StreetLondon EC4V 4DE, UKC: Tony JohnsonT: +44 (0) 20 7653 4096E: [email protected]: http://www.rbcdexia.com


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Société Générale Securities Services offers institutional investors, asset managers and financial intermediaries a comprehensive range of financial securities services: Clearing, Liquidity Management, Custody and Trustee, Fund Administration, Asset Servicing, Fund Distribution Services and Issuer Services. SGSS currently ranks 3rd European custodian and 7th worldwide custodian (Source: Globalcustody.net) with EUR 2,731* billion in assets held and valuates 5,158* funds representing assets of EUR 499* billion (at end March 2008).

Sébastien DanloyGlobal Head of SalesSociété Générale Securities ServicesT: +33 (0)1 41 42 98 65E: [email protected]: www.sg-securities-services.com

Hedge Fund Administration

Apex Fund Services Ltd is a global hedge fund administration solution for hedge funds and private equity clients located in 12 separate jurisdictions across the globe. The company uses the software solution, PFS PAXUS, which is a fully integrated hedge fund accounting system combined with web-based reporting to allow clients and investors to access their information 24/7 securely online. We will tailor all solutions to meet your needs and our continuing focus on the quality of service and the relationship with each and individual client ensures that we retain our ethos of providing a personalized service rather than a generic solution. Highly qualified and experienced staff, mirrored with top tier technology and competitive fee structures make Apex Fund Services Ltd the clear choice for your fund administration needs.

C: Peter HughesGroup Managing DirectorT: +1 441-292-2739F:+1 441-292-1884E: [email protected] BohanGroup Manager of OperationsT: +353 21 4633366F: +353 21 4633377E: [email protected]

Intesa Sanpaolo’s Transaction Services include :• Sub Custody, Derivatives and Remote Membership Clearing• Global Custody and Depository Bank for mutual funds,

pension funds, real estate funds, private equity funds and hedge funds

• Fund Administration for mutual funds, pension funds, real estate funds, private equity funds and hedge funds

• Paying Agent for foreign funds and sicavs• Cash and Payment services like swift to checks, mass

payments, checks and cash letters

Piazza della Scala 620121 Milan, ItalyT: +39 02 8794 2466F: +39 02 8794 1519W: intesasanpaolo.comC: Riccardo LamannaE: riccardo.lamanna@ intesasanpaolo.com

Swiss Financial Services (Ireland) Ltd. Block 4B,Cleaboy Business Park, Old Kilmeaden Road, Waterford, Ireland T: +353 51 351180UBS Global Asset Management- Fund Services Brunngässlein 12, PO Box CH-4002 Basel, Switzerland tel. +352-44-1010 1

Custom House Global Fund Services Ltd. (“CHGFS”), the Malta based parent company of the Custom House Group of Companies (“Custom House”), was established when Equity Trust’s fund services division was merged into Custom House in September 2008. CHGFS is recognised as a fund administrator and licensed under a Category 4 license as a Custodian for Funds of Funds and is also an authorised Trustee for Trusts. Custom House offers a full 24/5, “round the world”, “round the clock” administration service out of its offices in Amsterdam, Chicago, Dublin, Guernsey, Luxembourg, Malta and Singapore. This service, which enables Custom House to offer daily dealing NAVs covers all aspects of day to day operations, including maintaining the fund’s books and records, carrying out the valuations, calculating the NAV and handling all subscriptions and redemptions, as well as over-seeing payment of the fund’s expenses. Custom House uses the PFS-PAXUS fully integrated fund administration system. Reporting is effected through CHARIOT, Custom House’s secure web-reporting platform for managers and investors. Custom House is fully SAS70 compliant and the Dublin office was the only hedge fund administrator in the world ever to be awarded a Moody’s Management Quality Rating. CHGFS and its subsidiaries are fully regulated, as required, by the relevant authorities in their jurisdiction.

Custom House Global Fund Services LimitedHead Office Address: Tigne Towers Suite 33 Tigne Street Sliema 3172 Malta www.customhousegroup.com Contacts: Dermot S. L. Butler, [email protected] T: +353 1 878 0807Albert Cilia, Managing [email protected] T: +356 2702 2799


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eSecLending is a leading global securities lending agent servicing sophisticated institutional investors worldwide. The company’s approach has introduced investment management practices to the securities lending industry, offering beneficial owners an alternative to the custodial lending model. Their philosophy is focused on providing clients with complete program customization, optimal intrinsic returns, high touch client service and comprehensive risk management. Their process is to begin each client’s program with a competitive auction to determine the optimal route to market for their portfolios or asset classes whether it is via agency exclusives or traditional agency lending. This differentiated approach achieves best execution while delivering their clients with greater transparency and control, allowing them to more effectively monitor and mitigate risks. Additional information about eSecLending is available on the company’s website,

www.eseclending.com.

EquiLend is a leading provider of trading services for the securities finance industry. EquiLend facilitates straight-through processing by using a common standards-based protocol and infrastructure, which automates formerly manual trading processes. Used by borrowers and lenders throughout the world, the EquiLend platform allows for greater efficiency and enables firms to scale their business globally. Using EquiLend’s complete end-to-end services, including pre- and post-trade, reduces the risk of potential errors. The platform eliminates the need to maintain costly point-to-point connections while allowing firms to drive down unit costs, allowing firms to expand business, move into different markets, increase trading volumes, all without additional spend. This makes the EquiLend platform a cost-efficient choice for all institutions, regardless of size.

www.equilend.comEquiLend Europe Ltd.14 Devonshire SquareLondon, EC2M 4TE+44 (0) 207 426 4426T: UK- +44 (0)20 7743 9510

A: 17 State Street, 9th Floor New York, NY, 10004T: US- +1 212 901 2224C: Michelle LindenbergerE: michelle.lindenberger

@equilend.comW: www.equilend.com

Contact: Christopher Jaynes, Co-CEO

Tel: US +1 617 204 4500

Address: 175 Federal Street 11th Floor Boston, MA 02110, USA

Tel: UK +44 (0) 20 7469 6000Address: 1st Floor, 10 King William Street, London, EC4N 7TW, UKEmail: [email protected]: www.eseclending.com

Santander is the only Spanish financial institution with a team exclusively dedicated to securities finance & with the purchase of Abbey in 2004 has expanded its capacity on a Global basis with trading teams in London (UK) & Connecticut (USA).Santander’s leading local capabilities in Spain, Portugal, UK, USA & 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.

W: www.gruposantander.comT: (3491) 289 39 42/54E: securitieslending@ gruposantander.com

Finace is currently the only fully integrated solution which supports the future business model within the areas of Securities Lending, Repo and OTC Derivatives Collateral Management. The architecture of Finace is based on a stable, leading edge technology platform, which was developed with performance and robustness as the focus of design. With flexibility at its core, customer-driven extensions and modifications can be quickly and easily applied to the standard component set.

T: +41 (0)44 298 92 00F: +41 (0)44 298 93 00A: COMIT AG, Pflanzschulstrasse 7,CH-8004 Zürich, SwitzerlandW: www.finacesolution.comwww.comit.ch

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 5111Fortis Bank wNederland NV Rokin 55, 1012 KK Amsterdam, The Netherlands T: +31 20 527 1637JP Morgan 60, Victoria Embankment, London EC4Y OJP T: +44 207 742 0256SecFinex 60 Cannon Street London EC4N 6NPX T: +44 (0)20 7002 1003SS&C Fund Services 80 Lamberton Road, Windsor, CT, 06095 T+1-800-234-0556UBS Global Asset Management -

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


52

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 of companies and benefits from the joint contributions and experiences within the group of market traders, business analysts, financial services professionals and skilled Microsoft Certified programmers. The company has developed a suite of applications that integrate and Straight Through Process (STP) real-time trading, back office administration, accounting and compliance. Ultra.net®, S-Messenger® 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.

W: www.f-tradeware.comT: +44 (0)20 7493 2773F: +44 (0)20 7495 4858C: Graham BrightE: [email protected]: 31 Dover Street London W1S 4ND UK

Eagle Investment Systems LLC is a global provider of financial services technology serving the world’s leading financial institutions. Eagle provides enterprise-wide, leading-edge technology and professional services for data management, investment accounting and performance measurement. Eagle’s Web-based solutions support the complex requirements of firms of any size including institutional investment managers, mutual funds, hedge funds, brokers, public funds, plan sponsors and insurance companies. Eagle’s product suite is offered as an installed application or can be hosted via Eagle ACCESSSM, Eagle’s ASP offering. Eagle Investment Systems LLC is a subsidiary of The Bank of New York Mellon Corporation. To learn more about Eagle’s solutions, contact [email protected] or visit www.eagleinvsys.com.

Eagle Investment Systems LLCThe Bank of New York Mellon Financial Centre160 Queen Victoria Street, LondonUNITED KINGDOMEC4V 4LAPhone Number: 44 (0)20 7163 5700E: [email protected]: www.eagleinvsys.com

Technology

Fidelity ActionsXchange is the leading provider of flexible, technology-driven global corporate actions information solutions for many of the world’s financial industry leaders. Through our two products, ActionService and ActionCompare, we provide multi-sourced, cleansed data and complementary event information which is validated, enhanced and enriched by a team of in-house analysts. By leveraging more than 10 years of analytical expertise, technology and service, we offer solutions that source, enhance, compare and validate corporate action announcements, turning even the most 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.

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, integrated systems and services that are dependable, scalable and cost-efficient. Our systems help reduce the need for clients to make significant 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.

For more information about Broadridge, please visit www.broadridge.com.

C: Gil IsensteinSenior ManagerFidelity Investments

A: 82 Devonshire Street, W4ABoston, MA 02109E: [email protected]: 617-563-6764

Information Mosaic is a trusted global provider of advanced post-trade automation solutions to the securities industry, to include custody, asset servicing, private wealth, asset management and investment banking. The company is a recognized market leader for corporate actions automation, winning the 2009 European Banking Technology Readers’ Choice Award for best corporate actions solution and achieving record scores in B.I.S.S. 2009 corporate actions benchmark tests. Founded in 1997, Information Mosaic currently supports the post-trade operations of over 60 financial institutions worldwide. The company has a proven track record of helping financial institutions transform post-trade operations, enabling them to enter new markets, improve customer service and reduce the risk and cost associated with volume and complex processing. Information Mosaic’s breakless post-trade automation platform removes reconciliation points and therefore reduces risk and cost for all core post-trade services including corporate actions, securities settlement, trade, portfolio and cash management. The company supports its global customer base from offices in Dublin, London, Luxembourg, New Delhi, Singapore, Melbourne and New York.

For more information on Information Mosaic, please visit our website at www.informationmosaic.com US: [email protected]

Europe: [email protected]

Asia: [email protected]


53

peterevans is a leading independent provider of front to back office solutions for the financial services sector. Clearly focused on the securities and investment market, and building on over 24 years experience of providing award winning solutions to this sector, peterevans presents a sophisticated boutique approach in a homogenised market place. With xanite our new suite of applications we can help ensure that you deliver extraordinary products and services to your customers. The peterevans xanite suite offers a configurable, fully integrated, browser based, comprehensive front to back solution that can be either deployed as a single application or integrated as components into your existing platform. xanite has been designed for today’s market, and provides Multi-entity, Multi- currency, and Multi-language support. User access to the system is configurable allowing each user’s experience of the system to be tailored to suit their specific needs. Each of the xanite modules can de delivered via an ASP or self-hosted. The xanite suite of products supports the following business areas: wealth management, custody, corporate actions, clearing and settlement, private client and on-line stock broking, peterevans gives full but controlled access to clients, portfolio, fund and relationship managers, brokers, middle and back office staff – on line anywhere and everywhere.

A: peterevansNew Broad Street House 35 New Broad Street London EC2M 1NH T: +44 (0)29 20402200

E: [email protected]

W: http://www.peterevans.com

Isis Financial Systems provides mission critical investment management software and services to many large and small companies. Our customers perform a broad range of accounting and management functions covering various industries including the fund, hedge fund, wealth management, and pension and endowments, etc…. Our integrated solution services span from the back office to the middle. Even some front office operations are available. IMS is built on a contemporary three tiered architecture. Our services help financial companies improve operating efficiencies, increase accuracy and reliability and improve customer service. IsisFS has the experience and IMS is the platform to improve your operations and save you money.

Isis Financial Systems14 Felton StreetWaltham, MA 02453E: [email protected]: (00-1) 781-209-0262

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, multi-asset class solution that boasts 18 years OTC derivatives 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. Misys provides integrated, comprehensive solutions that deliver significant results to over 1,200 financial institutions globally.

C: Suzanne McLaughlinT: +44 (0)20 3320 5000E: [email protected]: www.misys.com

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 vanilla to the most complex derivative products. Coupled with a high degree of flexibility and customization, Mx Asset Manager features a multifaceted design catering to the needs of both service providers (prime brokers, administrators, asset servicing providers) and direct 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.

C: Hélène Desbiez Business Development ManagerT: +33 1 44 05 32 00

E: [email protected]

W: www.murex.com

KOGER is a leading provider of technology solutions to the fund administration industry. KOGER products are used by some of the largest and most respected institutions in the industry. KOGER has offices in each of the USA, Ireland, Slovakia and Australia and provides comprehensive 24/5 technical support. NTAS (New Generation Transfer Agency System) is the premier shareholder register and transfer agency system in the market. NTAS modules include an extensive range of incentive fee calculation methods as well as an extensive list of capabilities such as dividend processing, cash flow management, anti-money laundering, blacklist, taxation and fee management. NTAS supports a wide variety of fund structures including master-feeder, fund of funds, series, limited partnerships, private equity and side pockets. Reports are fully customizable and worldwide replication is available. KOGER’s GRID (Global Reach Interface Daemon) is a middleware interface that integrates NTAS with any third-party system.

C: Mr Ras SipkoT: +1-201-291-7747E: [email protected]: http://www.kogerusa.com


54

SimCorp Dimension is designed to enable institutions which manage or service investment portfolios to mitigate risk, reduce costs and position themselves for growth. It is a comprehensive, truly seamless system supporting front, middle and back office functions as required. It handles NAV and other calculations, with full related accounting, for a huge variety of fund structures and product types, including regional specialities. SimCorp Dimension was designed from scratch as an enterprise-wide system, so it handles all aspects of the investment management process and related administration functions, consistently. Data is recorded once into a core database so that reporting is made easy, there is no need for internal reconciliation of data, no duplication of procedures and integration with external systems is particularly straightforward.

T: +44 (0)20 7260 1900 F: +44 (0)20 7260 1911 C: Elizabeth Gee, sales director of SimCorp DimensionE: [email protected]: www.simcorpdimension.comA: SimCorp, 100 Wood Street, London EC2V 7AN

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 service encompasses daily contract compare, monthly billing comparison, mark-to-market & exposure processing, pending trade comparison, income claims processing and custody reconciliation. Subscribers to Pirum’s services significantly increase their operational efficiency and reduce their risk by using Pirum’s solutions, as staff are able to focus on fixing the exceptions instead of using their time to check and process routine business. These automated processes are more scalable and risk controlled too, allowing significantly higher volumes to be managed without corresponding increases in operations headcount.

T: +44 20 7220 0961F: +44 20 7220 0977C: Rupert PerryE: [email protected]: Pirum Systems Limited37-39 Lime StreetLondon, EC3M 7AYW: www.pirum.com

Witholding Tax

Goal is widely-acknowledged in the financial services sector for its innovative and creative solutions to highly-specialized niche processes.Goal’s research has shown that in excess of USD8 billion of withholding tax remains unclaimed each year by the rightful owners and beneficiaries and that over USD12 billion is lost because rightful beneficiaries are not participating in class actions, bankruptcies and disgorgements.

T: +44 (0) 208 760 7130C: Stephen Everard or Saghar BigwoodA: 7th Floor, 69 Park Lane,Croydon, Surrey, CR9 1BGE: [email protected] or [email protected] or [email protected]: www.goalgroup.com

SunGard’s solutions for data management provide technology for the management and delivery of market, historical and reference data to financial services institutions, energy and public sector organizations. SunGard also offers outsourced data management services, as well as real-time, interactive and flat-file data feeds for application integration. Aggregating market data and financial content from more than 100 third-party sources, SunGard’s solutions for data management add value through a range of services including cleansing, enrichment and analytics. To find out how SunGard’s solutions for data management can help improve productivity, portfolio optimization and investment opportunity with predictive analytics and packaged data please visit our web site.

888 Seventh AvenueNew York 10106, UST: +1 888 441 9935E: [email protected]: http://www.sungard.com

Advent Software 1 Bedford Avenue, London, WC1B 3AU, UK T: 0207 631 9240Accuity Market House 124 Middleessex Street Bishopsgate London E1 7HY T: +44 20 7014 3454Aquin Components GmbH Moosmatthalde 4, Meggen, CH-6045, Switzerland T: +41 44 455 62 44BI-SAM 1 Cornhill, London EC3V 3ND T: +44 (0)20 3008 5834Bravura Solutions Austin Friars House 2-6 Austin Friars London EC2N 2HD, UK T: 020 7997 3000Calypso Technology 17 Dominion Street, London, EC2M 2EF, UK T: 020 7826 2500DST International DST House, St Mark’s Hill, Surbiton, Surrey, KT6 4QD T: +44 (0)20 8390 5000Princeton Financial Systems 600 College Road East, Princeton, NJ 08540, USA T: +1 609-987-2400Redi2 Technologies, Inc, 1771 Broadway St., Oakland, CA 94612 T: +1 (510) 834-7334SmartStream Technologies 1690 Park Avenue Aztec West Almondsbury Bristol BS32 4RA UK T: +44 (0)20 8390 5000


Show me the Light

European Custody LandscapeGermany , Southern Europe, Central & Eastern Europe, Nordic

Spotlight on: Cyprus - Private Equity & Hedge Fund Services

EUROPEANCUSTODY

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11

EUROPEANCUSTODY

EditorBrian [email protected]

Advisory Board ChairmanClive Gandeclive.gandeISJ.tv

Senior correspondentCraig [email protected]

US correspondentJohn [email protected]

Special correspondentsCherry ReynardAnthony Harrington

Head of salesPatricia De La [email protected] Account managersCicely Lewis [email protected]

Eradat [email protected]

CTOPeter [email protected]

Operations managerNicolette Whittaker [email protected]

Editor-in-ChiefRoy [email protected]

Managing directorJon Hewson [email protected]

PublisherMark Latham [email protected]

2i UK One Angel Wharf,59 Eagle Wharf Road London, N1 7ER, UKT: +44 (0) 20 7183 7470 F: +44 (0) 20 7250 0350 2i US 410 Park Avenue, 15th Floor, New York, NY 10022T: +1 212 231 8421 F: +1 212 231 8121

© 2010 2i Media All rights reserved. No part of this publication may be reproduced, in whole or in part, without prior written permission from the publishers. ISSN 1744-151X

European Custody LandscapeGermany 2

Southern Europe 4Central & Eastern Europe 8

Nordic Region 16

Spotlight on: Cyprus for private equity and hedge funds 12

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