Funds Global Asia consulted a panel of experts from asset servicing firms and industry groups to understand the impact of fund passporting, A-share inclusion, ETF Connect and other issues.
Managing Director and CCO, Fundsquare
What are the main operational challenges facing asset managers and asset servicing firms in Europe?
Costs must fall as margins are under pressure and the customer experience must improve if asset managers are to thrive. There is still too much complexity in fund distribution. Financial advisers, distributors, platforms, central securities depositaries and transfer agents are all intermediaries between the asset manager and their clients. On top of that, there are the costs of serving the different regulatory and market needs of numerous jurisdictions. The result is a spaghetti plate of bilateral and redundant connections for orders, settlement, know-your-client, transfers, corporate actions, reporting and more.
What progress has been made in terms of automating fund processing in Europe?
Distributors and investors have diverse needs. Transfer agents and platforms are doing their best to meet these efficiently, but the market is too fragmented, resulting in insufficient standardisation and innovation. Using blockchain would enable all the actors to interoperate in a more efficient manner. This would open up a new way to innovation and the creation of new products. ‘Smart contracts’ could eliminate much human intervention. A Luxembourg consortium, FundsDLT, is working in that direction.
What other regulatory developments have been occupying your time?
European regulators are pushing the financial industry toward more transparency and investor protection. It is getting more difficult for asset managers and asset servicers to digest these changes while keeping service levels high and costs down. Fundsquare is helping by mutualising the connectivity between the actors when it comes to filing regulatory reporting, disseminating fund information and processing transactions.
Funds Global Asia, September 2017