September 2009

Volume 6 No. 42
GBP 25 - UK, ROW
USD 45 - America
EUR 35 - EMEA
www.ISJ.tv

Europe - Spanish Custody

Collateral - Longevity Swaps
Asia - Hedge Fund Services, Settlement
THE GLOBAL SECURITIES SERVICES INDUSTRY MAGAZINE

Interaction
Risk, liquidity and legacy
in transaction banking
CEO Profile: Pierre Francotte, Euroclear
Panel: Fund Administration in Emerging Markets
Shareholders: Corporate Actions

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 Heads up ISJ Investor Services Journal

P.14 CEO Profile P.17 Payments P.30 Custody interview P.36 Panel Debate

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48

P.06 News

Editor’s letter
have been as intriguing as figures in payments optimistic
Feel good factor the last two. As the People’s about the region, in amongst
Republic continues to take a wider discussion of legacy
What better place and centre stage, and Asian countries systems, new technology and
time for this year’s Sibos increasingly use each other as the little known size of the
conference: in the middle of a trading partners, there is still profits that banks derive from its
cautious global recovery in the an argument for the gradual transaction banking.
Editor: region that is leading the world decoupling of the continent Corporate accountability
Ben Roberts for growth prospects. It has
ben.roberts@2i.tv from the US and Europe. will continue to be a heavily
been estimated that the average In this issue, ISJ gains debated issue up to the end of
Contributing editor: annualised growth of Asian significant insight into key areas this year, and as the composition
Anthony Harrington
markets is around the 10% of investor services and the of boardrooms change, the
Reporters: mark. middle and back office world. issuance and processing of
Kimberley Ferguson
kimberley.ferguson@2i.tv
This is as defiant an estimate Craig McGlashan finds corporate actions is vital.
as any seen in the second hedge funds already on top of Turn to page 18 to learn of the
Craig McGlashan quarter of this year, showing the
craig.mcglashan@2i.tv the newest demands seen in significant challenges in this
cumulative effect of confidence the rest of the world, such as space.
Account manager: that has allowed the exporting third-party administration. Challenges abound too
Tarik Rekiouak
tarik.rekiouak@2i.tv countries – unhampered by the Anthony Harrington explores in Spain, where the custody
strife of toxic balance sheets and the difficulty of a pan-Asian market remains heavily weighted
Senior account manager:
Patricia De La Grange
shaky confidence – to make a settlement, despite the market towards local providers.
trish.delagrange@2i.tv significant global statement for will to this end, and guest On the theme of custody,
the future. columnists describe tive of the early mover advantage
their SEB’s Ulf BSENoren
and underlines
kindlytheanswers
fact that it
Business development manager: still plays an important role in the Indian equity markets. But what is
James Olweny Emerging market equities approach to regional demands. ISJ’s questions about succeeding
worrying is that when it comes to new business segments such as debt
james.olweny@2i.tv have been a popular stock Our lead feature sees top
or equity in new markets.
and currency derivatives, ■ NSE in terms of
BSE is far behind
Website design: allocation for US money service providers and banking
innovation Ben
and marketing. ThisRoberts,
does not bodeEditor
well for its standing in
Peter Ainsworth managers and the region’s the market in the long run.
peter.ainsworth@2i.tv
IPO levels for this year to date
STATS-SNAP The Figure 5: Market Capitalization of Leading Indian Stock Exchanges
Operations manager: – according to Dealogic - are Ahead of the pack: Market capitalisation of leading
graph shows the
Nicolette Whittaker steaming ahead. Indian stock exchanges (USD billion) SOURCE: BSE, NSE, Celent
nicolette.whittaker@2i.tv strong rebound Market Capitalization (US$Billion)
Hong Kong sits nicely in made by India’s
Commercial director: the middle of the Western the Bombay Stock
Jon Hewson
jon.hewson@2i.tv and Eastern worlds that have Exchange and
1748
1596
increasingly converged. National Stock
CEO: Mark Latham
mark.latham@2i.tv
For centuries an Asian Exchange and 1150
BSE
1000 NSE
outpost for European banks and forecasts see this 900
805 761
2i Media plc the centre of Pacific capitalism trend continuing. 675
UK 16-17 Little Portland Street, 566 528
London W1W 8BP, UK along with Japan, few of the 2009 figures are 379 355
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All rights reserved. No part of this Month Winner Client Location Assignment Mandate size
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1-17 ISJ42.indd 2 19/08/2009 14:24

1-17 ISJ42.indd 3 20/08/2009 15:21
 Contents ISJ Investor Services Journal
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48

Contents
Letter to editor
Dear ISJ

As with all regulation, Misys has

been monitoring and analysing
In this issue SEPA and discussing it with our
clients for many years now.
To date, the uptake of SEPA
COVER STORY
COVER STORY solutions is very low - this is not
George Ravich, Fundtech,
17 Analyse This - a big surprise, but it is certainly
page 14 disappointing.
Payments - Industry
Most of Misys’ banking
comment on CLS and standards.
clients are domestic, regional or
international operations of large
18 Votes in -Corporate banks. SEPA was devised by the
actions - Anthony Harrington European Payments Council
highlights the new innovations (EPC) as a forerunner to EU’s
and contentious issues for Payment Services Directive.
financial institutions surrounding The EPC is made up of the
shareholder voting. largest European banks, and
many of these have been actively
24 The quest for pan-Asian using SEPA as a reason to build
large payments processing
settlement - Equities factories, since payments is a
Interaction and bonds core business for them and they
An update on the initiatives and want to offer outsourced services
challenges to creating a cross- Sowing the seeds for hedge
to the smaller banks.
People continent settlement entity. growth, page 32
Therefore, most European
banks have had little to do with
06 News and mandates Custody
SEPA, or as is the case with some
The last month of updates in
custody, clearing and settlement, 26 Tough nut to crack - Misys clients, it’s taken care of by
securities lending, legal and Spanish custody Kimberley their head office.
compliance and technology. Ferguson assesses the custody I think we are all aware that
landscape in Spain and gains the problem with the EPC’s
insight into structure and approach, agreed with the EU
08 News analysis - regulation. Commission, is that it has not
Longevity swaps been inclusive of smaller banks,
Plus, one year in brief. 30 The custody interview vendors or the users of the
payment services.
- SEB’s Ulf Noren ISJ asks
12 A decade on - CEO the head of client relations for
Because of this, plus the fact
Profile SEPA is not mandatory, it is
sub-custody about the market
Ben Roberts talks to Pierre challenges and expanding into
based on complex new message
Francotte, CEO of Euroclear. new countries. standards and it has no hard
Stuart Feffer, panel debate
deadline, it is proving too
page 36
Payments Fund Administration
expensive for most banks, there
is no client demand and no
14 Interaction - 32 Sowing the seeds for regulatory stick - so why bother?
Transaction banking hedge growth - Hedge The PSD comes into force in
Investment in payment and fund services in Asia November 2009, which is the
transcation systems has increased Craig McGlashan sees growing official regulation from the EU
in many global firms. Ben Roberts demand for a wider breadth of but it is coming very late, is
explores the issues and the risk services. overly complex, with potential
and regulatory context of this variations in each country, and
core activity. all countries may not even be
36 ISJ Panel - Fund
ready. Considering all this, it is
administration in not a surprise that the majority
emerging markets of banks have done very little
ISJ quizzes three leading about SEPA or the PSD.
MEMBER - periodical companies.
publishers association
to renew your subscription
Colin Lunn, HSBC page 32 Barry Kislingbury
please telephone: 40 Directory - List of Solutions Manager for
+44 (0)20 7299 7700
service providers Payments and Messaging,
or visit... WWW.ISJ.tv Misys. n

1-17 ISJ42.indd 4 21/08/2009 10:17

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1-17 ISJ42.indd 5 20/08/2009 15:22

 News
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48
Custody
LONDON - The Bank of New York
Mellon Corporation acquired
Insight Investment Management
Limited from Lloyds Banking
Group plc for GBP235 million.
RBC Dexia Investor Services
won a mandate to provide
international investor services
for HSBC Global Investments,
the institutional wealth business
of HSBC Bank Australia Limited.
ConvergEX now offers its
transition management services
to clients of BNP Paribas,
following a deal recently
revealed by the two companies.
More risk and quant managers
are being consulted by
colleagues in the wake of the
financial crisis, according to
a survey by 7city Learning,
a financial services training
company. Of the alumni of
its Certificate in Quantitative
Finance (CQF) course, 61% of
those working as quant or risk
managers were being asked
more questions than previously
about their validation or an
explanation of their techniques.
Thirty-six per cent of
respondents felt that risk
management was the dominant
element of their role.
HSBC and Barclays reported
solid results for the first half
of the year, backed by their
investment banking divisions
– while rival Lloyds revealed a
large loss. HSBC achieved overall
pre-tax earnings of US5 billion,
while Barclays Capital achieved a
profit of GBP2.9 billion.
Fund Administration
KAS Bank N.V. acquired
Deutsche Postbank
Private Investment
Kapitalanlagegesellschaft mbH
(PPI), the fund administration
business of Deutsche Postbank
Group. The sale enables
Postbank to concentrate
on its core competences of
1-17 ISJ42.indd 6
fund management and sales,
according to Horst Küpker,
a Postbank board member
responsible for financial markets.
Legal
BERMUDA - International
financial offshore law firm
Conyers, Dill & Pearman
supported the alterations to the
legal framework surrounding
mergers and acquisitions
involving Cayman-domiciled
companies. The Companies
(Amendment) Law, 2009 came
into force on 11th May 2009 and
sought to introduce simpler and
more cost-effective mechanism
for mergers and consolidations
between domestic companies
and between Cayman-based and
foreign companies.   in bond repo transactions with a
Clearing
MOSCOW – The National
Depository Center and the
MICEX Settlement House
achieved the very first foreign
currency Delivery Versus Payment
transaction, settled on the 31st
July. This was achieved using
Euroclear Bank - an international
central depository.
The NDC has also adopted an
electronic data interchange
system with the specialist
registrar, Vedeniye Reyestrov
Kompaniy, for all their
information interactions.
Eurex Clearing, the clearing
house, has partnered with the
financial technology provider
Calypso, for operational support
for Eurex Credit Clear- its new
central clearing platform for over
the counter credit default swaps.
The new OTC derivatives clearing
service improves market stability
on a global scale – enhancing
transparency and regulatory
reporting as well as reducing
systemic risk for the financial
market as a whole.
SWIFT and SmartStream have
joined to enable financial
institutions to communicate with
SmartStream’s TLM OnDemand
reconciliation service via SWIFT.
Existing SWIFT customers can
reuse their SWIFT infrastructure
to use SmartStream’s service,
reducing transaction breaks,
operational risk and time to
process transactions, while
maximizing their return on
investment and minimizing total
cost of ownership (TCO).
Securities Lending
MOSCOW – VTB Capital, the
investment business of VTB
Group, has become one of the
‘top 5’ operators in the equity
market for the first time on a
special index from MICEX, the
indices and market data provider.
The division also became a leader
RUR 125 billion turnover – a 15-
fold increase on June.
LONDON - The International
Securities Lending Association
(ISLA), the trade body
representing lenders and
borrowers of securities in the
international markets, appointed
Kevin McNulty as CEO. This
follows the resignation of David
Rule to take up a position at the
Financial Services Authority.
Mr McNulty was formerly a
managing director at Barclays
Global Investors and a previous
chairman of ISLA.
Technology
BATS Global Markets, the
holding company of BATS Trading
and BATS Europe, is to launch
a US equity options exchange
- BATS Options - in early 2010.
Jeromee Johnson, hired by BATS
Exchange as vice president of
market development in April
2009, has been brought in as an
integral part of the operations of
the new platform.
Raiffeisen Zentralbank
Österreich AG (RZB) has
implemented SmartStream’s TLM
Corona SWIFTNet E&I solution
to decrease operational risk and
improve customer service across
its payments operations.
ISJ Investor Services Journal
Chi-X, the high-speed trading
platform, and the Singapore
Stock Exchange are to develop
and launch the first exchange-
backed dark pool in the Asia
Pacific region.
Regulation
The UK’s shadow chancellor,
George Osbourne, has postulated
that the Bank of England would
be given sweeping powers
over City institutions under a
Conservative UK government. The
FSA would effectively be reduced
to a consumer protection agency.
The City has reacted angrily to
government-supported proposals
for greater controls and
disclosure over executive pay.
The Walker Report, authored by
Sir David Walker, ex-chairman of
Morgan Stanley International,
recommended caps on executive
pay, as well as disclosures of
salaries that are over boardroom
levels, among other measures.
London bankers claimed such
measures would be overly-
bureaucratic and a populist move
in an anti-bank sentiment.
Plans to readjust US financial
regulation are on track and Wall
Street banks will not be able to
revert to old bad habits despite
a return to profits, according to
the US Treasury Secretary Tim
Geithner last month.
In an interview with the Wall
Street Journal, Mr Geithner
insisted that a “clean up” of the
system has already seen balance
sheets shrink, with less leverage
and more conservative liquidity
cushions.
There have been concerns of
“business as usual” within banks
on the back of recent profits and
a new round of pay incentives
so soon after the return of
government bail out money. n
For more news, visit www.isj.tv
21/08/2009 10:20
1-17 ISJ42.indd 7 20/08/2009 15:22

News Analysis
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48
Longevity swaps: One
new collateral? year
on
Will it be ‘love actuary’ for this little-
covered financial product?
To anyone not either an
actuary or intimately involved
with final salary based pension
schemes, longevity is one of
those ‘out there’ topics.
We all “know” that we tend
to be living longer, on average,
than previous generations and
that many companies with
final salary schemes have huge
deficits, which means that they
don’t have sufficient assets to
meet their obligation to pay
out pensions for the full life
spans of their members.
However, for the most
part, we tend to think that this
deficit has been caused by the
global financial equity market
meltdown. It has, but longevity
creep – the fact that people
are living longer, and that the
rate at which they are living
longer seems to be increasing
– is making a very significant
contribution to scheme
deficits.
This realisation is now
concerning, both to companies
sponsoring final salary
schemes and to pension fund
trustees - creating interest in
the possibility of longevity
swaps.
Jerome Melcer, a partner
with Lane, Clark & Peacock
explains that in a longevity
swap, the provider, (who
will be either an insurance
company, a bank or a money
market player), takes the risk
that the scheme’s members
will live longer than a specified
average span.
In exchange, instead
of paying benefits to the
members, the scheme pays
an equivalent revenue stream
to the swap provider and,
basically, pays out as much
1-17 ISJ42.indd 8
as it would if all the scheme’s
members (specifically those
already receiving benefits) lived
to an agreed average span.
To the extent that they live
beyond this span, the provider
takes over paying the benefits.
The clear benefit here is
that the scheme’s liability to
members is capped. Effectively,
the uncertainty over longevity
is ‘swapped’ out of the scheme.
Trustees can sleep easy
at night knowing that they
are not going to have to go
cap-in-hand to the sponsor
for more funding every time
the scheme actuary tells them
that longevity has gone up by
another year (from an average
“lifespan” in retirement of 22
years, say, to 23 years, then 24
years and so on).
So where does
collateralisation come in?
It comes in because of the
duration of these swap
arrangements. Clearly, if you
are writing an indefinite or 60-
year longevity swap, there is a
risk that your counterparty will
not be around to back up their
promises.
Basically, whoever is “out
the money” in the swap
arrangement (either the
pension scheme or the swap
provider), puts up collateral to
the value of the longevity swap
based on current longevity
expectations. The collateral
will be a mixture, generally,
of cash, government bonds
and possibly some corporate
investment grade bonds.
However, one of the
difficulties for the emerging
market of longevity swaps
is the absence of any market
making mechanism to set a
price on longevity. It can’t be
marked-to-market on a daily
basis, for example, and there is
scope for huge disagreements
between the scheme actuary
and the swap provider as to
what the scheme’s “actual” (ie,
currently estimated) longevity
position really is.
The scheme actuary is
responsible for giving the
trustees a view on longevity.
But the swap provider will be
working off its own model of
longevity, based on work it has
done on mortality statistics
refined by post codes, work
types etc. What both sides need
is an agreed way, in advance, of
resolving any potential conflict
in the scale of collateral that
needs to be put up.
So far there is some
evidence from the few
deals done to date that this
agreement is hard to reach.
Moreover, the issue of who
is going to manage the
collateralisation of the deal
is something the pensions
industry and the parties
involved have not yet solved,
even though it looks to be a
classic for tri-party collateral
management.
In fact, as Olivier
Grimonpont, Director of
Collateral Services at Euroclear
points out, there is no necessity
for a collateralised longevity
swap to be put into the hands
of a tri-party manager from
day one. Given the fact that
there is no mechanism (or
requirement) to mark to
market a longevity swap on a
day to day basis, the collateral
will probably only need to
reflect changed realities in the
longevity market after a few
years. It will be sufficiently
timely at that stage for the
parties to seek the services of a
triparty agent, he suggests. n
ISJ 26
ISJ Investor Services Journal
12 months of
financial drama...
7th September, 2008: Mortgage
lenders Fannie Mae and
Freddie Mac are rescued by the
US government.
15th September: Lehman
Brothers files for bankruptcy.
US bank Merrill Lynch is taken
over by Bank of America.
17th September: Lloyds TSB
announced its USD12 billion
take over mortgage lender
HBOS, a deal apparently
strongly influenced by the UK
government.
3rd October: The US House
of Representatives passes a
USD700 billion government
plan to rescue the US financial
sector, splitting political
opinion and becoming a
central issue in the presidential
candidate race.
8th October: The UK
government announces details
of a rescue package for the
banking system worth GBP50
billion (USD88 billion).
In addition, it offers up to
GBP200 billion (USD350
billion) in short-term lending.
13th October: Royal Bank of
Scotland (RBS), Lloyds TSB
and HBOS receive a total of
USD37 billion in taxpayer
money, though Barclays seeks
to broker a GBP7 billion deal
from Abu Dhabi and Qatar to
escape government influence.
US bank Wachovia is taken
over by Well Fargo.
20/08/2009 15:22
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1-17 ISJ42.indd 9 20/08/2009 15:22

 News Analysis
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48
24th November, 2008: The UK
government cuts VAT from
17.5% to 15%, a move panned
by critics.
25th November, 2008: The US
Federal Reserve announces it
will inject another USD800
billion into the economy.
19th December, 2008: USD17.4
billion of the USD700 billion
is given to the ‘Big Three’ US
carmakers: General Motors,
Ford and Chrysler.
23rd January, 2009: The UK
officially enters a recession as
fourth quarter GDP falls by
1.5%.
17th February, 2009: Barack
Obama approves a USD787
billion economic stimulus
plan.
12th June: BlackRock buys
Barclays Global Investors (BGI)
for USD13.5 billion, making
it the world’s biggest money
manager. The deal included the
highly successful iShares arm,
which a few months before
was to be purchased by CVC
Partners.
17th June: The US government
announces a major reform of
banking regulation to prevent
future financial crises.
14th July: Goldman Sachs
reports net profit of USD3.44
billion for April to June,
exceeding forecasts. The issue
of executive pay again hits the
agenda.
3rd August: Barclays
announces an 8% rise in
first-half profits, boosted by its
investment banking division.
17th August: US Treasury
Secretary Tim Geithner
claims the plans to reform the
financial sector are on track
and there will be no reversion
to old bad habits among Wall
Street firms, despite new
profits. n
1-17 ISJ42.indd 10
Flash in the pan?
The regulators get tough on two influential liquidity
mechanisms: flash trading and dark pools.
The issue of flash trading and
dark pools of liquidity have
come to the fore of late, with
the US Securities and Exchange
Commission revealing it was
considering banning the former
and was investigating the latter.
US senator Charles Schumer
even said that if the SEC did
not ban flash orders he would
introduce legislation to outlaw
the technique. But experts
have warned that any new
regulations must be carefully
considered.
In the UK, reports had
suggested that the Financial
Services Authority was also
conducting a review of the
practices, which rely on
supercomputers to gain a
trading advantage. An FSA
spokesperson denied that an
“investigation” was taking
place, but added: “As part of
our role as a regulator and
supervisor of the exchanges we
look at a range of issues in the
equities market, including high
frequency trading.”
So what are flash trading
and dark pools? Flash trading
involves members of exchanges
buying and selling data on
trades milliseconds before the
information is made public. By
using sophisticated computer
software, these traders are able
to gain an advantage on their
rivals by making the trades
themselves.
Additionally, some
exchanges can block their
competitors by flashing orders
to traders milliseconds before
they become available to other
traders.
Dark pools, on the other
hand, refer to large systems
where buyers and sellers can
be matched up without the
trading data falling into the
public domain.
10
ISJ Investor Services Journal
But apart from the actually built in anti-gaming
possibility of creating a two- technology to combat strategies
tier system of trading, with which use flash trading and dark
those who have the technology pools. However, he does feel
needed for these practices at that the SEC will bring in new
the top and everyone else at regulation on the techniques –
the bottom, what else might but warns that they should tread
regulators be worried about? carefully.
“One of the concerns with “I think they will ban
respect to flash orders and exchanges from implementing
indications of interest is that the functionality, but I’m not
the traders, through their convinced that they will ban it
strategies, have the opportunitythroughout the entire market
to affect riskless transactions structure because there are
because sometimes the markets other pieces of functionality
that are similar to flash trading,”
“One concern Sussman explains, adding
that “all sorts of unintended
is that traders, consequences could occur” if the
rules are not worded correctly.
through their
“That’s why they need to
look at it across the board and
strategies, come down with a ruling that
doesn’t just address flash trading
have the but also issues of indications
of interest and how order
opportunity to information is communicated
throughout the industry,” he
affect riskless says.
“They must be very specific
transactions ” about firm orders versus
non-firm orders and closed
networks versus exchanges
where information is available
to everybody to participate.”
are locked or they’re crossed While flash trading and
and so they can get the rebates dark pools continue to cause
without exposing themselves controversy, it seems unlikely
to any risk,” says Edward that the issue will be resolved
Pittman, Counsel in the any time soon.
financial services group at law In mid-August, Singapore
firm Dechert. “So they generate and Chi-X Global announced
transactions without any risk plans to launch a dark pool
and theoretically it’s harming system for investors trading
the marketplace.” stocks in Hong Kong, Japan,
Adam Sussman, Director of Australia and Singapore, with
I
Research at TABB Group, the the venture expected to begin
financial markets research and operations in the first half of a
advisory firm, has been looking next year. The future of high u
into the various practices and frequency trading may be as s
adds that many brokerage dark as the pools of liquidity t
firms have been one step ahead n
themselves. n
of the regulators and have y
p
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1-17EQ9041_203x267mm+3.indd
ISJ42.indd 11 1 20/08/2009
24-07-2009 15:22
09:28:04
 CEO Profile
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48
A decade on
Pierre Francotte, CEO of Euroclear, talks to Ben Roberts about the
resilience of post-trade systems and making decisions in a crisis.
Pierre Francotte will step down from
the role of CEO at Euroclear in a few
months after 10 years at the helm. The last
year, as with the heads of many industry
leading firms, he believes has been among
the most dramatic. Of significance, it has
been a time to not only demonstrate the
proven resilience of post-trade operations
during a financial crisis, but also an
opportunity to deliver innovation.
In particular, there is the ongoing
unification of the processing platforms
operated by the Euroclear group central
securities depositories (CSDs) – including
Euroclear Bank and the group’s national
CSDs – to create a single platform for
seven EU domestic markets including
the UK, Ireland, the Euronext markets
and the Nordics for bonds, equities and
other asset classes. It began in 2006 with
the Single Settlement Engine (SSE), a
consolidation of the current group (I)CSD
core settlement applications, which already
improved settlement efficiency.
Using the SSE as its foundation,
Euroclear delivered the Euroclear
Settlement of Euronext-zone Securities
(ESES) system in January 2009, which
is effectively a single platform for the
Belgian, Dutch and French markets.
The Single Platform programme will
be completed in 2011 at which time the
Finnish and Swedish markets will migrate
immediately thereafter.
The Single Platform harmonises market
practices across the seven CSD markets
and provides a single access point to both
the national and international depositories
of the group. One particular benefit of the
Single Platform is that customers will have
access to their entire pool of assets they
safekeep with Euroclear, which will be very
useful when collateralising trade exposures
across markets.
Francotte points out that the explosion
in derivatives, such as credit default swaps,
has made such access to collateral vital.
“There is a desire on the part of clients -
encouraged by the authorities - to be able
to use the assets they safekeep in Euroclear
to collateralise exposures arising from as
many types of transactions as possible,
including derivatives, even though
derivatives transactions settle outside
1-17 ISJ42.indd 12
Euroclear.”
It means that Euroclear Bank
customers, for example, collectively
have access to as much as EUR 9 trillion
of assets held in Euroclear Bank today;
the pooling of assets across the entire
Euroclear group would increase the pool
of collateral to around EUR18 trillion.
Francotte adds that the increased
desire to collateralise transactions is
due to the shift from unsecured to
secured transactions, largely as a result
of the recent financial crisis. Calls from
regulators, such as the SEC, to trade
derivatives on exchanges and clear
these trades through a single central
counterparty, will result in additional
demand for collateral solutions.
“When trades are cleared and netted
through a CCP, the net exposure is
reduced, but the CCP still requires the
exposure to be collateralised. As we
already have in place for equity trades, we
have the prospect of working with CCPs
for derivatives trades, helping clients
collateralise exposures in a straight-
through processing fashion from their
pool of assets held anywhere within the
12
ISJ Investor Services Journal
Euroclear group.
Francotte explains: “We are firm
believers in seamless interoperability
between CCPs and CSDs - or an ICSD like
Euroclear Bank. (I)CSDs should be able to
freely compete for settlement and collateral
management business opportunities by
offering the market a choice of provider,
particularly in markets where there are no
alternatives today. This is the spirit of the
European Commission’s Code of Conduct
for Clearing and Settlement.”
In addition to the benefits of choice
and competition, Francotte points out
the efficiency and business growth
potential advantages too. By providing an
environment where clients can centralise
their settlement, custody and collateral
management needs in the venue(s) of their
choice, volume discounts will mean lower
unit costs, fewer but larger asset pools will
mean greater collateral optimisation and
opportunities for clients to rationalise
their own back offices will mean internal
cost savings. As a result, he says, firms can
trade more, and more cost effectively.
Francotte explains that a familiar brace
of subjects are top priorities during client
meetings: reducing risks and reducing
costs.
He says there are two immediate ways
that Euroclear tackles these issues: first,
by continuing to provide a risk-averse
environment in which clients can process
their transactions and by continuing to
reduce tariffs to make post-trade services
cheaper; second, by delivering the Single
Platform to reduce market fragmentation
and help eliminate the high costs and risks
of cross-border transaction processing.
The move to process all custody-related
transactions, such as corporate actions,
across Euroclear’s markets on the Single
Platform is due to be implemented by
the end of 2010 – the next milestone in
Euroclear’s programme, which is more
than 80% completed.
“It’s an objective worth pursuing,”
he begins. “Trading firms need to invest
in different technologies, maintain
relationships with multiple intermediaries
and market infrastructure service
providers in order to access different
20/08/2009 15:22
 ISJ Investor Services Journal
markets.
“The more we can rationalise,
streamline and harmonise access to
multiple markets, the more business they
will be able to transact while saving money
in their back offices.”
Talk of market-practice harmonisation
and post-trade processing is a far cry from
Francotte’s career origins – a Belgium
native - who first practiced as a lawyer.
In 1993, while working in the US for the
International Monetary Fund, Francotte
was head-hunted by JP Morgan to work
in a legal capacity at Euroclear – then
still operated by the New York bank - in
Brussels.
He recalls that he did not expect to be
able to fulfil his dream of a career with
an international scope by returning to his
home country, and he had not previously
heard of Euroclear and its role in the
international capital markets.
However, he says that it quickly became
apparent that Euroclear was one of the
“jewels in the crown” of JP Morgan, with
an unusually diverse team of employees
taking on different roles at Euroclear
during their careers. “Euroclear was
independent from the activities of JP
Morgan, and rightly so. One of the most
attractive features at Euroclear was the
opportunity accorded to senior and mid-
level people to rotate jobs and learn new
skills within the same company.”
Francotte also appreciates Euroclear’s
user ownership and governance, which
allows Euroclear to invest in business
safeguards that do not necessarily
generate short-term profits. For example,
its business continuity arrangements
are second to none. Francotte reveals
that - purely coincidentally – Euroclear
simulated a ‘stress test’ scenario where one
of its major liquidity providers defaulted,
just one month before the collapse of
Lehman Brothers in mid-2008. This type
of rehearsal helped Euroclear manage the
crisis with no market disruption and no
losses on its exposure to Lehman.
“The theme of the test was ‘One of our
biggest counterparties goes bust – what
do we do?’ As we went through the lessons
and exercises, we took careful note of the
procedures we would improve for the next
time we do an exercise like this. It was
very useful that we had done this when the
Lehman crisis occurred.”
Francotte says he is proud of how
well his colleagues handled the event,
continuing to operate the rest of the
business as normal, despite working “days
and nights” in the wake of the collapse.
“Decisions about how to handle a crisis
1-17 ISJ42.indd 13
like Lehmans are typically not taken by
the CEO; they need to be taken by the
people who are closely involved with the
day-to-day business. Obviously, there is no
time to properly train them at the start of
a crisis, so being well prepared in advance
is vital. That’s one of the major strengths
of Euroclear – depth of management and
quality of people.”
He says that the authorities publicly
acknowledged the strong performance of
the post-trade systems during the crisis.
“They – including the central banks –
recognised the operational resilience of
the payment and securities infrastructures
in 2008. We are what has been called in
another context ‘the dog that didn’t bark’,
because if we had had problems processing
payment or securities transactions, the
markets would have been unable to
function normally. And, that did not
happen.”
The legacy of 2008 can be remembered
as a period of significant volatility, for
example, transactions in the UK alone
leaped from around 300,000 transactions
a day on average, with peaks of around
600,000, to a spike of 1.6 million
transactions in one day. He says this
systems resilience challenge had been met
without issue due to the fact that Euroclear
had decided to invest in systems capacity
enhancements well before the crisis
ensued.
The introduction and growth of multi-
lateral trading facilities and new CCPs
were other significant developments for
the post-trade providers to manage, having
an impact on both trading and settlement
volumes.
Francotte believes that despite the
proliferation of MTFs, “I’m not convinced
there’s room for so many in Europe. The
MTFs are forcing the exchanges to rethink
their business models and change their
pricing structures. As always, liquidity is
an important determinant of success at
the trading level, so price is not the only
factor.”
When asked to consider the biggest
achievement of the Euroclear group during
his time in charge, Francotte points to the
firm’s ability to integrate two of the three
biggest securities markets in Europe: the
French and the UK markets. None of the
other market infrastructures – exchanges
or CCPs – have achieved the same level of
integration, he adds.
“The hard part of a merger or
acquisition is the integration process, but
that’s where the true value is derived. It is
partly because of this ability that I believe
Euroclear will remain one of the most
13
CEO Profile
“The more we
can rationalise,
streamline and
harmonise access to
multiple markets,
the more business
trading firms will
be able to transact
while saving money
in their back offices”
important drivers of securities market
integration in Europe and perhaps beyond.
“It’s a challenge to work on so many
different initiatives at the same time, but
with a strong discipline of execution, good
results emerge. The CEO of a company is
like the conductor of an orchestra, leading
teams of experts towards a harmonious
result.” n
Biography
- Chief Executive Officer and Chair-
man of the Management Committee
of Euroclear SA/NV (2005 – present)
- Member of the Board of Directors,
Euroclear SA/NV (2009)
- First Chief Executive Officer of
Euroclear Bank upon its creation
(2001-2005).
- Chief Operating Officer and Gen-
eral Manager (2000-2001)
- Managing Director and head of
the Transaction Processing division
1997-2000)
- Managing Director and head of the
Legal division (1994-1997)
- Joined Euroclear’s Legal division
in 1993
- Assistant General Counsel at
the International Monetary Fund
(1982-1993.
- Bachelor’s degree in Law and a
Master’s degree in Financial and
Economic Law from the Université
Libre de Bruxelles (Belgium).
- Diploma in Comparative Legal
Studies from Cambridge University
(UK).
20/08/2009 15:22
 Payments ISJ Investor Services Journal

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48

Pays to invest
Transaction banking has climbed the agenda for banks, though legacy sys-
tems and stop-start legislation need to be addressed, finds Ben Roberts.
Some aspects of finance are so
fundamental they are typically
overlooked.
The interbank lending market only
really showed its true influence on the
activities of financial institutions – and
wider economies - when it came to a near
standstill from mid 2007. But it operates
as part of perhaps the most fundamental
investor service, perhaps the core of
banking itself historically: payments
transactions.
Compared to the faster changing arms
of investment banking and commercial
banking, payments and transaction
banking is the pragmatic machine
of money movement, though many
would still be surprised by the revenues
generated. HSBC last year saw revenues
of more than USD9 billion in transaction
banking, according to Andrew Long,
group general manager and head of global
transaction banking at the firm. and asset management through to more their liquidity better.”
But it is an area of a bank in which general corporate clients and retail – can Fundtech’s key product to enable this
internal systems typically change less be processed and distributed. is called Global PAYPlus, which features
frequently, and if delivery is on time it is a “The credit crisis certainly has made a core engine from which a variety
key functions that is taken for granted. it more important [to] move towards of payments services, including mass
But as George Ravich, EVP at payments a consolidated payments hub where a payments and high-value payments, can
technology developer Fundtech points be installed. The framework for these
out to ISJ, the ripple effect of the credit consolidated payment services is achieved
crisis has made the status of payments
and transaction banking climb the
“The credit crisis through what it has called a service-
oriented architecture (SOA).
priority list for banks’ infrastructure
spend. In particular, issues of risk,
has certainly “SOA relates to how easy it is to deploy

made it more
different functionality and how they can

security, high transaction volumes,
liquidity management – subjects that
have dominated discussions in the more
eye-catching areas of trading and portfolio
management – have their implication for
payments operations, and more CFOs are
taking note.
A key issue is the disparate nature
of payments within the banks. Multiple
systems can exist, often from very different
decades, overlapping with each other and
creating the kind of ‘silos’ also present in
the post-trade processing of different asset
classes.
It can mean high maintenance cost and
decreasing efficiency. Fundtech’s answer
to the market has been the creation of a
centralised payments ‘hub’ by which all
types of payments – from custodian arms
G
interoperate,” explains Ravich.
important to move He adds that this deployment may vary
depending on the size of the institutions.
to a consolidated “Like any situation, bigger banks will have
more money to spend on development f
payments hub”
they’re usually the ones who will invest
sooner in SOA and hubs. The smaller
banks would need to use this technology,
as it will not only provide benefits to the
George Ravich, banks but also the end customer. The ease
of sending a bank a file saying ‘take care of
Fundtech my payments’ - rather than having to have
different systems for payments.”
Andrew Long at HSBC adds that
bank could see its risk across all kinds of the bank has been reducing its multiple
payments,” says Ravich. “Banks with a payment platforms two key payments
payments hubs can see their risk better, systems – high and low value payments –
their risk-by-customer better and manage and there is still discussion as to whether

14

1-17 ISJ42.indd 14 19/08/2009 11:16

 ISJ Investor Services Journal Payments

about 80% of the high value traffic will
be on the systems, with an even higher
percentage 12 months later. “These
new systems increase straight through
processing rates, improve data handling
rates and facilitate data reconciliation
and forecasting,” he says. “But they’re not
cheap, that’s why the newer players that
want to come into this space might not be
able to afford to be that sophisticated.”
Distra is a Sydney based provider of
payments solutions that among other
things offers a unified framework so that
banks can replace the different payment
systems that have been built and added
over decades.
Mike Aston, Distra’s CEO, explained
to ISJ that each of these legacy systems
– themselves created to facilitate best
performance for clients – have limitations,
particularly as they only service one type
of payment, but because they have become
so “mission critical” to daily operations
there has been a tendency to cling to them.
In the past, he adds, banks and major
parties ran the payment networks. If there
were a specific operational issue, they’d
find their own private solution. But over
the last few years, he explains, “regulators
have jumped into the ring and created
situations in which those comfortable
arrangements no longer apply. Plus, there’s
less money in the pool anyway in terms of
fees if firms are reducing interchange fees.”
Aston says the continued use of siloed
systems hampers the ability to assess risk
and liquidity controls.
Traditional ‘batch’ processing systems
entailed a kind of black box effect:
payment information would go in at the
beginning and banks would not know
their net position until the batch process
had finished. “Any traditional ACH system
would not know the settlement position,”
he explains, “so in liquidity management
terms therefore, they would have to assume
that today would be no different to today
or the same day last week.”
This lack of feedback as to the progress
and overall liquidity status outs firms at a
disadvantage.
Long at HSBC says that liquidity
management has climbed the agenda for
banks. “There is increased focus on cash
and the availability of cash – where your
cash sits in the transaction flows of a
customer has always been important,” he
says. “In the past, making payments and
receiving collections has been the focus,
it was a processing ‘play’ with liquidity
second.”
The effect of lower economic activity
the collapse of Lehman Brothers and
the difficulty suffered by some financial
institutions spurred this increased focus
on systemic and corporate liquidity, he
adds, leading to increased scrutiny from
regulators.
“One of the drivers of this is that
working capital has reduced as an industry,
and a key reason for this is the implication
of the Basel II regulation. Basel II –
because the way the cycle has worked – has
meant banks need to put up more capital
in a declining environment for the same
level of assets. If you’re not making money
you can’t raise that capital internally and
raising externally has become harder.
Banks have had to reduce their need for
capital by shrinking the balance sheet.
So it’s easier to cut a short-term working
capital loan than a 10-year property loan.”
To better assess the status of balance
sheets and liquidity levels for customers
Aston says Distra has attempted to provide
a solution - chiefly embodied in its UK
Faster Payments Service - whereby firms

• Securities processing solutions

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• Electronic proxy voting

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1-17 ISJ42.indd 15 20/08/2009 15:22

 Payments
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48
“The reality is that
modern technology
means that it is
much lower cost
- you don’t need
complex systems,
you don’t need
expensive people to
install and run it”
Mike Aston, Distra
can instead constantly monitor how
much is owed to which party. “In Faster
Payments we’re providing a real time
view of net settlement positions between
the parties, something traditionally not
available.”
The first step to tackling the problem of
disparate systems, he says, is to realise that
the different payments themselves are not
really that different. The payments may be
different lengths, he says, but if you build
the systems right operators can overcome
these issues.
The Single Euro Payments System
(SEPA), the staggered legislation for a pan-
European marketplace that would level the
cost of cross-border electronic payments,
is one such form of transaction that a
payment hub can incorporate, rather than
developing specific new technology. SEPA
itself is still a work-in-progress. In January
2008 banks and technology providers
were preparing for SEPA credit transfers.
The long awaited follow up – SEPA Direct
Debit – is scheduled for the beginning of
November.
Some smaller clients may be tempted
to outsource their payments processing,
another aspect that Ravich says Fundtech
is working on with clients and another
area more commonly associated with other
investor services. “There are a number
of facilities already – we’re very involved
in outsourcing for a smaller bank that
does not want to invest in the technology
needed.
“They will more readily want to
outsource to a specialist to someone who
1-17 ISJ42.indd 16
has a payments hub available to a service
bureau basis. So we see service bureaux
growing more going forward.”
Colin Kerr, industry manager, core
banking and payments, Worldwide
Financial Services at Microsoft
Corporation, says that the upcoming
legislation has been one of the drivers for
the increase in budget for upgrades to
banks’ payments systems.
“The projects are fairly long running
and very much driven by regulation as
well. If you think about all the events
happening in Europe with SEPA and UK
Faster Payments they have almost been
regulatory drivers as much as business
drivers. So treasury services have not really
slowed considerably.”
He adds that new regulation gives firms
the opportunity to “rethink” some of the
technology architecture.
Worldwide Financial Services does not
build applications like Fundtech. Instead
a technology provider would create the
application and Microsoft underpins it
with both its own technology stack along
with the necessary integration layer which
can provide a framework for connecting
those applications together in the bank
offices and linking it to the various clearing
and settlement systems. The primary
service is called BIZTALK and is certified
by SWIFT and can connect to SWIFT
through AllianceGateway.
Though some e-banking technology
firms such as Equens and CoCoNet seem
to be relishing the business opportunity,
some see the next stage – and SEPA itself -
as a significant challenge to smaller firms.
Barry Kislingbury, solutions manager
for payments and messaging at Misys,
who writes in this issue of ISJ, points out
that SEPA benefits the largest banks and
may have excluded the smaller majority
of institutions. He says that the European
Payments Council, the consortium of the
biggest European banks that created the
legislation, were able to use SEPA to build
large payments processing factories to take
advantage of their scale and outsourcing
offering to smaller firms.
The EPC’s approach, he says, “has not
been inclusive of smaller banks, vendors
or the users of the payment services.
Because of this, plus the fact SEPA is not
mandatory, it is based on complex new
message standards and it has no hard
deadline, it is proving too expensive for the
majority of banks.”
This, along with the emphasis on
“complex new messaging standards” and
16
ISJ Investor Services Journal
the lack of set deadline, means there is
little momentum for the legislation on the
part of market practitioners.
Mike Aston at Distra takes a different
view to the claim that SEPA’s creation
solely benefited the large organisations,
and argues that new technology – correctly
deployed, helps pluralise the market.
“It’s an argument that to some extent
is somewhat believable and has ‘legs’,
but there are a lot of myths existing in
this whole area - that to do anything in
payments is extremely expensive and only
the largest organisations can do that.
“That is legacy thinking to a large
extent… because your required things,
like main frame computers - together with
a lot of expensive proprietary software -
[it seemed that] unless you really had a
significant volume, it was very difficult to
get a business case together, and thus the
tendency for the smaller organisations
to outsource. The reality is that modern
technology means that it’s much lower
cost - you don’t need complex systems, you
don’t need highly expensive people to help
you install and run it.”
SEPA remains a quintessentially
European initiative, facilitated by a
number of countries with a single currency
and a similar level of development. Asia,
with one currency per county and a greater
disparity between country developments,
has a different outlook.
But at time of interview, market
practitioners were looking forward to
the Sibos conference in Hong Kong, and
some western payments service providers
have had some recent success in the
region. Fundtech, forexample, in July sold
its GlobalCASH Plus system to United
Overseas Bank, Thailand’s leading bank.
“Asia’s an interesting market, says
Aston. “In some respects its very different
to Europe in that rather than one unified
region it’s made up of a lot of different
relationships and different alliances. I
think a SEPA-like environment in Asia
would be difficult to imagine. Certainly
the idea of a greater efficiency and
standardisation is something those
markets understand well.
“The other thing is they do look at
the developments, one of the things
we’re seeing is a keen interest in real time
settlement, and they do look at what’s
happening in the UK with faster payments.
“We see other countries, particularly
in Asia, look at it as something instinctive
and intuitive – why wouldn’t you settle
something in real time if you could?” n
20/08/2009 15:22
 ISJ Investor Services Journal
Analyse This: payments
What are the
benefits of
continuous
link settle-
ment? Moti
Porath, executive vice
president, business de-
velopment, Fundtech
Lehman Brothers’ collapse last year and
the financial crisis have highlighted the
systemic risks in the business of settlement
of complex financial transactions. At the
same time, the business is not getting any
simpler. More asset classes are becoming
part of the trading mix and, with them, the
domain of settlement schemes is becoming
more and more complex and risk prone.
There has therefore never been a better
time for firms to seek out the stability and
efficiency of systems designed to mitigate
the risks of participating in CLS.
Squashing Settlement Risk
In addition to removing settlement risk,
CLS offers many operational and liquidity
benefits, leading to significant cost savings. dustry need
For example, CLS members base their
daily funding requirements on a multi-
lateral net position, rather than gross
transaction-by-transaction funding, which
reduces necessary daily funding by 95%.
Accordingly, CLS members have to
fund less than USD50 billion a day for
every USD1 trillion of value settled.
CLS members also enjoy the benefits
of straight-through processing, lowered
payment volumes and fewer failed
settlements.
Similar benefits can be offered by a
settlement member to its third parties
through their CLS back office solutions. A
comprehensive CLS back office will offer
Service Level Agreements with several
payment schedules and funding options
that can dynamically execute best practice
STP rules that meet the needs and risk
profile of a particular CLS third party.
Get More Out of CLS: Key Considerations
- Offer third-party services
- Streamline risk management
- Improve compliance
- Participate in a growing community of
trust
- Enhance treasury functions
- Optimise central bank relationships
1-17 ISJ42.indd 17
- Greater operational efficiency
- Expand into new asset classes
- Centralise cross-border trading activity
The best way to take advantage of all the
benefits CLS has to offer is through a
dedicated back office CLS system that is
optimized to fully exploit its capabilities.
Sophisticated vendor products installed
in-house to connect to CLS, for example,
let institutions use liquidity and other
tools available through CLS to engage
in cutting-edge strategies, such as ring-
fencing, to better understand and manage
their positions.
In selecting a vendor product,
banks will also gain greatly in the
implementation expertise of their new
partner for their CLS project. They
immediately gain the insights and
knowledge acquired during the experiences
of other CLS projects. This gives the bank
confidence they will be entering into CLS
operations in the most efficient and cost
effective manner. n
Why does the
banking in-
standards?
Colin Kerr,
Industry
Manager, Payments and
Core Banking World-
wide Financial Services,
Microsoft Corp.
This is actually a fair question.  of industry architecture models and
In fact, it can be said that the banking
industry has always had standards, and
that the last thing it needs is yet more.
But the reality is that the type of
standards employed to date, particularly
in the area of payments processing, have
been generally designed to be an enabler
of communication among industry
participants – but less so a model for how
a bank could or should operate.
Certainly the formation of standards
at the transactional level is important, as
evidenced by the initiatives mandated by
the Single Euro Payments Area (SEPA)
and the development of ISO20022, but the
primary purpose is to allow structure and
17
Pension Funds
efficiency for the exchange of data.
Beyond that, perhaps there are
additional reasons why industry-wide
standards, or models, are necessary for
the architectural renewal of financial
institutions.
Banks face a myriad of internal
applications and systems that have been
developed over the past 30 to 35 years
and spread across different technology
platforms.
These systems were often implemented
to fulfil a new product need, and few of
these systems resulted in the replacement
of older systems.
As a result, they were integrated
without regard to enterprise architecture
in an ad-hoc manner. Each of those
systems processes banking transactions
in different ways, using different formats,
and requires different levels of support by
auxiliary processes, such as compliance
screening.
Mergers, acquisitions, and different
national banking schemes, further
complicate matters - it is easy to see
how the environment has become
quite unmanageable, and potentially
unreliable. For these reasons, banks seek
a blueprint for developing an architecture
model that will enable them to gradually
replace components of their current IT
infrastructures over time as business cases
permit. Developing standards that improve
interoperability and reduce costs must be
viewed as a major enabler of efficiencies.
The work of BIAN (Banking Industry
Architecture Network www.bian.org)
aims to address this challenge, and is
complementary to the message level
specifications for ISO20022.
BIAN recognises that although no
two banks are the same, the development
standards for specific banking services can
provide this foundational blueprint.
Adopting these models will enable
banks to implement a consistent service
oriented architecture (SOA) across all
technology platforms, whether they decide
to build or buy software components.
Leveraging architecture and message-
based standards will enable banks to
become more efficient via streamlined
integration of systems and processes.
As a result, the delivery of such
standards will help the banking industry
address the key market imperative to drive
cost reductions through greater efficiencies
and organisational flexibility. n
20/08/2009 15:22

Corporate actions
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48
Votes are in
There is no doubt that the
administration of corporate events is one
the most demanding responsibilities for
any custodian to deal with.
There are many facets and aspects to
dealing accurately with custody events
on behalf of beneficial owners. Accessing
corporate actions information off, say, a
real time feed from a provider like SWIFT,
is only the first part of the challenge
Providing a full service for beneficial
owners involves adding value across a
number of fronts.
The tasks involved range from
switching dividends from a pool of
domestic and international securities to
a common currency to ensuring that all
holders have the chance to exercise their
full voting rights on all the securities they
own. services sector. “Shareholders here have the
Paul Hewitt is business development
Manager at Manifest, which specialises in
proxy voting.
As he explains, processing voting
instructions for clients is probably the
most demanding of all the corporate
actions to which an administrator has
to react. Manifest’s client base are fund
managers, pension funds and some
sovereign wealth funds.
Their clients, by the nature of their
activities, hold large equity portfolios
and Manifest provides a voting platform
which allows them to specify their voting
instructions, with the service acting as
the back office instruction fulfilment
operation.
That is easy to say, but as Hewitt
explains, proxy voting is tough to stay
on top of in practice without a very
sophisticated electronic platform.
Moreover, institutional fund managers
are busy folk. They can’t spend time
pondering which way they want to vote
across a share portfolio that might contain
anything up to 200 or more equities per
fund and multiple funds.
The way it works in practice, Hewitt
says, is that his fund manager clients will
specify their voting policies, based on their
reading of their end clients’ preferences
and their own concerns as large investors.
Manifest generates bespoke voting
recommendations for each corporate event
requiring a vote and all the client has to
do is to accept the recommendation (or
provide further guidance) and the shares
18-29 ISJ42.indd 18
Corporate actions remain a significant pro-
cessing task, finds Anthony Harrington.
One of the hottest
voting topics at the
moment is the issue
of executive and
board remuneration
and bonuses,
particularly in
financial services
will be voted for them.
At a stroke, this puts the beneficial
owner of the shares in intellectual control
of their assets while sparing them the need
to get involved in the actual administration
of voting practices.
“When they log on to our system, they
can see historic research reports written on
the company. They can view their historic
voting record with the company, together
with their voting policies and they will
have the issues that we have highlighted
with regard to the particular company they
are looking at,” he says.
The voting advice that Manifest
provides is triggered by aspects of the
governance of the company that are of
interest to the investor. This provides a
18
FAX_Fu
ISJ Investor Services Journal
very clear picture of the issues that the
client might have with that particular
company. “The kind of thing we highlight
might be the issue of the separation
of chairman and chief executive roles,
in companies where the two roles are
combined in a single individual. The
options for the client, if they object to this
and are looking to improve governance in
their holdings, might be to vote against the
appointment of the individual concerned,
or to take an even stronger line and oppose
the approval of the report and accounts,”
Hewitt says.
Undoubtedly one of the hottest
voting topics at the moment is the issue
of executive and Board remuneration
and bonuses, particularly in the financial
obvious tool of the remuneration report,
which has to go to a shareholder vote, and
they also have an advisory vote on the
remuneration practices and structures,”
Hewitt says.
In addition, there is the election of
directors involved with the remuneration
committee, particularly if the chairman
of the remuneration committee is up for
re-election.
Risk management is another hot topic
right now, particularly if there are links
with how executives below board level
are incentivised to deliver performance.
“It is becoming increasingly clear that
investors are taking an interest in the
internal controls within a company, so
Board responsibility for internal control
and the individual or individuals on the
Board responsible for overseeing this could
become the focus of investor concern with
respect to their re-election,” Hewitt says.
All of this makes for a very complex
picture. However, Manifest stays clear of
one major area of shareholder interest and
that is M&A activity.
“These are essentially financial
investment decisions although there
are inevitably corporate governance
issues bound up with them. One thinks
in particular about the issue of which
directors in the two Boards will make
up the new Board. But on M&A work
generally, when it comes to the voting
decision at the AGM or an Extraordinary
General Meeting, we take the view as a
voting agency that this is an area for the
19/08/2009 10:51
FAX_Fullw_ISJ_081309.qxd 8/13/09 3:06 PM Page 1

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18-29 ISJ42.indd 19 20/08/2009 10:01

 Corporate Actions
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48
professional financial investors to take
responsibility,” Hewitt says.
Commenting on the “big picture” view
of proxy voting, Hewitt says that one has
to remember that voting, as an activity,
is not something the investor gets paid
to do. “There are aspects of fiduciary
responsibility about exercising one’s voting
rights, but it costs money and time to
vote,” he points out.
This means that some investors will
only vote a certain proportion of their
equities. Overseas equities in which they
have a small holding, where their vote will
get submerged in the general vote, often
hold few attractions. However, demand for
proxy voting services in general is growing
hugely, he says.
“Even before last year’s crash, the
popularity of exercising shareholder rights
was growing enormously. There has been
a marked increase in socially responsible
investment practices and fund managers
generally will have a very keen sense of
what their end clients expect them to do by
way of voting,” he says.
In fact the stream of investor queries in
to fund managers via emails and suchlike
makes it plain to managers that they need
to be voting their shares where possible.
Even fund managers running passive
investment portfolios should feel the need
to be active shareholders (as opposed to
being “shareholder activists, ie someone
who sets out to force through changes to
company policy through voting pressure).
On 3 August this year, the European
Shareholder Rights Directive became law
across the EU. This directive has had a
particularly positive impact on corporate
actions as far as beneficial owners are
concerned. “Our take on the Directive
is that it has been a very good thing. It
has highlighted the need for minimum
common standards around corporate
events across Europe,” Hewitt says.
One of the changes introduced has
been the setting of a minimum of 21 days
notice before the calling of a shareholder
meeting, and the establishment of a
record date, which is the date on which
the shareholdings in the company are
essentially established by the registrar for
the issuer, and the voting rights pertaining
to each shareholder.
“The practice of share blocking, in
particular was a concern for us,” says
Hewitt. This is where beneficial owners
had to have all their shares registered at a
certain bank by a certain deadline before
the meeting. Moreover there could not be
18-29 ISJ42.indd 20
any sale or dealing in those shares until
a set number of days after the meeting if
the shareholder chooses to register their
shares to vote. As Hewitt points out, fund
managers hate this since it leaves them
powerless to act if a company in which
they have a stake crashes during that
blocked period. As a consequence, they
will quite often opt not to vote if there is a
share blocking mechanism in place.
Many global custodian banks and
infrastructure providers like Euroclear and
Clearstream have been working on beefing
up their corporate action/corporate event
services and some have been lending
their weight to cross-border initiatives to
harmonise practices around corporate
events. Denis Peters, Communications
Director at Euroclear, for example, says
that Euroclear has been doing a good deal
“Investors are
taking an interest
in the internal
controls within a
company”
Paul Hewitt,
Manifest
of work to harmonise corporate action
rules and procedures across markets.
“In the three Euronext markets,
Belgium, France and the Netherlands,
where we recently launched a single
platform, we have delivered Europe’s
frist group of markets working with
harmonised market rules and practices,”
says Peters.
Euroclear identified more than 250
different market practices across its five
markets and has worked with market
participants, step by step, to harmonise
each of these disparate practices.
One example Peters gives is the record
date. In the French market, for example,
there was no such concept, so Euroclear
worked with the French market and
authorities to introduce a record date to
French securities to determine when, for
example, a security is traded and settled
ex-dividend. This is now a common
measure across the seven Euroclear group
markets.
Another initiative that is still patchy, in
20
ISJ Investor Services Journal
Peters’ words involves the identification
of a security’s ultimate beneficial owner. F
“In the Netherlands, there will be new
legislation expected in early 2010 which Eu
will make it mandatory for end investors 9
to disclose their identity to issuers. Once
this happens, investors can communicate
directly with issuers when it comes
E
to voting and they will then be in a
position to get voting and other relevant
C
a
information directly from the issuer,” says
Peters. At present, it is possible for an
objecting beneficial owner to be totally
anonymous to the issuer in some markets,
V
such as in the UK and the US.
Another issue where there is as yet little
harmonisation is tax collection practices.
There is no equivalent, for example, of the
UK’s stamp duty in other markets.
“There are clearly improvements to
be made with issuers communicating
corporate action event information to
beneficial owners and intermediaries.
SWIFT plays a key role as the gateway
for most ISO standards and messages,
particularly within the interbank
community.
However, Euroclear has become one
of the first entities other than SWIFT
to receive approval for a new set of ISO
20022 messages to be used between issuer-
appointed agents and central securities
depositories when communicating
both corporate action information and
instructions between them,” he says.
In 2010, Euroclear intends to launch a
single platform for custody across five of
its seven EU markets, and the international
CSD, Euroclear Bank, which will process
all domestic and cross-border custody
and corporate events for securities held by
those entities.
Sweden and Finland will come onto
the platform in 2012. “This will comprise
corporate actions covering more than 60%
of the blue-chip equities in Europe and
more than 50% of domestic fixed-income
securities in Europe,” Peters says.
Laura Pollard, Executive Vice President
at Fidelity ActionsXchange says that the
riskiest and most complex corporate
event tasks for any custody service are
those involving any voluntary or elective
corporate actions. “A miscalculation of the
due dates, time frames or payout options
can cost the client firm millions here,”
she says. Fidelity ActionsXchange looks
to combine its analytical expertise, data
validation capabilities and technology
to provide comprehensive, timely and
accurate information, along with tools
20/08/2009 10:01 5313 A
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18-29 ISJ42.indd
5313 Advert 21
210x276mm.indd 1 20/08/2009 10:01
14/8/09 16:59:35
 Corporate Actions ISJ |ISJ Investor
Investor Services
Services Journal
Journal
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48

already complicated information. “Because

to help automate manually intensive
processes.
Proxy voting has been the subject of
much increased scrutiny recently, she says.
“Both investors and regulatory bodies
are pushing for greater transparency into
investment strategies, corporate actions
and related corporate announcements.
“Investors want insight into the
entire voting lifecycle and value highly
transparent processes that can track,
control and account for election decisions
across all stages,” she adds.
ActionsXchange provides proxy meeting
notices and supporting regulatory filings
as part of its offering and Pollard says
that it is currently exploring technology
to support a more robust and compliant
downstream event management lifecycle.
There is no doubt that for investors
trading across multiple borders, the
different regulatory, legal and data rules
that apply from market to market really do
add an additional layer of complexity to
of this, firms are increasingly turning “Both investors
and regulatory
to providers with the market expertise
to act as partners in managing risk who
can provide guidance and support to
transform their data into actionable bodies are pushing
intelligence,” she says.
Payment too, is not without its for greater
complexity. “Payment of dividends in the
currency of choice is highly dependent on transparency
the timing of the dividend, actual terms of
the declaration and current FX rates. It is
into investment
an area where data validation and careful
analyst review is paramount.
strategies”
“We consistently work closely with
our clients to understand their evolving
needs. As such, currency options are
something we have identified as being a
Laura Pollard,
top priority and will be included in our
upcoming release,” Pollard concludes.
Fidelity
ActionsXchange
Fidelity ActionsXchange provides
flexible, technology-driven global event
management solutions for many of the
world’s financial industry leaders. n

Why is vote confirmation important?

Elizabeth Maiellano, Senior Director, Institutional Product and
Strategy at Broadridge Financial Solutions
Those outside the world of
corporate governance may
ask why vote confirmation
is important, while those
involved would instead
ask why it must be so
problematic.
The term “vote
confirmation” seems to define
itself: a vote instruction is
attested to by the receiver.
However, in the world of
proxy, the act of authorising
someone to vote on matters
of corporate governance on
behalf of someone else can
be complex and fragmented,
making confirmation of that
action even more difficult.
Defining vote entitlement
is the first step in the proxy
voting process.
An investor’s entitlement to
vote at a shareholder meeting
is dependent on the class of
shares held, a determination
based on the records of the
company shareholder register
or custodial records.
Markets may establish a
record date, or entitlement
could be determined based on
the shareholder’s position as
of the meeting date.
Voting entitlement
calculations are made based
on settled shares held in
an account that are not
pledged, on loan or otherwise
hypothecated.
Institutional investors
continue to have a growing
concern: are all of their
eligible shares, or those
shares earmarked for
voting, and the associated
vote instructions actually
represented at shareholder
meetings?
In 2004, The Myner’s Report
outlined a comprehensive
action program to remove
obstacles to casting votes by
institutional investors at UK
company meetings.
One step included urging
institutional investors to
annually review a sampling
of shareholder meetings in
order to provide a level of
confidence in the process.
However, the time has come
for the industry to deliver on
vote confirmation, rather than
relying on individual record
keeping and reporting.
It is a matter of confidence
and integrity. The obstacle
to implementing vote
confirmation is the active
involvement of every
organisation involved in the
process.
Today, Broadridge Financial
Solutions, Inc. is able to
confirm voting in the US
where it acts as tabulator.
In 2007, Broadridge
implemented a vote
confirmation process through
its ProxyEdge® system for
those US corporate issuers
for which it provides direct
tabulation services. Users
of the platform are able to
receive confirmation that
their vote instructions were
recorded at these shareholder
meetings. In this case,
transparency is possible
because the entity that has
the information provides it
directly to the voting party.
In most markets, Broadridge
and other proxy processors
are dependent on the various
entities in the chain to
provide their processing
status of the instruction.
Broadridge recognises that
all parties in the industry
must be involved in the
confirmation process in order
for it to be effective.
Partnering with Yale’s
Millstein Center, Broadridge
will co-host an industry
conference to examine ways
to achieve complete vote
confirmation.
Today, commitment to
the process varies. There
are obstacles to overcome:
cost, transparency of data,
and automation. Issuers,
investors, custodians and
intermediaries must work
together to ensure that vote
confirmation is the accepted
standard. n

22

18-29 ISJ42.indd 22 20/08/2009 10:01

 ISJ Investor Services Journal
Clear2Pay is an innovative financial technology
company focused on delivering globally
applicable solutions for secure, timely electronic
payments. Headquartered in Belgium, the
company facilitates banks and financial
organisations in their provision of payments
services. Clear2Pay’s technology helps to reduce
transactions processing costs, and to deliver new,
compelling payment services in a competitive
way.
The Open Payment Framework is built entirely on a Service Oriented
Architecture (SOA) delivering common, reusable services consisting of a
comprehensive data model, choreographed payment business processes
and configurable services including parsing, validation, cost based routing,
warehousing security, auditing and many more. From this core framework,
Clear2Pay has created pre-defined solutions including the Bank Payment
Hub, Imaged Check Processing, SEPA, International Payments, EBPP,
Remittance and eBanking. In addition Clear2Pay offers a wide range of card
related payments products and testing tools. At Sibos 2009 Clear2Pay will
also demonstrate its set of payment solutions for the Chinese market and the
new ‘SEPA in a box’ solution for fast track compliance, as well as the newly
launched iPhone mobile banking solution. Clients include global and major
regional financial institutions such as ING, Banco Santander, Crédit Agricole,
Nordea, Abbey National, Bank of East Asia, Shenzhen Ping An Bank, United
Arab Bank, ANZ and Commonwealth Bank. Clear2Pay operates out of 13
offices and currently employs over 450 staff.
Contact detail: www.clear2pay.com – booth 1-D18
Clear2Pay NV SA
Schaliënhoevedreef 20A
2800 Mechelen
Belgium
T: +32 15 79 52 00
Mark Hartley, VP Strategy and Business Development/CMO
E: mark.hartley@clear2pay.com
eSecLending is a leading full-service
securities lending agent. Its program
has been adopted by some of the
world’s largest and most sophisticated
institutional investors including pension funds, mutual funds, investment
managers and insurance companies. eSecLending 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 comprehensive risk management, high touch
client service, program customization and optimal returns. These themes are
executed through their approach, which is to begin each lending program
with a competitive blind auction to determine the optimal route to market
whether it is via exclusives or discretionary lending. Having built their business
to incorporate investment practices such as the use of specialists, multiple-
managers, unbundling, price transparency, and competition, their approach
ensures best execution and also provides clients with greater control over their
programs, allowing them to more effectively monitor and mitigate risks and
counterparty relationships.
Key Locations:
Boston
175 Federal Street, 11th Floor, Boston, MA 02110, United States of America
+1 617 204 4500
London
10 King William Street, 1st Floor, London, EC4N 7TW United Kingdom
+44 (0) 20 7469 6000
Sydney
60 Castlereagh Street, 17th Floor, Sydney, NSW 2000, Australia
+61 (0) 2 9220 3610
Key Contacts:
Christopher Jaynes, Co-Chief Executive Officer, cjaynes@eseclending.com
+1 617 204 4500
Karen O’Connor, Co-Chief Executive Officer, koconnor@eseclending.com
+1 617 204 4500
www.eseclending.com
18-29 ISJ42.indd 23
Sibos
Building on over 23 years of successful presence
in capital markets with over 160 clients and
32,000 users worldwide, Murex has developed
an unmatched competence in the design and
implementation of cross-asset trading, risk
management and processing solutions for
the world’s top buy- and sell-side financial
institutions, corporations and utilities.
MXpress™, the latest Murex implementation
methodology, leverages the wealth of business content accumulated through a
combination of pre-packaging of best practices and client-tailored approach
enabling an accelerated process of delivery. A team of over 1150 specialists,
located in Asia, Europe and America are dedicated to providing clients with the
best support in the industry. Key Services: Featuring unrivalled product coverage
and leading functionality in each asset class (interest rates, foreign exchange,
equity, credit, securities and commodity instruments), the platform delivers
superior power and flexibility, from high volume trading to exotic product
structuring. MX Risk Manager provides cutting edge tools for the management
and control of credit risk, market risk & liquidity risk and MX Collateral
Manager enables enterprise-wide collateral management and margin trading –
both solutions are available as stand-alone offerings. Any industry process can
be implemented and extended as needed through addition of external tasks or
by integration into enterprise-level workflows. Highly customisable, our fully
fledged workflows are available pre-packaged or tailor-made in order to fulfil
your business requirements. Pre-and post-trade compliance are provided on a
wide variety of rule types. The solution introduces a benchmark in scalability
through its innovative multi-business, multi-entity architecture.
Key Locations:
Regional Offices: Paris, France (Headquarters) – Singapore, Singapore – New
York, United States of America
Other Offices: Beijing (China) - Beirut (Lebanon) – Dublin (Ireland) – London
(United Kingdom) – Luxembourg (Luxembourg) – Sydney (Australia)
Key Contacts (incl. telephone numbers and email)
Paris, France (Headquarters) – Telephone: +33 1 44 05 32 00 –
email: sibos@murex.com; Singapore, Singapore – Telephone: +65 621 602 88 –
email: sibos@murex.com
New York, United States of America – Telephone: +1 212 381 4300 –
email: sibos@murex.com
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 Services
P: +65 6517 0134
E: Giles.Elliott@sc.com
W: www.standardchartered.com
20/08/2009 10:01
 Settlement
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48
The quest for pan-Asian settlement
Market enthusiasm doesn’t diminish the post-
trade task in the bond and equity markets.
For some time now Asian governments
have realised that the fragmented state of
the Asian bond market and equity market
settlement infrastructure is putting the
region at a serious global disadvantage.
Many initiatives are under way, including
the Asian Bond Markets Initiative (ABMI).
However, despite political and market
willingness, building a trans-border
settlement infrastructure that unites
independent markets in various stages of
development is a mammoth task.
The ABMI was the prime focus of
the Asian Bond Clearing and Settlement
Conference on 23 June this year, held
under the auspices of the Hong Kong
Monetary Authority. The initiative itself
was launched two years ago by the finance
ministers of the ASEAN + 3 group of
countries (South East Asia plus China,
Japan and Korea). Its aim was to develop
efficient and liquid bond markets in the
region, and to foster a high degree of
financial independence in Asia. The project
was given to a Group of Experts (GoE) in
December 2007, who were asked to come
up with proposals.
As Alton Chan, Executive Director of
Relationship Management, Asia/Pacific at
Clearstream explains, the Group of Experts
is now set to present two alternatives to the
ASEAN + 3 finance ministers in January
2010. “The two options on the table are the
creation of an Asian International Central
Securities Depository (ICSD) or a CSD
link up that would embrace a number
of existing country specific CSDs, much
along the lines of the European model, and
would be a kind of virtual integration of
existing CSDs in the region,” he says.
These are two radically different
options - creating a new ICSD would cost
hundreds of millions of dollars and the
cost will take some visionary thinking to
justify in the early years. There are also
huge challenges, Chan says, with forging
links between national CSDs. “Every
country in the region at present has a fully
functioning CSD, but it is relatively new in
most of them and is considered a national
asset. So merging it with other nations’
CSDs is a real political challenge,” he says.
In a similar vein, as soon as talk gets
18-29 ISJ42.indd 24
around as to where to locate the proposed
pan-Asian ICSD, it rapidly becomes
obvious that the Japanese expect it to be
in Tokyo, the Chinese think it should be
in Shanghai and so on, with every country
arguing that it is the “natural” home for
any pan-Asian infrastructure entity.
However, Chan argues that one should
not let the inevitable national politicking
cloud the fact that there is a real desire
across the region, both from investors
and at national government levels to
harmonise and standardise the bond and
equity markets in the region – however
Herculean that task might look at present.
Philip Reichardt, director and head of
Euroclear’s International Collaboration
Department says that one of the major
problems is that while some of the
participating countries, such as Japan,
have very mature, open structures,
others are in various stages of opening
up. “The clearest example is mainland
China, where if foreign investors want
to buy securities, they have to do it
through a Qualified Financial Investment
Intermediary in China. Plus, of course, the
Chinese currency is still not a freely traded
currency, though there are signs that it is
opening up little by little,” he says.
The drive for harmonisation and a
pan Asian settlement system goes back
to the 1997 crisis, which started with
the Thai baht. Securities denominated
in baht and held as collateral plunged in
value and with a knock-on effect which
propagated through the banks of the
region. This led the drive for pan-Asian
settlement, particularly as analysis of the
1997 crisis showed that one of the causes
was undoubtedly the lack of an Asian bond
market, Reichardt says.
However, he points out that there
is more than one group of countries
discussing their own initiatives, so there
is no one, single pan-Asian initiative
dominating play right now. “Today a
great deal of the capital raising by Asian
companies ends up with international
bonds denominated in US dollars. Because
there is no one standard dominant
currency in Asia, the pivot currency
always ends up being the US dollar, which
24
ISJ |ISJ Investor
Investor Services
Services Journal
Journal
continues to play the role of the world’s
reserve currency,” he says. Discussions are
taking place about whether Asian countries
would like to move away from the US
dollar towards an alternative reserve
currency based on some kind of a basket of
currencies, but these ideas are still in their
infancy. So currency harmonisation and
openness remains a stumbling block.
“Today, Hong Kong has some freedom
to trade the Renminbi, which has been
allowed to appreciate gradually against
the dollar. There is a clear awareness on
the part of the Chinese government that
people who trade with China need to be
able to pay in an efficient way and if you
can get access to the Renminbi for trade,
then you have begun to establish the
infrastructure that can show how things
can move forward quite rapidly in the
region,” he says.
However, Jonathan Butterfield,
executive vice-president, marketing, for
CLS Bank International, cautions that any
pan-Asian settlement system is hugely
ambitious and it is by no means clear that
everyone in the region wants one. Many
local CSDs for example, he points out,
would lose lucrative, high margin revenues
around the edges of their operation to
such a system. “The most obvious place to
start is the bond market, but even there,
a linking system, which isn’t a grandiose
scheme to “boil the ocean”, would be
much more sensible than an all singing,
all dancing, all-Asia owned independent
entity,” he says.
Butterfield warns that what really
matters to investors is pricing and liquidity
so that they can trade in and out. If
settlement were so expensive that it knocks
a few basis points off a trade, then that
will be a big issue for investors. But for
the most part settlement and clearing
costs will be a fractional part of any deal.
“You have to remember that while a pan-
Asian bond market looks the obvious
place to start, many Asian bonds are still
denominated in distant currencies and
the dollar still dominates. This annoys
people in Asia since New York is asleep in
the middle of the Asian trading day, but
what do you get if you bring it all back to
Asia? You probably fracture your dollar
flows, since the bulk will still go through
New York. I think the jury is still out on
whether a pan-Asian settlement systems
infrastructure is inevitable,” he says. n
32551
19/08/2009 10:47
 Nordea Bank
Custody services with
a broader horizon
Are you looking for a single point of entry to the Nordic and Baltic region? Or do you have
your eyes set on a specific 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: anne-lise.kristiansen@nordea.com,
Ms. Nina Groth, tel +45 3333 6124, email: nina.groth@nordea.com or
Mr. Teemu Pihlatie, tel +358 9 165 51008, email: teemu.pihlatie@nordea.com.

nordea.com Making it possible

32551_Custody_203x267.indd 1 21.4.2009 12:27:47

18-29 ISJ42.indd 25 20/08/2009 10:01
 Custody
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48
Tough nut to crack
Internationally, assets in custody
exceed USD65 trillion, with USD23 trillion
of this belonging to the world’s biggest
global custody player, BNY Mellon Asset
Servicing. It is a big market, and in Spain,
one that is dominated by four main firms:
BNP Paribas, Citibank, and two major
Spanish banks, Banco Santander and
BBVA.
However, the Spanish custody market
itself is one very closely protected by
stringent legislation - particularly when it
comes to the entry of a foreign custodian.
For example, only commercial and
savings banks, stockbroker entities and
credit co-operatives can act as custodian
entities in Spain.
What is more, their corporate domicile
and central administration must always
be local, and prior authorisation from the
Spanish Securities Regulator, the omisión
Nacional del Mercado de Valores (CNMV),
is required. Marta de Alba, Executive
Director Securities Services from BBVA,
Spain believes that the tightly controlled
market is what makes Spain distinctive.
“Whilst it has probably acted as a barrier
to the development of business in the years
of growth, we now see it as an advantage in
the face of the current crisis,” he says.
A senior member of Banco Santander’s
Securities and Listed Derivatives Services
team explained that “Spanish legislation
covering the equities world is complex and
makes the custody and settlement process
something for experts only. Not knowing
the market and its peculiarities can prove
costly and many a client has had their
fingers burnt.
However, the Spanish market has been
probably the most attractive market in
Europe over the past 10 years due to the
high returns offered by the companies
included in the IBEX-35 index and this has
made the “risk” of trading in Spain worth
while for all.
The most notorious aspect of the
custody and settlement process and
legislation is the technical references (or
RR’s as they are commonly know) as
well as the need for the registration of
securities as part of the settlement process.
These are the two key points that make
the Spanish market different from most
other European venues as well as the
18-29 ISJ42.indd 26
Providing custody in Spain is
still difficult for foreign firms,
finds Kimberley Ferguson
main source of trouble for non-resident
investors. However, this has also become
an opportunity for domestic players to
enhance their service and product offering
to non-resident investors to facilitate
operating in the Spanish market and
allowing domestic players to take part of
the pre-settlement functions out of the
non-resident client’s flow and into our
“Asset managers
with less than
EUR500 million
may need to explore
mergers to survive”
Jose Maria Alonso-
Gamo, RBC Dexia
own back-office flows and procedures.
This has greatly helped our clients to
reduce headcount and risk exposure and
has allowed us to add significant value
to our clients and expand our product
offering reaching beyond run of the mill
custody and settlement services”.
The Spanish fund market itself is
characterised by extreme fragmentation.
With more than 6,000 investment funds
and SICAVs (open-ended collective
investment schemes), it represents 10% of
26
ISJ | ISJ Investor
Investor Services
Services Journal
Journal
worldwide investment funds by number,
but only 2% of Assets Under Management
(AUM). The balance sheets of most of
the Spanish asset managers are very weak,
with one in four currently in severe deficit.
José María Alonso-Gamo, managing
director of RBC Dexia, Spain, suggests that
a restructuring of the industry is a must.
“Asset managers with less than �500 million
in AUM may need to explore mergers to
survive,” he explains. “Due to the increase
in costs and income reductions, mergers
between funds and asset managers are how
we foresee the industry in the short term.”
And this industry has no plans to open up
to more foreign custodians any time soon.
Alvaro Camunas, Head of BNP Paribas
Securities Services in Spain, commented
that “during the last twelve months, the
local regulators have been strengthening
their requirements, and we feel that the
current domestic environment is now even
less accessible to foreign service providers,
in particular, areas of the Depositary Bank
and Fund Administration services”.
When mentioning the recent
strengthening of local regulatory
requirements, Mr Camunas is specifically
referring to those published in 2008 and
2009 by the CNMV. Examples of these
circulars which impact the depository
entities acting as custodians of Spanish
funds include C 3/2008 on the accounting
rules of funds, C 4 /2008 on the public
information to be prepared by funds, and
C 3/2009 on the reports to be provided by
Depository Bank entities.
Mr Camunas goes on to explain: “We
believe that this legal framework reinforces
local regulatory requirements making the
access to foreign custodians more difficult
than ever. The fact that UCITS IV does not
contemplate the European passport for
depository entities is, of course, a further
drawback for these entities.”
In regards to the confidence Spanish
investors have on funds, Mr Camunas
believes that the latest financial events
have reinforced their already conservative
profile.
“This, linked with the slow recovery
of the main financial indexes and the
reinforcement of regulatory requirements,
20/08/2009 10:01
38032_
 ISJ Investor Services Journal Custody

does create a very challenging
environment for all the domestic fund
industry,” he says. However, this is not
all bad news. “We believe this presents a
good opportunity to reinforce the level of
professionalism in the market, as only the
custodians showing the adequate level of
recourses, expertise and commitment will
be able to subsist.”
The Spanish market itself has also
undergone significant change over
the last twelve months. For example,
many asset managers owned by banks
have now been vertically integrated,
making them accountable for not
only the asset management, but the
associated administration, risk control
and compliance issues. According to Mr
Alonso-Gamo, this process was “possible
with buoyant markets, when analytical
accountancy was not a priority”. He added:
“Since the last quarter of 2008 the main
aims are no longer growth at any cost, but
a more logical focus on company profit
and loss. The market trends change so
rapidly, meaning that new regulatory rules
have to be implemented at short notice,
and as a result, the P&L has turned red.”
For custodians specifically, change has
occurred in the asset mix of client funds.
“Last year, we saw a significant shift from
equities to fixed income assets,” explains
Mr Camunas.
For RBC Dexia, Mr Alonso-Gamo
describes a different experience. “The
rising stars within the underlying assets
of local investment funds are public debt
and bank deposits. On the other side,
fund managers are still very reluctant to
trade in high yield fixed income, equities,
collateralised debt obligations and other
structured vehicles. Volumes traded on
the stock exchange are still at relatively
low levels, even though some innovative
products such as exchange-traded funds
and reverse exchange-traded funds are
gaining market share.”
So how do these changes impact the
custodian? “Most of these assets, mainly
public debt and bank deposits, are less
profitable for custodian banks,” Mr
Alonso-Gamo states. “The fees charged for
custody of public debt are not significant,
and interest rates worldwide are at
their lowest level, so margins are being
squeezed.”
For BNP Paribas, Mr Camunas
mentioned the impact that the
redemptions carried-out on both
traditional funds and, more significantly,
on alternative funds. “This has had,
of course, a relevant operational and
organisational impact on our teams, as
well as tightening our margins.”
Another change of note is the
surging of interest in the process of
outsourcing. “This is driven by three key
points,” explains de Alba.
“Firstly, it is due the increasing
complexity of the assets held in clients’
portfolios, making them more difficult
to administrate and settle. Secondly,
communication has vastly improved
at a global level, and finally, due to the
necessary reductions and concentration of
efforts in core business areas, outsourcing
is now more pertinent.” Mr Camunas
believes this incremental increase in
outsourcing presents room for potential.
“Entities that were not even considering
outsourcing some of their non-core
activities some months ago are now
knocking on our door to ask what
solutions we could provide. This includes
depository, private and retail banking
back-office services, and is probably the
area of fastest growth in our business
currently.”
The close scrutiny of the CNMV
and the typically conservative nature of
Spanish investors, plans to open up to
more foreign custodians are not set to
materialise any time soon. n

The leading provider of Custody and Clearing Services in Norway

DnB NOR proactive, adding value, delivering quality

Offering: Commitment, Knowledge, Experience and Excellent Service

For further information please contact:
Head of Securities Services - Jan B. Penne: jan.penne@dnbnor.no
Global Relations and Support - Bente Hoem: bente.hoem@dnbnor.no
e-mail: custody@dnbnor.no • www.dnbnor.no/custody

18-29 ISJ42.indd 27 20/08/2009 10:01

38032_DnBNOR_nordicpartner_tgs.indd 1 26-09-08 14:55:18
 Looking to Asia
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48
On the spot: Investor Services, Asia
What does
Asia want
next? Re-
sponse by
Francis Braekvelt,
head of planning and
development, Asia Pa-
cific, at BNY Mellon
From where I sit, the future for Asia
appears brighter than for any other
region around the world. The lessons
learned from the 1997 Asian financial
crisis – the need for stronger regulation
of the financial sector as well as
improved governance through increased
transparency and accountability –
cushioned our region from some of the
killer punches that hit home elsewhere.
However, we have not been untouched.
How do changing markets affect the valuation challenge?
Response by Nick Quin, director sales and marketing, Asia,
SimCorp Asia Pty. Ltd
With the increasing complexity of
Asian jurisdictions, instrument types,
fund structures and investment
opportunities, valuation has become
a key issue. Arguably, asset managers
have less information on underlying
investment risks when greater access to
data supporting their strategies, asset
allocation and instrument coverage is
required, especially as Asian regulators
tighten rules around emerging markets
and structured products.
As market sophistication has
increased, it has been possible to obtain
prices only from the selling broker,
which leads to inherent counterparty
risks affecting the valuation of the entire
fund/unit price.
The falling market makes us question
18-29 ISJ42.indd 28
The global credit meltdown will result in
the tightening of financial regulations.
Investors are also being forced back to
basics, rediscovering the fundamental
risk-reward theorem and adopting new
approaches to assessing and mitigating
counterparty, market and business risk.
Transformational changes like these create
opportunities and challenges alike for
market participants and service providers.
The recent market disruptions have
brought home to many institutions that
they are perhaps not as well equipped to
handle post-trade processing and related
activities in-house as they might have
thought. Factor in the cost of upgrading
and maintaining in-house solutions, and
we expect to see more firms partnering
with providers like ourselves to take
advantage of sophisticated valuation and
monitoring solutions we offer to enhance
transparency and mitigate operational risk.
Many institutions are also placing
considerable attention on data
management as a central component
information are then fed back into risk
valuation processes. Does lack of liquidity
affect market price validity? How do you
price new and sophisticated instruments -
can your TPA handle them?
Instrument price data is received from
the broker by the portfolio manager
through order execution processes,
onto the TPA/custody operations, then
posted into accounting and valuation
systems. With a traditional investment
management system this would be handled
by a series of disparate systems, linked
together with middleware or other form
of interfacing. Each system would have its
own database.
Pricing validation control is thus
limited as the data enters the unit
pricing system, which impacts investors’
results. Valuations, cash and holdings
28
ISJ | ISJ Investor
Investor Services
Services Journal
Journal
of their risk management strategy – a
relatively new development for Asia.
For many, a data-centric model is being
explored that centralises all their securities,
accounting, analytic and performance data
in an effort to not only provide greater
transparency within their portfolios, but to
meet the anticipated regulatory oversight.
We have seen a clear flight to strength
trend sweep across Asia as they look for
trusted partners and apply stringent due
diligence processes to counterparty and
service provider selection.
In response, service providers will have
to introduce customised, automated and
innovative solutions focusing on data
management and transfer protocols, and
other value added services.
With renewed investor realism and
given the vibrant markets, emerging
sectors (such as pensions) and increasingly
sophisticated and affluent investors in
Asia, we are optimistic about the region’s
future opportunities and its role as a
growth engine. n
and performance systems separately with
data replication across multiple systems,
leading to data disparity and more
reconciliation and auditing costs. Asian
regions require sophisticated investor
and regulatory reporting aggregated
regionally then broken down by country
and individual tax requirements.
This requires transparency and timely
access to consistent information during
valuation - only be achieved through
a seamless processing system based on
a single core database. Information is
entered once and is accessible enterprise-
wide, providing transparency and
immediate accessibility. The fund
manager has a reliable view across assets
classes, portfolios and holdings across the
region. n
20/08/2009 10:01
 29

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 Custody ISJ Investor Services Journal

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48

The custody interview: SEB

ISJ asks Ulf Norén (pictured below), global head of sub-custody client
relations, SEB, Custody Services, Merchant Banking, about expanding
a custody business and today’s market challenges.
or acquisitive growth? How do you select 10 years later has lead us to a market
1. How do you approach and overcome
local partners? leading position. The three Baltic banks
issues in managing the geographical
where a combination of acquisition
diversity across all your markets?
It is of great importance to obtain and organic growth where a very strong
intelligence and go for a detailed market position was in place in Lithuania while
SEB’s regional model saw the light of
analysis. Here one must think thoroughly Estonia and Latvia was weaker from a
day in 1999 when Denmark, Finland and
to define where you would like to start and market share standpoint.
Norway was opened up as greenfielding
what the medium term objectives are. Assimilating business into the regional
projects.
The approach is different depending on model has lead to organic growth and we
The first obstacle to deal with is
the level of maturity, how crowded the are now the leader in this region, having
the realisation that also neighbouring
market is and its complexity. Basically, you also helped us to offer a seven-market
countries are very different and the
have four options: geographical and trading environmental
further away from home turf you get, the
region for offering. Germany was in place
more diversity issues you are bound to
1) Grow organically with substantial banking operations
encounter.
2) Grow by way of acquisition through the acquisition of BfG Bank.
You need to organise in a way where
3) Enter into a joint venture The reason for the addition of custody
objectives of consistency, same ‘touch
4) Keep out was to secure organisational and business
and feel’ and overall corporate and client
model assimilation of the global custody
objectives are set first but without ignoring
SEB’s main strategy is to follow the business and to make substantial savings
cultural differences, language differences,
bank - only when we have a SEB banking on our own German portfolio.
the historical reasons for given market
operations structure in place are we in The sub-custody part did therefore
structures, interacting with local major
total control of the custody set up and lead a fairly quiet life until we started to
players, habits, level of authority respect,
delivery. market it to Nordic/Baltic institutions
politics, side plays, influencing and
That means that alternative 1, 2 and and lately also to a wider array of
lobbying etc.
4 are available to us and only in very international banks.
This need to be constantly managed
special circumstances would we explore We set up in Ukraine as we saw an
as differences will not go away but can be
the joint venture alternative as they are opportunity to grab a position in one of
used to the organisations advantage. In
hard to manage and most are deemed to the largest nations in Europe when we
the sub-custody business, a number of
an unsuccessful ending - we know of a acquired Bank Agio, and this trip has
house rules have helped us in achieving
very limited few that has had any strong been really interesting with boosting
objectives:
success. market shares in the most likely most
- Direct reporting to the global head of
Our Nordic custody set up was a fully difficult, unpredictable and complex
custody
organic growth starting in 1999 and now custody market in Europe.
- equal representation in management
groups
- Centralisation where it makes sense
(Product management, Global Relations,
Finance) but NEVER on local operations
level
“Of the BRIC nations
- harmonise fee structure, IT environment,
reporting, high level product offering and
we are already in
documentation framework. With that in
place, much is done. However, things will
the ‘R’ but have no
remain different and some markets can
not be highly harmonised in a foreseeable
plans for B, I or C!”
future, f ex Ukraine. Finally, no matter
how well you become in running a
regional model, you must be outstanding
in each and every market you provide
services in.

2. How do you go about infiltrating

foreign markets: is it through organic

30

30-39 ISJ42.indd 30 20/08/2009 13:57

 ISJ Investor Services Journal
“We are starting to
see a new realism
among clients that
you get what you
pay for”
The latest on our list is Russia where we on-exchange trading for CCP-clearing
started in August of last year. Russia is true - EMCF +2 in Denmark, Finland and
greenfielding and only for sub-custody. It
has been our most structured market set-
up so far and also this is beginning to pay a response to the MiFID directive but it is
off.
When markets are highly competitive
or does not fit into strategic models you
might decide to keep out. So far, this has
been our strategy for UK, France and
Poland.
3. How do you deal with all the
regulatory requirements of the
different countries?
A key question, especially in the aftermath
of what happened in 2008, coming on top SEB acquired Bank Agio in 2004 and
of all the ongoing European initiatives.
This is more than a handful for any
organisation and I believe you find the
answer in the first question.
We have refined the regional/local
model to an extent that we do not miss
out on initiatives and can employ an SEB
opinion on regulatory initiatives that
reminds of each other even in cases where When entering 2009, SEB had 1329
they are strictly local.
This means that we have a number of
cases where the wheel doesn’t need to be
re-invented saving us a lot of time and
resources. The issue we often face is the
need for a large legal work force in markets branch offices in the country.
where that resource is scarce. That must
be bridged by external consulting and by
putting parts of the legal and compliance
burden onto the management of the local The ambition is to provide banking
operation.
4. What has been the impact ofthe
market conditions? What are your
response mechanisms?
It has of course had the immediate impact is in line with SEB’s strategy to strengthen
of asset values shrinking, activity level
coming down somewhat due to some
institutions ceasing (either to exist or
to drop business lines), interest levels
travelling close to 0% has a severe effect on and despite the very critical situation
revenues from interest net.
In addition you see a sharp increase
in due diligence/compliance activities,
30-39 ISJ42.indd 31
regulatory mass invasion and a global need
to shrink balance sheet. If that is not a
gloomy picture, then I don’t know what is.
It is important to realise that this
business will remain, that SEB has absolute
intentions to keep playing a significant role
and that new business ideas will emerge
from the changed European playfield.
The most obvious response to reduce
cost and increase safety has been to
replace bi-lateral settlement regimes for
Sweden and Oslo Clearing + ? in Norway.
The emergence of the numerous MTFs is
already changing the trading environment
and the fragmentation of trading models
must be managed - yet another a business
opportunity.
5. In Sweden, Estonia, Latvia, Lithuania
and Germany, SEB offers universal
banking services, but SEB aims to be
a universal bank also in Ukraine. Why
Ukraine, and how are you going about
this?
followed up by the 2007 acquisition of the
Kharkov based bank, Factorial Bank. This
gave SEB access to nearly all important
regional and local centres of Ukraine.
SEB is big and among the four leading
Custodians in Ukraine but in terms of
traditional banking activity we are really
small.
employees in the country and a market
share of 0.43% in lending and 0.41%
in deposits. SEB provides service to
approximately 15000 corporate clients and
85000 retail clients and runs about 100
Our operations in the Ukraine include
Retail Banking, Corporate Banking,
Custody and Life and Asset Management.
services and financial solutions to
corporate clients and to meet the
increasing demands for broad and
more sophisticated banking and savings
products among private individuals.
The extension of business in Ukraine
the footprint in Eastern Europe through
organic growth an add on acquisitions.
There is an ongoing consolidation
of the banking industry in Ukraine
for the economy it will offer continued
opportunity for further growth. SEB is
the fourth largest custodian and this is a
31
Custody
market where we intend to win more. A lot
more.
6. SEB has won many plaudits recently,
including ‘best Nordic sub-custodian’
and ‘best custodian in Sweden’. How
have you differentiated yourselves from
your competitors?
The first level of differentiation is in
terms of coverage. After establishing a
trustworthy Nordic solution, the three
Baltic subsidiaries were integrated and
after that expansion has happened in
Germany, Ukraine and Russia.
This means that SEB can provide a
recognisable SEB quality in the core area
of the seven Nordic/Baltic countries which
no other competitor does on the ground.
Furthermore, the very outspoken
objective of delivering consistency,
manifested on the agreement framework
and by using one and the same
system across the Nordics is a definite
differentiator and will become more and
more meaningful the closer we will come
to true marginal pricing. SEB as sub-
custodian do not mix interests but lobby
very visibly running a client agenda.
This has been much appreciated as
it becomes clear that the agenda is not
hidden. We are for real, are outspoken
“We have refined
the regional model
to an extent that we
do not miss out on
initiatives”
and do not run much of a crap marketing
agenda claiming that we ‘’are the only
Nordic Custodian’’ as we are not.
Our fans claim that we are the best one
but we have no problems realising that we
have one very strong competitor in the
shape of Nordea. Both of us will continue
to win business and the sharp competition
will make this a better place to be a client.
7. Are you looking to move into any new
sub- custody markets, for example the
BRIC nations?
Of the BRIC nations we are already in
the ‘’R’’ but have no plans for B, I or C!
Let’s see what more will be on the agenda.
As of today - no immediate plans to be
announced though. n
20/08/2009 13:57
 Hedge Fund Services ISJ Investor Services Journal

V
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48

Sowing seeds for hedge growth

Craig
McGlashan
finds that the
Asian hedge
fund market is
set on strong
foundations,
with a widening
array of services
for managers.
something that really got to them, they Morrissey, Head of Business Development
Asia is home to more than half of the
lost their liquidity and they had their and Client Services for EMEA at SEI’S
world’s population and a growing share of
concerns but that could have been out of Investment Manager Services division.
global GDP, with a vast range of languages
lack of experience with that asset class and “Asian investors are interested in getting to
and cultures. Additionally, its hedge
strategy,” he says. Asking the same question know their manager and creating a long-
fund market is relatively immature when
today, or in a month’s time, could yield an term relationship, perhaps more so than in
compared to Europe and North America
entirely different result, Enos suggests. Europe or North America.”
but this has not impacted on the services
In fact, particularly on an institutional Andrew Gordon, Head of Alternative
available to funds and in some ways has
level, there is no difference between what Investment Services for Asia Pacific at
put it ahead of the game.
Asian investors are looking for compared the Bank of New York Mellon, cites the
According to figures from Chicago-
with their counterparts in the rest of the example of a manager who is about to
based Hedge Fund Research, total capital
world – “the things that underline their use his organisation as an administrator
invested the Asian hedge fund industry
priorities right now are independence and and is “very, very focused on structuring
stood at USD65 billion at the end of Q1
transparency,” explains Akshaya Bhargava, the performance fees so that it aligns the
2009 – far less than the USD100 billion
Chief Executive of Butterfield Fulcrum. interest as well as it can between the firm,
invested during Q2 2009 in hedge funds
The Madoff scandal and the wider the manager, the individuals within the
globally, which now have capital totalling
economic downturn over the last two years firm and obviously the investors to make
USD1.43 trillion.
may have originated in the West, but their sure that everyone is pulling in the same
Does this relative immaturity in the
lessons are being applied in Asia too. direction for the benefit of all”.
market mean that Asian investors have
“If you look at the ecosystem of a But in some ways Asia has been ahead
a different attitude towards hedge funds
hedge fund, the administrator is the only of the rest of the world in terms of the
than elsewhere? A survey of investors,
source of independently reconciled data,” use of third-party fund administrators,
consultants and funds by the Bank of New
Bhargava explains. “So if a fund does not suggests Colin Lunn, Head of Business
York Mellon and Casey Quirk labelled The
use third-party administration, I think it Development for Asia-Pacific, Fund
Hedge Fund of Tomorrow: Building an
G
raises a lot of red flags.” Services, at HSBC Securities Services.
Enduring Firm found that 43% of Asian
In general, Asian investors have often “People don’t realise that Asia is effectively
investors would “never” re-invest with a
been keener than those in the West to 100% outsourced. All managers use third-
manager that had gated them – compared
develop a personal relationship with their party fund administrators. It’s very rare
to just 3% of North Americans and 0%
hedge fund manager and find out how the you come across an Asian-based manager
of Europeans. Is this indicative of a wider
underlying business works. This may go who self-administers. You don’t really have
trend? Not so, according to Gary Enos,
some way to explain why so many in the the same issues out here that you see in the
Executive Vice President of State Street,
Asian sphere were particularly unhappy West, I would argue.” This, Lunn explains,
who was “surprised” by the report.
at being gated. “The further east you is because of the evolution of the market,
“I think in the Asia Pacific region,
go, the more emphasis there is on the which saw a small number of start-
especially where it was a newer strategy
face-to-face relationship,” explains David ups which outsourced in order to keep
to investors, getting gated obviously was
costs down. The fact that Asia has been

32

30-39 ISJ42.indd 32 20/08/2009 13:57 German

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20/08/2009 17:36
13:57
 Hedge Fund Services
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48
“People don’t
realise that Asia is
effectively 100%
outsourced anyway.
All managers
use third-party
administrators”
Colin Lunn, HSBC
outsourced “from day one” is the main
reason that the region has not seen the
number of fraud cases that have occurred
in the West, he suggests.
This outsourcing means that Asian
hedge funds do not have to worry about
the relative immaturity of the industry
impacting on the services available. “Good
quality services are definitely available”
in Asia, according to Gordon. He adds
that fund managers operating in places as
diverse as Tokyo and Sydney can expect
services from Bank of New York Mellon
that are “similar in pretty much every
respect to that which we would deliver
from either the US or from Europe, from
London or from Dublin, to our clients
there”.
Enos agrees that the Asian hedge fund
services industry is strong, citing a number
of factors that have grown the standard
of service and care “considerably” in the
last few years. These are the decline in the
market, which has opened up capacity
for firms to “redeploy technology and
strengthen staff on a local basis”, the
buying up of smaller administration shops
by institutions which “are able to bring
stability and deployment of services off a
global platform” and the fact that Asian
assets were “roughly 5% of the marketplace
even at its high point”. He adds: “I think
those things lend themselves to being able
to catch up in terms of services available to
the Asia Pacific region.”
But what difficulties do these firms face
when servicing funds in Asia, compared
with more established markets like Europe
and North America? Asia’s size, diversity
and the fact that investors are working
30-39 ISJ42.indd 34
with emerging markets are at the heart
of the matter, according to Lunn. “You’re
dealing with valuation, pricing, those
sorts of challenges out here, perhaps
more than you see in the US and Europe.
Asia is not as developed in terms of data,
particularly say in the credit fixed income
space - getting market data for those
types of instruments is quite difficult so
valuations can be a bit of a challenge,” he
says. “Obviously you’re also dealing with
a multitude of different markets, different
regulations with trading and settlements,
different languages, a lot more than you
get in the Western world.”
These cultural differences have led to
a number of specific funds being created
to tailor to particular needs and Asia is no
exception. Many funds in the Middle East
– as well as a growing number in Europe
and North America – are based on Sharia
law, which sets out a number of provisions
on what investments can be made by the
fund.
But the differences in how the funds
operate do not impact greatly on service
providers’ underlying model, according
to Ross Ellis, Vice President of Marketing
and Client Experience at SEI’s Investment
Manager Services division (IMS). “Our
workflow, data management and processes
largely remain unchanged regardless of
where we are working, the main differences
are on the presentation level, the degree of
transparency and analytics provided and
how we interact with clients,” he explains.
Additionally, market differences can
affect how the funds themselves operate,
aside from any particular wishes of the
client. The dominant strategy in Asia
is long/short and the securities services
industry has typically been dominated by
boutique administrators, Lunn adds, and
there are “still a lot of boutique players” in
the region, despite a number of mergers in
the industry. But he adds: “The big players
out here that focus on the hedge fund
space are ourselves, Fortis, Citco – they are
the dominant players.”
If Asian investors broadly resemble
those in Europe and North America
and they have access to the same level
of services, does this mean hedge funds
themselves are generally similar globally?
The Hedge Fund of Tomorrow report
outlined four models that hedge funds
may take in the future and, according
to Gordon, most Asian funds fall under
the Single-Strategy Boutique model,
basically the “classic” hedge fund structure.
Despite this being a “perfectly fine model”
worldwide, Asia “in many ways illustrates
34
ISJ Investor Services Journal
some of the limitations”. Under this
design, the risk of capacity constrain is
high and funds of this type often have
difficulties in developing and maintaining
the organisational balance. Once again,
the report found that issues beyond
investment performance, such as business
management, distribution and operations,
featured highly on investors’ wish-lists.
However, Gordon has seen a trend in
Hong Kong towards the Multi-Capability
Platform outlined in the report, which
offers a common brand, distribution and
business infrastructure support along
with multiple investment capabilities. This
has been brought on by factors such as
principal retirements or fund withdrawals,
he explains.
“In effect there are a few people out
there that are actively consolidating and
they’re bringing back the infrastructure
or in many ways the investment skills of
those other funds into their own umbrella
as it were and becoming much more
like the multi-capability firm that we
described,” he says. “You have an ability to
share both some of the investment that’s
needed to build the investment side, be it
technology, access to the right quality of
trading systems and information flows,
as well as the other elements of business
management operations and distribution
as well. These can be shared among a
broader group, so we are seeing some of
that in Asia already.”
At a closer level, perhaps the two most
interesting countries in the region are
China and India, both of which have seen
their economies continue to grow despite
the worldwide downturn. But despite their
similarities – huge economies and large
domestic demand for instance – they are
“very different” from a hedge fund point of
view, Bhargava explains.
“I think that both represent
opportunities but China is much less
transparent from an investor standpoint.
India is far more transparent and the
financial, equity and bond markets are
much better regulated. But if you talk
particularly about hedge funds, my
personal view is that both these markets
are delivering strong returns on a long-
only basis due to the high growth of these
economies.”
Bhargava “does not anticipate” the same
level of hedge fund activity occurring in
these countries that is seen in the West.
However, Lunn believes that, despite hedge
funds in China operating offshore, the
industry will open up. “I don’t think we’re
that far away from seeing a strong hedge
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30-39 ISJ42.indd 35 20/08/2009 13:57


Hedge Fund Services
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22
fund industry developing in China.  It’s
not next year, but I think in the next five to
10 years, I don’t see why not,” he says.
Indeed, with hedge fund activity
picking up in Asia post-credit crunch, as
it has in the rest of the world, the industry
in Asia as a whole has a “bright future”,
according to Gordon.
“These are emerging markets and
they are emerging and I certainly believe
that that represents opportunities for
hedge fund managers, as well as obviously
opportunities for institutions like the Bank
of New York Mellon that are seeking to
service hedge fund managers or private
equity managers or any other participants
in the Asian financial markets.”
The Asian hedge fund segment may
still be immature with many obstacles to
overcome before it can compete with the
European and US markets. But whether
or not it will emerge as a global leader in
the industry or will take a smaller role in
the worldwide number of funds, the range
of services available for Asian funds is as
broad as the continent itself. n
Panel - fund administration in emerging markets
As fund industries in emerging markets in Asia and
Latin America continue their growth, ISJ asks the
experts about serving local and foreign clients.
Francis Braekvelt is head
of planning and develop-
ment, Asia Pacific, at BNY
Mellon
30-39 ISJ42.indd 36
$38.6 billion. Hong Kong is also home to a large share of hedge funds
due to its proximity to high potential emerging markets like China and
India. Since 2005, Singapore has seen significant growth in market
share from 8% to 16%. This is partly due to regulations and tax struc-
tures that make the country attractive to hedge funds. For example, a
ISJ Investor Services Journal
23number
24 25 26 27 28of Japan-based
29 30 31 32 33 34 35 36 37hedge
38 39 40 41funds
42 43 44 moved
45 46 47 48 their operations to Singa-
pore in order to avoid regulatory scrutiny and take advantage of
favorable tax structures. Japan now has a market share of 16% versus
2007 Hedge fund assets under
22% in 2005.
management in APR
Figure 3: 2007 Hedge Fund Assets Under Management in APR
(total: USD 106Fund
2007 Hedge billion, asManagement
Assets Under of June 2007)
in APR
(Total : $106 bn)
Australia
38.6 bn, 36%
Hong Kong
28.2 bn, 27%
Other
5.0 bn, 5%
Singapore Japan
16.5 bn, 16% 17.3 bn, 16%
SOURCE: LCA Group
Source: LCA Group
As of June 30th, 2007
1.Many Asian and Latin Ameri-
can markets are developing bur-
geoning fund industries. Has
the number ‘local’ funds you
administer increased over the
last few years, and what is the
percentage of local funds com-
pared with the total amount
8
of funds you work with (for
Copyright 2009 © Oliver Wyman
example, from US and European
fund clients) that are active in
these markets?
BRAEKVELT: Fund penetration in
Asia has traditionally been low
compared to other regions but
a catch up process appears to
be well underway. This process,
however, will be gradual and will
vary between countries/ sectors
and the volatility of fund flows
more significant.
Asset managers in Asia continue
to adopt a combined onshore
and offshore approach to benefit
T. Andrew Smith, Executive Stuart Feffer is co-CEO both from the domestic opportu-
Vice President, Global Busi- of LaCrosse Global Fund nities while also leveraging the
ness Development Head at Services passporting opportunities linked
Butterfield Fulcrum with offshore structures like the
UCITS funds.
With the beginnings of an
36
20/08/2009 13:57 Handels
 ISJ Investor Services Journal Panel Debate

investor mentality shift towards
more long term investing and
more particularly towards fund
structures, requests for fund
administration services have
increased accordingly.
SMITH: We have certainly seen
an increase in the number of
Asian and Latin American based
funds that we administer. Overall
this makes up a small percentage
of our clients, both in terms of
assets and total number of funds,
but it continues to grow. Lately
we have been seeing more start-
ups in Latin America than from
the more mature US market.
FEFFER: Locally managed funds in
Asia have been a fast-increasing
segment of the market for us
for some time now, although
along with the rest of the market
growth there slowed during the
first half of 2009. We are once
again seeing local launches and
are noticing significant investor
interest.
Locally managed funds in Latin
America are far fewer in number,
although increasing.
LaCrosse has announced several
new clients in both Asia and
Latin America in recent months,
including Cavenaugh Capital
(Asia), Flowering Tree Invest-
ment Management (Asia), Tahan
Capital Management (Asia) and
Noctua Asset Management (Latin
America).
2.Are you seeing more or less
business from fund start-ups?
BRAEKVELT: The global financial
turmoil has probably been the
largest defining event in recent
times for the fund industry.
Where before the slowdown,
the introduction of new and
innovative structures as well as
new fund launches were common
place, this momentum almost
came to a halt recently.
Once the dust settles, however,
we expect Asia to resume its lead-
ing role as a growth engine for
the fund segment and a centre
of choice for the introduction
and distribution of on-shore,
off-shore and alternative fund
products.
Given the increased risk aver-
sion from the investor com-
munity, the recent focus has
been directed more towards well
established domestic and global
fund companies.
For asset managers in emerging
markets, licensing, application
and registration of new products
has proven to be somewhat time
consuming which has, at times,
limited their ability to introduce
innovative and competitive fund
structures or to create a deep
brand name recognition.
In line with future expectations
though, we expect that start up
or niche fund providers may gain
increasing interest.
SMITH: The first half of this year
was slow in terms of fund start-
ups, but things have definitely
picked up in the second half of
the year, and we have seen a
significant flurry of new start-ups
in the last couple of months.
FEFFER: More business from
start-ups recently, after a pause
during the credit crisis.
3.In developed markets, the
fraud of Bernard Madoff and an
emphasis on accountability has
meant third-party administra-
tion is a high priority for many
fund investors. Is there an
equivalent drive for this in the
emerging markets in which you
operate?
BRAEKVELT: In all regions,
including Asia, in reaction to
general macro economic trends
as well as to some very specific
market events, investors have
been forced back to the basics,
rediscovering the fundamental
risk – reward theorem.
As a result, new or improved
practices are introduced into
the asset allocation and service
provider review processes to
assess and mitigate counter-
party, market and business risk
and the increased market and
investor sophistication, the
regulatory disclosure and
reporting requirements have
driven fund managers to look
at outsourcing middle and back
office functions to reputable,
independent third parties.
SMITH: There is certainly a
heightened focus on the fidu-
ciary aspect of running a hedge
fund. On an institutional
level, there is no difference
between what Asian/Latin
American investors are looking
for compared with the rest of
the world. The things that
underline their priorities right
now are independence and
transparency.
FEFFER: Regardless of where
the fund manager sits, man-
ager accountability is an issue.
Investors worldwide are asking
questions about administra-
tion, valuation and custody
arrangements, and are with-
holding investments when they
do not like the answers.
4.What other demands are
made from local/foreign
clients in these emerging
markets?
Given the more stringent due
diligence and review process-
es, the sales process has been
extended significantly.

Flexibility on a solid ground

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present in all the Nordic markets, and offers a wide product
spectra to a diverse client base. Handelsbanken is one bank
throughout the region and we pride ourselves on being the
most flexible provider of custody and clearing services in the
region. We are also one of the highest rated private banks in
Europe.

Nordic Custody Services

Annika Larsson - Head of Relationship Management & Sales
Telephone: +46 8 7018141
Mail: anni51@handelsbanken.se

Handelsbanken
30-39 ISJ42.inddad.indd
37 1 18/08/2009
19/08/2009 10:24
16:18

Panel Debate
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48
“Once the dust BRAEKVELT: Recent client de-
mands, trends and opportunities
settles, we are centered on, amongst others,
an increasingly bi polar investor
expect Asia focus balancing protection con-
cerns with return generating asset
to resume its allocations as well as a growing
need for real time, sophisticated
leading role data as well as for risk analytics,
investment guideline, exposure
as a growth and drill down reporting.
In addition, market participants
engine for the are looking at leveraging sophis-
ticated distribution strategies,
fund segment with banks continuing to be the
main intermediaries and greater
and a centre product transparency, for example
the recent interest in ETFs. For
of choice providers in emerging markets, in
turn, this requires an increasingly
for onshore, tailored product and service offer-
ing around specific client require-
offshore and ments, pricing or legal needs,
often combining their hedge fund
alternative and traditional custody and cash
platforms.
fund products” SMITH: Liquidity is quite impor-
tant to Brazilian based investors
and therefore we often see funds
Francis allowing monthly redemptions and
sometimes even daily or weekly
Braekvelt, subscriptions. Specific to the
Brazilian market, often a fund will
BNY Mellon be set up with a single investor – a
local fund – and provide daily NAV
calculations. This set up is to take
advantage of the CVM instructions
450 and 456 which allow the local
fund to invest up to 20% of its
“Lately we
assets abroad.
have seen FEFFER: The primary demand is
familiarity with the local markets
more fund
and expertise in the instruments
and market conventions that
start-ups from are used to access them. Many
emerging markets instruments
Latin America
than from the
have unusual features and specific
requirements, and working with
a firm that understands this and
has relevant experience can help
more mature
US market”
avoid problems once a fund is up
and running.
Also, especially with the recent
changes in the prime broker-
age space, fund managers are
frequently left to arrange for their
T. Andrew own access to markets. Working
with a partner that can either fa-
Smith,
cilitate that access or provide the
operational flexibility to pursue
Butterfield multiple options is critical
Fulcrum 5.Amid changing global regula-
38
30-39 ISJ42.indd 38
tion, have legal services and
related advice become part of
the administrative package by
default?
BRAEKVELT: Throughout Asia, but
primarily in the emerging mar-
kets, the authorities and regula-
tors continue their cautious
approach to building out the
domestic capital market. Overall,
the regulators have greatly sup-
ported ongoing liberalization
and diversification efforts and
are expected to continue to do
so, once the immediate concerns
about stabilizing the domestic
markets have been addressed.
From an investors perspective,
many institutions pay consider-
able attention to risk manage-
ment strategies and particularly
to data management processes
– a relatively new development
for Asia.
SMITH: Our focus continues to
be on administration and related
value-added services, in order
that we can anticipate our clients’
needs and invest in new products
and services ahead of regulatory
and investor requirements. We
also work with the industry in its
evolution and decision-making
processes, and try to represent
clients’ views as standards
develop.
FEFFER: We do not provide any
legal services or advice.
6.Various market surveys have
found lesser levels of technol-
ogy spending and straight
through processing rates among
emerging market firms. How
would you compare the infra-
structure of emerging markets’
bank technology regarding key
administrative procedures - eg,
investor reporting, P&L report-
ing – compared with ‘Western’
institutions?
BRAEKVELT: A key challenge to
growing and servicing fund prod-
ucts in Asia is the fragmented
nature of the region.
As such, ongoing investments
in people and technology both in
good and challenging times are
critical to the long term success
of securities servicing providers.
As in most emerging markets,
KR2214
ISJ Investor Services Journal
the system infrastructure is fo-
cused on and tailor made to meet
the requirements of the domestic
market, additional investments
will be required to link those up
with the infrastructure in the
global markets or its market
participants.
M
S
On the other hand, however,
given the rapid evolution of
the investment community and
markets, some of the emerging
market providers are evaluating
state of the art technology and H
data solutions.
The ongoing challenge, how-
ever, will remain for the back
office infrastructure to keep pace
with the speed and extent of the
changes in the front office.
If the recent market disrup-
tion has illustrated something,
it would be the fact that many
institutions may perhaps not be
as well equipped to handle post-
trade processing and related
activities in-house as they might
have thought.
SMITH: From our perspective, as
the administrator who obtains
independent P&L and trad-
ing information of a Fund from
its custodian or prime broker, D
generally speaking the methods
of providing this information
f
are not comparable to ‘Western’
institutions. With a US based
bank, logging in through a secure
reporting portal is the common
f
method of obtaining this infor-
mation – that level of technology
is not yet commonplace in Latin
American banks.
f
FEFFER: We use the same technol-
ogy and the same administrative
procedures with our emerging
markets activities as with major
markets. We operate out of
four major hubs: Minneapolis,
London, Singapore and Buenos
f
Aires, with all of our hubs on
a common, integrated, global
technology platform.nsurance
f
f
markets. Again, our presence in
China is not new — State Street
has operated in Hong Kong
for more than 25 years and we
have been actively involved in
C
the Chinese financial landscape
since 1997, working with many
of the country’s leading financial
institutions. n
19/08/2009 16:18
KR2214ISJAD:LatAm A3 09 29/7/09 10:38 Page 1

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Main Conference: 19-21 October 09
Sharia Investment Summit: 22 October 09
2009 Email: info@icbi.co.uk
MANCHESTER UNITED
FOOTBALL CLUB

Determining The Future Shape Of The Middle Eastern OVER 450

ATTENDEES
Over 75 Experts
Investment Management Industry In A Changing World IN 2008 Including:
• NCB Capital
• HSBC Bank Middle East
Hear Insights From Over 25 Industry CEOs & Thought Leaders Including: •
•
Jadwa Investment
Unicorn Investment Bank
• Deutsche Bank
• Derayah
• Mirabaud Cie
• Capital Growth Management
• KSB Capital Group
• Invesco
• Blackrock
• 3i Capital Group
• Man Investments
• JP Morgan Asset Management
• Shuaa Asset Management
• Emirates NBD
Majid Al Refai Dr Henry Azzam Mohammed El-Kuwaiz Ibrahim bin Mohammed Al Farah Foustok • Barclays Private Banking
CEO CEO MENA Co-Founder Alwan CEO • National Bank of Abu Dhabi
• MSCI Barra
UNICORN DEUTSCHE BANK DERAYAH Deputy CEO & VP Asset ING INVESTMENT • FundQuest
INVESTMENT Management MANAGEMENT • bfinance
BANK KSB CAPITAL GROUP MIDDLE EAST • Mercer
• SEI
• Funds@Work
• SwissLife
• Cerulli
• UGB Securities
• ICICI Bank
• Silk Invest
• MENA Capital
• Strategic Insight
• Mashreq Capital
• Argyll Investment Services Guernsey
• CAPM Investment
Richard Lepere Abdul Kadir Hussain Dr Akram Yosri Tarek Sakka Fadi Tabbara • NYU in London
CEO CEO Managing Partner/Chairman CEO CIO • CAAM Saudi Fransi
CAAM MASHREQ CAPITAL 3I CAPITAL GROUP AJEEJ CAPITAL JADWA INVESTMENT • Gryphon Investment Bank
• Tharwa Management Consultancy
SAUDI FRANSI • Credit Suisse
• DST Global Solutions
• Thomson Reuters
Guest Academic Address • Princeton Financial Systems
Don’t Miss The Unique Features Which Make FundForum •
•
Morgan Stanley
LM Investment Management Ltd
A Geo-Strategic Analysis Of Factors
Middle East A Must-Attend Event In Difficult Times
• Guernsey Finance
• Bermuda International Business Association
Impacting Oil & Gas: • BNY Mellon Asset Servicing
What Will Impact The Future Shape Of Oil, • Bahrain Economic Dvelopment Board

f
• Swift
The New FundForum CEO Day - A Unique Opportunity For You To Debate The Gas And The Investment Landscape • Beltone Financial
• Liquidity Management Centre
Future For Asset Management With The People Shaping The Industry: Over 25 In The Middle East • Fidessa Latent Zero
• Pharos Financial Group
CEOs Already Confirmed (see p. 2)
NEW
• Standard Chartered
• ING Investment Management Middle East

f
• Schroders
Brand New Strategy & Practice Labs - This Innovative And Interactive Format FOR •
•
Ajeej Capital
Royal Skandia
Will Provide A More Comprehensive Look At Some Of The
Key Topics And Allow For More Audience Participation (see p.3) 2009 •
•
•
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Arcapita
Oasis Capital Bank
• Citi
• Securities & Investment Company (SICO)

f
More Time For Structured Networking - Back By Popular Demand – The Hagai Segal, Lecturer/Professor, Analyst and •
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FundForum Discussion Roundtables. This Is Your Chance To Exchange Consultant in Middle Eastern Affairs • Al Rayan Investment
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Business Cards & Discuss Informally With Some Of Our Key • Allfunds
Speakers (see p.3 ) •
•
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Samba Financial Group

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• iShares
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You Meet The People That Count (see p.3) Finance And Investment Management. • Robeco

f NEW
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Most Up To Date Overview Of The Ever-Changing Economic Climate With
Some Of The Region’s Leading Experts (see p.4) FOR
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More Industry Insights & Intellectual Take-Away - Hear From Renowned Moderated by:
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Comprehensive Overview Of The Middle Eastern Investment Management Specialist in Islamic Asset
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Co-Sponsor Associate Sponsors

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Endorsed by

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Paper sourced
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 ISJ
ISJDirectory
Directoryof
ofServices
Services ISJ Directory of Services ISJISJInvestor
InvestorServices
ServicesJournal
Journal

Asset Servicing
T: +44 (0) 208 760 7130
C: Stephen Everard or
Goal is widely-acknowledged in the financial services sector for its innovative and
Saghar Bigwood
creative solutions to highly-specialized niche processes. A: 7th Floor, 69 Park Lane,
Goal’s research has shown that in excess of USD8 billion of withholding tax remains Croydon, Surrey, CR9 1BG
unclaimed each year by the rightful owners and beneficiaries and that over USD12 E: severard@goalgroup.com or
billion is lost because rightful beneficiaries are not participating in class actions, sbigwood@goalgroup.com or
bankruptcies and disgorgements. info@goalgroup.com
W: www.goalgroup.com

Consultancy

SMA Financial is the UK’s premier provider of SWIFT services and a long standing Simon Murby
business partner of SWIFT. SMA’s vast experience in the banking and securities Managing Director
industry has provided high quality provision of SWIFT related consultancy, training, SMA Financial Limited
system care and bureau services which is second to none. SMA prides itself on their Telephone : +44 (0)20 7940 4200
in-depth and highly experienced team of consultants chosen from the banking and Bramah House,
securities industry. The introduction of the SWIFT bureau service has witnessed much 65-71 Bermondsey Street,
success by providing cost effective and quality hosted connectivity services to many London. SE1 3XF
satisfied clients. Website: www.sma.co.uk

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 Strahlenbergerstraße 45; 63067
billion in assets under administration and a depotbanking volume of EUR 85 billion, Offenbach a.M. Germany
BHF Asset Servicing GmbH is one of Germany’s leading specialists in depotbanking •Contact: Moritz Ostwald
and custody business. It develops innovative and high-class services for investment •Phone:+49 69 667744 838
companies, institutional investors and foreign banks, and excels at tailoring solutions to •Email: moritz.ostwald@
the individual needs of its clientele.
bhfassetserv.com
Assets under Administration: EUR 270 bn
No of funds: 478

DnB NOR is the leading provider of Custody, Clearing and Remote Member Service in T: +47 22 94 92 95
Norway. DnB NOR offers a full range of securities settlement, Corporate Action and cash F: +47 22 48 28 46
management services for both foreign and domestic institutional clients. The bank Contact: Bente I. Hoem, Head of Global
has a strong commitment to the Custody business in Norway and the staff is highly Relations & Network
knowledgeable and experienced. In addition, DnB NOR provides a wide range of value- E: bente.hoem@dnbnor.no
added services for foreign clients such as Securities Lending, Income Collection, Proxy W:www.dnbnor.com
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.

Banking Securities Services provides award winning local and regional custody services For further information please contact
for investment professionals. We are proud to be the largest custodian provider in Lilla Juranyi, Global Head Custody
terms of assets and number of foreign clients in Central & Eastern Europe. ING has been at + 31 20 7979 435
providing Securities Services in CEE since 1994 and we will continue our ongoing pursuit or contact her by email:
of excellence through new technology. Innovation and client focus are the key drivers Lilla.Juranyi@mail.ing.nl
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.

Intesa Sanpaolo’s Transaction Services include : Piazza della Scala 6

• Sub Custody, Derivatives and Remote Membership Clearing
20121 Milan, Italy
• Global Custody and Depository Bank for mutual funds, pension funds, real
T: +39 02 8794 2466
estate funds, private equity funds and hedge funds
• Fund Administration for mutual funds, pension funds, real estate funds, F: +39 02 8794 1519
private equity funds and hedge funds W: intesasanpaolo.com
• Paying Agent for foreign funds and sicavs C: Riccardo Lamanna
• Cash and Payment services like swift to checks, mass payments, checks and E: riccardo.lamanna@
cash letters intesasanpaolo.com

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 ISJ Investor
ISJ Investor Services
Services Journal
Journal ISJDirectory
ISJ DirectoryofofServices
Services
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 Contact:
Nordic and Baltic securities. Due to the unique history of being formed from four established Nina Groth
banks, Nordea is the only Nordic custody provider with strong local presence and expertise in all Head of Sub-custody and Clearing
four markets. Nordea combines Nordic competence with local expertise, and has proven ability Tel: +45 3333 6124
to deliver high quality services that meet both clients’ and each local market’s requirements. E-mail: nina.groth@nordea.com
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.

www.rbcdexia.com
RBC Dexia Investor Services offers a complete range of investor services to institutions T: +44 (0) 20 7653 4096
worldwide. Our unique offshore and onshore solutions, combined with the expertise F: +44 (0) 20 7248 3946
of our 5,500 professionals in 16 markets, help clients grow their business and sustain Contact: Antony Johnson
enhanced performance through efficiency improvements and robust risk management Global Head Sales and Distribution
processes. Equally-own by RBC and Dexia, the company ranks among the world’s top 10 E: antony.johnson@rbcdexia.com
global custodians with USD 1.9 trillion in client assets under administration. Address: 71 Queen Victoria Street,
London, EC4V 4DE, UK

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
T: Europe: (34) 91 2893932 / 28
well established after more than a century of providing services in this field.
T: USA: (1212) 350 39 02
Santander’s cutting edge technology enables it to offer a comprehensive array of
W: santanderglobal.com
innovative services in a broad range of markets. Santander currently has full local
E: globalsecurities@
capabilities in Iberian and Latin American markets along with a franchised presence in
gruposantander.com
many others. Santander`s experience and product range ensures that every aspect of
the securities business is fully contemplated.

Financial Asset Services is the custody and investments-servicing division of Standard

Bank, providing a unique suite of services to sophisticated investors in South Africa and A:Standard Bank
eight sub-Saharan markets. Investor Services
Securities Lending Department
Standard Bank has assets under custody to the value of ZAR1.56 trillion and an overall 25 Sauer Street
market share of approximately 40%. 2nd Floor, Entrance 3
Johannesburg 2001
Standard Bank’s unique selling point lies in its consultative approach to South Africa
relationships combined with the bank’s commitment to custody and investment T: +2711 636 6615
administration services. E: adam.bateman@standardbank.co.za
W: www.standardbank.co.za

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
T: +46 8 763 53 04
securities worth over 560 bn EUR and provide services in more that 75 markets, 10 of
F: +46 8 763 69 30
them under the SEB name (Sweden, Norway, Finland, Denmark, Luxembourg, Germany,
C: Goran Fors, Global Head
Estonia, Latvia, Lithuania and Ukraine).
of Custody Services
We offer a full range of securities services including corporate action and information
E: goran.fors@seb.se
services, securities lending and services to remote members of the Nordic and Baltic
W: www.seb.se
stock exchanges. 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 over 150 years in the
securities industry; we know the market and our clients well.

Société Générale Securities Services offers institutional investors, asset managers and Sébastien Danloy
financial intermediaries a comprehensive range of financial securities services: custody, Global Head of Sales,
clearing & trustee services, fund administration, asset servicing and transfer agency. Investor Services
SGSS currently ranks 3rd European custodian and 9th worldwide custodian (Source: Société Générale Securities Services
Globalcustody.net) with EUR 2,580* billion in assets held and valuates 4,354* funds T: +33 (0)1 41 42 98 65
representing assets of EUR 405* billion (as of June 2007). E: sebastien.danloy@socgen.com
W: www.sg-securities-services.com

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 ISJ Directory of Services ISJISJInvestor
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ServicesJournal
Journal

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 C: Giles Elliott, Global Head, Securities
to meet the diverse needs of our corporate and institutional clients in some of the world’s most dynamic Services
markets. Building on a rich banking heritage, Standard Chartered is noted for a client-focused approach P: +65 6517 0134
to business, unmatched on-the-ground expertise and a solid track record of innovative, award-winning E: Giles.Elliott@sc.com
financial services solutions, reflecting our continued commitment to power our clients’ ambitions. As W: www.standardchartered.com
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.

Swedbank provides client-focused custody services to domestic and international

securities lending (including auto-borrow facilities), derivative clearing services, proxy
voting, full corporate actions and income service. Flexibility is an important aspect of
Swedbanks products and services. Our dedicated Client Relations Managers and Account T: +46 8 5859 1800
Managers are focused on personalized processing and reporting solutions. F: +46 8 7237 147
Other Features: C: Neal Meacham, Head of Custody
• ISO9001:2000 quality certification. E: neal.meacham@swedbank.com
• Swedbank Markets Online (SMO) internet information and reporting tool for A: Stockholm SE 105 34 Sweden
Custody and Securities Lending.
• Nordic Custody alliance with DnB NOR (Norway), OKO Bank (Finland) and
Amagerbanken (Denmark) to offer regional custody product.
Institutional Assets under Custody: USD 70 billion

Data Services
Market Data & Analytics provides high-value real-time market data, indices and back Avox
office services. Information from diverse sources are provided to its customers, tailored Redwither Tower
to their specific information needs. Accuracy and reliability are ensured by collecting Redwither Business Park
the data from the Group’s own trading platforms, such as Xetra® and Eurex® and Wrexham, LL13 9XT
cooperation partners like STOXX Ltd. and the Irish Stock Exchange. Avox®, a majority- United Kingdom
owned subsidiary, validates, corrects, enriches and maintains
business entity data. With an operational model, unique in the industry, Avox® enables T: +44 (1978) 661 813
clients to comply with regulatory requirements and to achieve a holistic view of the risk F: +44 (1978) 661 668
exposure towards a client. W: www.avox.info

Interactive Data Corporation (NYSE: IDC) is a leading global provider of financial market www.interactivedata.com
data, analytics and related services to financial institutions, active traders and individual T: 020 7825 7800
investors. The Company’s businesses supply real-time market data, time-sensitive F: 020 7608 3514
pricing, evaluations and reference data for millions of securities traded around the Brendan Beith
world, including hard-to-value instruments. Many of the world’s best-known financial European Sales Director
service and software companies subscribe to the Company’s services in support of their eu-info@interactivedata.com
trading, analysis, portfolio management and valuation activities. Through its businesses, Fitzroy House
Interactive Data Pricing and Reference Data, Interactive Data Real-Time Services, 13-17 Epworth Street
Interactive Data Fixed Income Analytics, and eSignal, the Company has approximately London EC2A 4DL UK
2,300 employees in offices located throughout North America, Europe, Asia and
Australia.

SmartCo is a leading provider of data management solutions for the financial industry. For further information: www.smartco.fr
SmartCo’s software, Smart Financial Data Hub, covers all the data area, including or info@smartco.fr
financial instruments, market data, third parties, funds, transactions, and provides full
connectivity, a powerful and user friendly front-end, traceability, quality control, data SmartCo
enrichment and customisable workflow. 37 rue de Liège
Our solutions are based on SmartPlanet, an innovative technology focused on data 75008 Paris
management, and able to meet evolving business requirements. France
SmartCo offers to its customers the ability to respond in the fastest way to regulatory and T: + 33 1 58 22 29 60
business changes. E: info@smartco.fr
W: www.smartco.fr

Fund Administration
For more information visit our website:
Established in 2002, IMFC Fund Services B.V. is a boutique hedge fund administrator www.imfcfundservices.com
and a trustee with its offices in Amsterdam and Sydney. IMFC offers third parties
administration and related services to all type of onshore and offshore funds combining www.imfcfundservices.com
high quality, independency, technology, timely calculation with flexibility, experience, t +31.20.644.4558
f +31.20.644.2735
custom-made solutions and competitive rates. Our services include: fund set-up and
Mrs. Consuelo Nardon
corporate services, NAV calculation and other accounting services, R&T agent and other
e: consuelo.nardon@imfc.nl
investors and compliance services.
Rivierstaete Building, Amsteldijk 166,
1079 LH Amsterdam, Netherlands

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ISJ Investor Services
Services Journal
Journal ISJDirectory
ISJ DirectoryofofServices
Services

Intesa Sanpaolo’s Transaction Services include : Piazza della Scala 6

• Sub Custody, Derivatives and Remote Membership Clearing
20121 Milan, Italy
• Global Custody and Depository Bank for mutual funds, pension funds, real
T: +39 02 8794 2466
estate funds, private equity funds and hedge funds
• Fund Administration for mutual funds, pension funds, real estate funds, F: +39 02 8794 1519
private equity funds and hedge funds W: intesasanpaolo.com
• Paying Agent for foreign funds and sicavs C: Riccardo Lamanna
• Cash and Payment services like swift to checks, mass payments, checks and E: riccardo.lamanna@
cash letters intesasanpaolo.com

Société Générale Securities Services offers institutional investors, asset

managers and financial intermediaries a comprehensive range of financial securities Sébastien Danloy
services: Clearing, Liquidity Management, Custody and Trustee, Fund Administration, Global Head of Sales
Asset Servicing, Fund Distribution Services and Issuer Services. SGSS currently ranks 3rd Société Générale Securities Services
European custodian and 7th worldwide T: +33 (0)1 41 42 98 65
custodian (Source: Globalcustody.net) with EUR 2,731* billion in assets held and valuates E: sebastien.danloy@socgen.com
5,158* funds representing assets of EUR 499* billion (at end March 2008). W: www.sg-securities-services.com

Swiss Financial Services

Drawing upon an extensive track record of proficiency, dependability and (Ireland) Ltd.
responsiveness, Swiss Financial Services acts as administrator as well as registrar and Block 4B,Cleaboy Business Park,
transfer agent of funds investing in a broad range of financial instruments. These Old Kilmeaden Road,
include futures, foreign exchange, equities, options, bonds and other funds. Waterford, Ireland
T: +353 51 351180
We perform accounting and administration services for diverse fund types domiciled F: +353 51 871595
in, but not limited to, the United States, Bahamas, Cayman Islands, B.V.I. and Ireland.
Adrian Maher
E: amaher@swiss-financial.ie

Luxembourg: Jean-Paul Gennari,

tel. +352-44-1010 1
Fund Services is a dedicated fund administrator providing customized and flexible services for Switzerland: Markus Steiner,
traditional and alternative investments. tel. +41-61-288 4910
Our comprehensive range of services for investment funds includes fund set-up, registration and W: www.ubs.com/fundservices
support around the world, fund accounting, NAV calculation, risk control and reporting. We have C: Andre Valente
practical experience with registering funds in 28 jurisdictions. T: + 41 61 288 6269
We provide a flexible offering from the full range of services, including Private Labelling, to selected E: andre.valente@ubs.com
functions. Through our leading fund administration architecture, multi-source pricing and powerful A:UBS Global Asset Management -
compliance tools, we offer a tailored, cost effective service. www.ubs.com/fundservices Fund Services, Brunngässlein 12,
PO Box CH-4002 Basel, Switzerland

Hedge Fund Administration

Apex Fund Services Ltd is a global hedge fund administration solution for hedge funds C: Peter Hughes
and private equity clients located in 12 separate jurisdictions across the globe. The Group Managing Director
company uses the software solution, PFS PAXUS, which is a fully integrated hedge fund T: +1 441-292-2739
accounting system combined with web-based reporting to allow clients and investors F:+1 441-292-1884
to access their information 24/7 securely online. We will tailor all solutions to meet E: peter@apex.bm
your needs and our continuing focus on the quality of service and the relationship with John Bohan
each and individual client ensures that we retain our ethos of providing a personalized Group Manager of Operations
service rather than a generic solution. T: +353 21 4633366
Highly qualified and experienced staff, mirrored with top tier technology and F: +353 21 4633377
competitive fee structures make Apex Fund Services Ltd the clear choice for your fund E: John@apexfunds.ie
administration needs.

Custom House Administration &

Custom House, which is one of the world’s largest independent alternative investment and
Corporate Services Limited
hedge fund administrators, was awarded a SAS 70 Type I in May 2007 and a SAS 70 Type II in
A: 25 Eden Quay, Dublin 1, Ireland
December 2007.
T: +(353) 1 878 0807
Custom House offers a round-the-world, round-the-clock service from its office in Dublin and F: +(353) 1 878 0827
representative offices in Chicago and Singapore, enabling it to provide, not only complete C: dermot.butler@
global administration services, but also the ability to produce daily dealing NAVs. customhousegroup.com
Custom House is authorised by the Irish Financial Regulator under Section 10 of the C: david.blair@
Investment Intermediaries Act, 1995, which authorisation does not extend to the Chicago customhousegroup.com
and Singapore representative offices. www.customhousegroup.com

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Fund Services holds a leading position in the area of hedge fund administration Cayman Islands: Darren Stainrod,
with specialized teams around the world. We offer a complete range of services tel. +1-345-914 1076
including accounting, NAV calculation, shareholder services, banking and credit Eire: Don McClean, T: +353-1-436 3636
facilities. US: Concetta Mastrangelo,
With specialist expertise in both single manager and fund of hedge fund tel. +1-212-882 5523
administration, services can be provided for both onshore and offshore funds. W: www.ubs.com/fundservices
C: Darren Stainrod, T: ++1-345-914 1076
Through our comprehensive range of services and products, leading edge
E: Darren.stainrod@ubs.com
technology platforms and superior client service, we work in partnership to offer A: UBS Fund Services (Cayman) Ltd, PO
the solutions you need. Box 852 GT, Grand Cayman, Cayman Is

International Finance Centres

The British Virgin Islands has created a progressive and transparent environment for the
establishment and regulation of mutual/hedge funds and their functionaries. By the end British Virgin Islands
of Q3 2006 the BVI had recognised or registered more than 4,000 funds, and licensed International Finance Centre
some 700 managers and administrators, making the BVI a leading domicile of choice for Haycraft Building
investment business. Benefits of conducting investment business in the BVI include: 1 Pasea Estate
• Fast-track registration and licensing system - funds can be registered in a few days. Road Town
• Presence of qualified, experienced legal, accounting & administration practitioners. Tortola
• A well-developed corporate professional infrastructure. British Virgin Islands
• Modern, robust and cost-effective regulatory and corporate regimes. T: +1 284 494 1509
• BVI private and professional funds fall outside the scope of EU Savings taxation Directive. F: +1 284 494 1260
• Segregated Portfolio Companies - also known as Protected Cell Companies - can now be W: www.bviifc.gov.vg
formed as mutual funds under the BVI Business Companies Act 2004.

Payments & Settlements

VocaLink is the payment transaction specialist. Trusted by the world’s top banks VocaLink
our automated payment system processes over 90 million transactions per day. The Drake House
VocaLink switching platform powers the world’s busiest ATM network and provides Homestead Road
end-to-end management of Europe’s largest ATM estate, while the Real-Time Rickmansworth
Payments platform provides the central infrastructure for the UK Faster Payments Hertfordshire
service. The VocaLink EuroCSM delivers reach for our clients throughout the SEPA WD3 1FX
and beyond with a range of value-added services that leverage our know-how and
technical capabilities. VocaLink is the partner of choice internationally, working T: +44(0)870 1650019
with BGC to process Sweden’s automated payments. F: info@vocalink.com
Find out how we can help your business at www.vocalink.com W: www.vocalink.com

Prime Brokerage
Newedge Global Prime Brokerage Group is a global, multi-disciplinary, solution-
providing team dedicated to delivering superior services to alternative investment Philippe Teilhard de Chardin,
industry participants including hedge funds, commodity trading advisors (CTAs), Global Head of Prime Brokerage
fund of hedge funds, family offices, and institutional investors (insurance companies, T +44 20 7676 8536
banks and pension funds). The Newedge prime brokerage team offers a global range Vincent Tournant, Head of Business
of brokerage services covering a wide range of asset classes including equities, Development T +44 20 7676 8171
bonds, currencies, commodities, and their related listed and OTC derivative products. Duncan Crawford, Head of Capital
We also offer an innovative portfolio-based cross-margining solution, a dedicated Introductions T +44 20 7676 8504
account management desk, hedge fund start up services, quantitative information on E: pbinfo@newedgegroup.com
the hedge fund industry, capital introductions services, and recently prime brokerage www.newedgegroup.com/primebrokerage
services to Sharia compliant hedge funds. Newedge is wholly owned by Calyon and
Société Générale, with both companies having 50% ownership.

Securities Lending
Data Explorers (www.dataexplorers.com), based in New York and London, is the UK: 2 Seething Lane, London, EC3N 4AT
world’s most complete resource for data, analysis and insight into securities T +44 (0) 20 7264 7600,
lending and short selling. The company’s proprietary data gives an unrivalled, F +44 (0)20 7392 4004
comprehensive view on share lending and short-selling activity. With data sourced US: 75 Rockefeller Plaza, 19th Floor
directly from securities lending desks of over 100 of the top lending firms and New York, 10019, USA
representing most of the global securities lending market, Data Explorers has built T +1 212 710 2210 F + 1 212 710 2212
a reputation with leading financial institutions as the source for short intelligence Julian Pittam T +44 (0) 207 264 7616
that informs their decision-making and their coverage of market sectors and E:julian.pittam@dataexplorers.com
companies. Please visit our Blog: dataexplorers.com/news, Twitter, twitter.com/ New York: Ken Read T +212 710 2210
dataexplorers, Video dataexplorers.com/daily-briefing and LinkedIn linkedin. E: kenneth.read@dataexplorers.com
www.dataexplorers.com
com/companies/data-explorers sites.
www.equilend.com
EquiLend is a leading provider of trading services for the securities finance EquiLend Europe Ltd.
industry. EquiLend facilitates straight-through processing by using a common 14 Devonshire Square
standards-based protocol and infrastructure, which automates formerly manual London, EC2M 4TE
trading processes. Used by borrowers and lenders throughout the world, the +44 (0) 207 426 4426
T: UK- +44 (0)20 7743 9510
EquiLend platform allows for greater efficiency and enables firms to scale their C: Michelle Lindenberger
business globally. Using EquiLend’s complete end-to-end services, including pre- E: michelle.lindenberger@equilend.com
and post-trade, reduces the risk of potential errors. The platform eliminates the A: 17 State Street, 9th Floor
need to maintain costly point-to-point connections while allowing firms to drive New York, NY, 10004
T: US- +1 212 901 2224
down unit costs, allowing firms to expand business, move into different markets, C: Michelle Lindenberger
increase trading volumes, all without additional spend. This makes the EquiLend E: michelle.lindenberger@equilend.com
platform a cost-efficient choice for all institutions, regardless of size. W: www.equilend.com

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 ISJ Investor
ISJ Investor Services
Services Journal
Journal ISJDirectory
ISJ DirectoryofofServices
Services
eSecLending is a full service securities lending agent and administrator of
customized securities lending programs. Their program has been adopted by many of
the world’s largest and most sophisticated asset gatherers including pension funds, T: US- +1 617 204 4500
mutual funds, investment managers and insurance companies. They are a third party T: UK- +44 (0)20 7469 6000
industry specialist providing lenders with customized programs, high touch client C: Christopher Jaynes
service, comprehensive risk management, and superior risk adjusted returns. The E: info@eseclending.com
firm takes a highly consultative approach with their clients by structuring separate, W: www.eseclending.com
non-pooled programs and utilizing a competitive auction to determine the optimal A: 175 Federal Street, 11th FL, Boston, MA
route to market for their clients’ lendable assets. Having built their business to 02110, US
incorporate investment practices such as the use of specialists, multiple-managers,
unbundling, price transparency, and competition, their approach ensures best A: 1st Floor, 10 King William Street,
execution and also provides clients with greater control over their programs, allowing London EC4N 7TW, UK
them to more effectively monitor and mitigate risks and counterparty relationships.

Eurex is one of the largest derivatives exchanges and the leading clearing house
in Europe. Wherever you are located, we provide you with access to the benchmark
futures and options market for European derivatives. Eurex also offers short term
W: www.eurexseclend.com
funding products, such as Eurex Repo. Eurex Repo is among the forerunners in
T: +41 58 854 2066
providing integrated trading and clearing for repo transactions. Eurex’s latest F: +41 58 854 2455
innovative marketplace is called Eurex SecLend. E: info@eurexseclend.com
Eurex SecLend. Europe’s leading investment banks participate as borrowers Eurex Zurich Ltd., Selnaustrasse
in the Eurex SecLend marketplace, acting as principal brokers, dealers and 30, 8021 Zurich, Switzerland
intermediaries. They all benefit from Eurex’s leading state-of-the-art trading and
processing services. For Eurex, service and technology innovation is not just a
buzzword. New trends are being transformed into inventions through the adoption
of advanced trading practices. Find out more on www.eurexseclend.com.

FINACE® is the only fully integrated solution today which supports the future T: +41 (0)44 298 92 00
business model within the area of Securities Finance and Collateral Management. F: +41 (0)44 298 93 00
The architecture of FINACE® is based on a stable, leading edge technology A: COMIT AG, Pflanzschulstrasse 7,
platform, which was developed with performance and robustness as the focus of CH-8004 Zürich, Switzerland
design. With flexibility at its core, customer-driven extensions and modifications W: www.finacesolution.com
can be quickly and easily applied to the standard component set. www.comit.ch

JPMorgan’s Securities Lending program is unparalleled due in no small part to New York: William Smith
T: 212-623-5664
the Firm’s breadth of capability, financial strength, professional expertise and
E: william.z.smith@jpmorgan.com
seamless operations. Our program enables investors to access a broad spectrum of
London: Michael Fox
lending markets, with a diverse borrower base, offering a broad indemnification T: 44 207 742 0256
against borrower default, while achieving very competitive bids for their E: michael.uk.fox@jpmorgan.com
securities - all of this in an environment designed not to compromise the activities Sydney: David Brown
of their fund managers. As one of the founding members of EquiLend, a global T: (61-2)92504606
automated platform for borrowers and lenders, JPMorgan is at the forefront E: david.ldn.brown@jpmorgan.com
of technology and is ideally placed given its integrated lending, custody and W: www.jpmorgan.com/wss
accounting platforms.

Santander is the only Spanish financial institution with a team exclusively

dedicated to securities finance & with the purchase of Abbey in 2004 has W: www.gruposantander.com
expanded its capacity on a Global basis with trading teams in London (UK) & T: (3491) 289 39 42/54
Connecticut (USA). E: securitieslending@
gruposantander.com
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.

Around the world, securities financing is managed on SunGard’s Email: securities.finance@

proven solutions for international and U.S. domestic securities lending and sungard.com
repo for over 250 clients. Through our Loanet, Global One, Martini and Astec Contact:
Analytics products and services, we provide comprehensive business solutions EMEA: +44 (0) 20 8081 2779
and information with worldwide reach for equities or fixed income securities America’s: +1 (646) 445-1179
financing. These solutions – all in an integrated, exception-based processing Asia Pacific: + 62276400
architecture – includes order routing, pre-trade analytics, trading, position Visit: www.sungard.com/
management, operations, accounting, settlement and reconciliation. securitiesfinance

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 ISJ Directory
Technologyof Services ISJISJInvestor
InvestorServices
ServicesJournal
Journal

BI-SAM is a leading provider of analytics software, client reporting and data

management solutions to the investment management community.
Our integrated and innovative solutions have already been adopted by many A: BI-SAM Ltd
renowned asset managers in France, Belgium, Luxembourg, UK, Hong Kong and 1 Cornhill
Singapore who have assets under management ranging from 10 to 450 billion Euros. London EC3V 3ND
The B-One suite of products covers: performance measurement, performance T: +44 (0)20 3008 5834
attribution (equities, balanced and fixed income), risk attribution (ex-post and ex- F: + 44 (0)20 3008 5831
ante), as well as multi-lingual client reporting and factsheets. This suite of products E: marketing@bi-sam.com
can be used either as stand-alone applications or ASP hosted solutions. W: www.bi-sam.com
The Company has approximately 45 employees in offices located in Europe (Paris,
London, Luxembourg). Offices in Asia and North America are under consideration.
The Company is headquartered in Paris.

DST International is the world’s premier vendor of technology solutions to the global investment T: UK +44 (0)20 8390 5000
management community with over 700 clients in 55 countries, and 1500 employees in 19 of the Boston +1 617 482 8800
world’s leading financial centres. Our wide range of asset management solutions meet the needs of Hong Kong +85 225 812 880
fund managers, dealers, settlement staff, custodians and record keepers operating as international F: +44 (0)20 8390 7000
asset managers; from front office simulation, opinion management and modelling functions, E: info@dstintl.com
through data management, dealing and settlement to custody and corporate actions. The suite of A: DST House, St Mark’s Hill, Surbiton,
products can be used either as stand-alone applications or brought together in flexible combinations Surrey, KT6 4QD
according to specific needs. W: www.dstinternational.com

Eagle Investment Systems LLC is a global provider of financial services technology,

serving the world’s leading financial institutions. Eagle’s Web-based systems support W: www.eagleinvsys.com
the complex requirements of firms of any size including institutional investment T: +44 (0) 20 7163 5700
managers, mutual funds, hedge funds, brokers, public funds, plan sponsors, and F: +44 (0) 20 7163 5701
insurance companies. Eagle is committed to providing enterprise-wide, leading-edge A: The Bank of New York Mellon
technology and professional services for investment accounting, data management, and Financial Centre
performance measurement. Eagle’s product suite is offered as an installed application or 160 Queen Victoria Street
can be hosted via Eagle ACCESS, Eagle’s application service provider. Eagle Investment London EC4V 4LA
Systems LLC is a division of The Bank of New York Mellon Corporation. To learn more
about Eagle’s solutions, contact sales@eagleinvsys.com or visit www.eagleinvsys.com.

Financial Tradeware provides integrated solutions for medium to small sized Investment
Management firms, Fund Managers and Hedge Funds, covering the full trade life cycle. W: www.f-tradeware.com
It is part of the Dharma Group of companies and benefits from the joint contributions T: +44 (0)20 7493 2773
and experiences within the group of market traders, business analysts, financial services F: +44 (0)20 7495 4858
professionals and skilled Microsoft Certified programmers. The company has developed a C: Graham Bright
suite of applications that integrate and Straight Through Process (STP) real-time trading, E: info@f-tradeware.com
back office administration, accounting and compliance. Ultra.net®, S-Messenger® and A: 31 Dover Street
H-Fund® arwe the company’s flagship products all based on Microsoft.NET infrastructure. London W1S 4ND UK
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.

Isis Financial Systems provides mission critical investment management software and
services to many large and small companies. Our customers perform a broad range of
functions including fund accounting, derivative and hedge funds, wealth management, Contact:
and pension and endowments, etc…. Our integrated solution services the front, middle, Isis Financial Systems
and back offices of these companies with software that accommodates most any security 14 Felton Street
type. Built on a contemporary three tiered architecture our application helps financial Waltham, MA 02453
companies improve operating efficiencies, increase accuracy and reliability and improve Sales@IsisFS.com
customer service. (00-1) 781-209-0262
IsisFS has the experience and IMS has the tools to improve your operations and save you
money.

SunGard is one of the world’s leading software and IT services companies. SunGard serves
more than 25,000 customers in more than 70 countries, including the world’s 25 largest SunGard Global Trading
financial services companies. 25 Canada Square, London E14 5LQ

Tel +44 (0)20 8081 2000

Dedicated to post trade securities operations, GL RIMS is your comprehensive real time
securities post execution processing solution, covering middle office, settlement and
Fax +44 (0)20 8081 3399
accounting requirements. Its wide use of automation enables global capital markets
organisation to achieve maximum STP. It is a flexible, highly scalable and easy to install www.sungard.com/globaltrading
platform with a new Service Oriented Architecture feature that allows smooth and
efficient connections with other third parties within a company. Email: info.globaltrading@sungard.com

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ISJ Investor Services
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Journal ISJDirectory
ISJ DirectoryofofServices
Services

A:IGEFI Group Sàrl - 7, Rue des

IGEFI is the foremost provider of software solutions for international fund promoters, Primeurs,
third-party service providers and fund managers. Its prestigious client-base is testimony L-2361 Strassen
to our commitment, service and quality with more than 200 expert staff supporting T: +352 26 44 211
clients from seven offices worldwide including Bangalore, Boston, Frankfurt, Geneva, F: +352 26 44 21 44
London, Luxembourg and Paris. MultiFonds is operational in more than 20 countries E: marketing@igefi.com
worldwide and support investment funds assets in excess of US$ 2 trillion. MultiFonds W: www.igefi.com
Fund Accounting and MultiFonds Transfer Agency are developed on a “one system-one C: Mr. Jesper Steiness - Head of
database” philosophy and provide significant advantages including reduced overhead Business Development
and IT support costs and single look and feel reporting for global clients. Europe & Asia
E: jesper.steiness@igefi.com

For more information on Information

Mosaic, please visit our website at
Information Mosaic is a global provider of advanced custody, corporate actions and wealth www.informationmosaic.com
Global:
management solutions to the global securities industry. Information Mosaic’s business
emullan@informationmosaic.com,
professionals leverage decades of financial industry expertise and technical knowledge
US:
to deliver complex projects on time and within budget. Since inception, the company emadigan@informationmosaic.com
has utilized the most modern technology to develop solutions to run on a scalable, Europe:
single platform. Today, Information Mosaic supports clients from offices in Boston, aleyder@informationmosaic.com
Dublin, London, Luxembourg, New York and Singapore. Currently, six of the top 10 global Asia:
custodians deploy Information Mosaic solutions worldwide. djennings@informationmosaic.com
General Enquires:
jflett@informationmosaic.com

For more than a decade, administrators, managers, and advisors have relied
on KOGER for dependable software tools backed by extensive industry T: 001-201-291-7747
experience and expertise. Now, for those who want to reduce costs and streamline F: 001-201-291-7808
business processes, Koger offers Fully Integrated Fund C: Mr Ras Sipko
Administrator, a vertically integrated suite serving the back-office software needs of the E: ras@kogerusa.com
fund industry. KOGER USA
Fully Integrated Fund Administrator consists of three core programs: 12 Route 17 North
~ NTAS, the New Transfer-agency System Suite 111
~ E*TAS, Electronic Transfer Agency System Paramus
New Jersey, NJ 07652, USA
~ GRID, Global Reach Interface Daemon
W: www.kogerusa.com
Other programs, such as PTAS, KIT, and KORS available separately, complement the core
competency of Fully Integrated Fund Administrator.

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, www.misys.com
multi-asset class solution that boasts 18 years OTC derivatives market expertise. tcm.marketing@misys.com
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.

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 C: Hélène Desbiez
the most complex derivative products. Business Development Manager
Coupled with a high degree of flexibility and customization, Mx Asset Manager T: +33 1 44 05 32 00
features a multifaceted design catering to the needs of both service providers E: helene.desbiez@murex.com
(prime brokers, administrators, asset servicing providers) and direct clients (portfolio W: www.murex.com
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.

Odyssey Financial Technologies is an industry leader in the global provision of wealth

and asset management solutions and services to the Private Banking, Mass Affluent and
London Office:
Retail Banks as well as Institutional and Fund Managers. Over 200 financial institutions Martin House
in more than 30 countries have chosen Odyssey solutions. Odyssey focuses on providing 5 Martin Lane
a comprehensive range of components for portfolio management (PMS), advisory London EC4R 0DP U.K.
process, customer relationship (CRM), compliance, risk, analytics and Enterprise Data
Management (EDM). The components are deployed on a single scalable wealth and asset T: +44 (0)20 7621 5800
management platform, facilitating the enterprise-wide implementation of solutions F: +44 (0)20 7621 5899
and data management. Founded in Luxembourg in 1995, Odyssey today has offices in
the key financial centers, including London, New York, Singapore, Zurich, Frankfurt, E: info@odyssey-group.com
Brussels, Geneva, Madrid, Toronto and Tokyo. Odyssey’s operational head office and main W: www.odyssey-group.com
development centre is located in Lausanne, Switzerland. Throughout this knowledgeable
network Odyssey employs over 600 professionals.

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Journal

peterevans is a leading provider of front to back office solutions for the financial services
sector. With 23 years experience peterevans takes a sophisticated and dynamic approach
to assist customers in reducing costs and witnessing an increase in margins by seamlessly peterevans
replacing costly and restricting legacy platforms. peterevans works in a collaborative New Broad Street House
manner and sees clients as partners to help meet all the demands in today’s marketplace. 35 New Broad Street
The xanite product suite offers a highly configurable, flexible and fully integrated, browser London EC2M 1NH
T: +44 (0) 29 20 402200
based, comprehensive front to back solution that complies with message standardization
E: info@peterevans.com
and settlement harmonization. Deployed as a single application or integrated as W: www.peterevans.com
components into your existing platform. Each of the xanite modules can be delivered via an
ASP or self-hosted. Covering: wealth management, custody corporate actions clearing and
settlement private client and on-line stock broking.

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 T: +44 20 7220 0961
compare, monthly billing comparison, mark-to-market & exposure processing, pending F: +44 20 7220 0977
trade comparison, income claims processing and C: Rupert Perry
custody reconciliation. E: rupert.perry@pirum.com
Subscribers to Pirum’s services significantly increase their operational efficiency and A: Pirum Systems Limited
reduce their risk by using Pirum’s solutions, as staff are able to focus on fixing the 37-39 Lime Street
exceptions instead of using their time to check and process routine business. These London, EC3M 7AY
automated processes are more scalable and risk controlled too, allowing W: www.pirum.com
significantly higher volumes to be managed without corresponding increases in
operations headcount.

Princeton Financial Systems (PFS), a 100% subsidiary of State Street Corporation, is a leading
provider of portfolio management and accounting systems, investment compliance, data For more information, visit Princeton
management, and reporting solutions to the global investment industry. Our solutions are
used worldwide by over 430 leading investment managers, custodians, insurance companies, Financial’s website at www.pfs.com or
pension funds, hedge funds, and banks, which manage combined total assets of over $5 www.pfs.aquin.com.
trillion in more than 40 countries.These include ABP, AEGON, AIG, Allianz Global Investors, T: +1 609-987-2400
BNP Paribas, CaIPERS, CACEIS Investor Services, Citi, Commerzbank, Credit Suisse, HSBC F: +1 609-987-9320
Insurance, Metropolitan Life Insurance, Nationwide, Northwestern Mutual, Prudential, RBS, C: Lorne Whitmore, Vice President,
Société Générale Securities Services, and State Street. MIG21, PFS’s award-winning investment Global Sales & Product Management
compliance and risk monitoring solution, optimizes pre-trade and post-trade compliance E: lwhitmore@pfs.com
checking, the administration of regulatory, prospectus, and internal investment guidelines A: 600 College Road East,
along with the consequent resolution workflows. PFS, headquartered in Princeton (NJ), has Princeton, NJ 08540, USA
offices located throughout the United States, Canada, Australia, Singapore, and China as well W: www.pfs.com, www.pfs.aquin.com
as in United Kingdom, the Netherlands, Luxembourg, France, Germany, and Switzerland.

Founded in 2002, Redi2 Technologies is a leading provider of fee billing solutions to the
global financial services industry. Redi2 offers flexible, feature-rich solutions that help
firms streamline operations, improve cash flow, reduce costs, enhance client service and Redi2 Technologies, Inc.
meet compliance obligations. 1771 Broadway St.
Redi2’s flagship fee billing and revenue management solution Redi2 Revenue Manager Oakland, CA 94612
helps financial professionals more easily manage the fee billing process, including client T: +1 (510) 834-7334
setup, multi-currency fee and accrual calculations, invoice and advice generation, E: info@redi2.com
W: www.redi2.com
accrual reconciliation, adjustments and reversals.
Our open APIs and support for industry-standard relational databases ease integration
with third-party solutions, including accounting, performance measurement and CRM
systems.

Netik’s team have spent the past 25 years perfecting the art of bringing
together market, reference, portfolio accounting, performance and risk data For more information please
from disparate sources into a single version of the truth (SVOTTTM). The result visit: www.netik.com
is a highly scalable and sophisticated business data model that has been or email: marketing@netik.com
designed to process all securities and offers a complete model for traditional
and alternative markets.

SimCorp Dimension is a powerful, comprehensive and truly seamless investment

management system. It can handle NAV and other calculations, with complete related
T: +44 (0)20 7260 1900
accounting, for a huge variety of fund structures and product types, including regional
F: +44 (0)20 7260 1911
specialities.
C: Elizabeth Gee, sales director
SimCorp Dimension has been designed from scratch as an enterprise-wide system, of SimCorp Dimension
handling all aspects of the investment management process and related administration E: elizabeth.gee@simcorp.com
functions, consistently. Data is recorded once into a core database so that reporting is W: www.simcorpdimension.com
made easy, there is no reconciliation of data and no duplication of procedures. A: SimCorp, 100 Wood Street,
-By cutting latency in securities processing, our clients are recognising new efficiencies, London EC2V 7AN
reducing costs and increasing throughput
-By streamlining their customer on-boarding processes, our clients are gaining faster
access to fees, increasing customer satisfaction, gaining greater cross-sell opportunities.

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 Clever Clogs?

Know your stuff in the Netherlands.

Get the up-to-date facts, trends and opinions
on the Dutch securities lending industry.
Free places available for selected industry
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Dutch summit magazine print ad - 16-06-09.indd 40 20/07/2009 10:40

Front Cover Section ISJ42.indd 3 19/10/2009 12:10
 Massimo Cotella
SGSS Milano

FROM MILAN TO HONG KONG,

WE STAND BY YOU
WITH AN INTERNATIONAL SERVICE PLATFORM.

“As well as the tools we provide for our clients, we have the structures to support their international
development every step of the way. In fact, our organisation is our strength. Our centres of expertise
are distributed throughout the world via international platforms. No matter which country my clients
are based in, I can offer them a complete range of services that best meets their expectations.”
Massimo Cotella, CEO, SGSS S.p.A. www.sg-securities-services.com

We stand by you

Front Cover Section ISJ42.indd 4 19/10/2009 12:10

SGSSP12_MIL_ISJ_203X267_UK.indd 1 28/07/09 15:40:48