June 2009

Turkey - Securities Services Volume 6 No. 40

GBP 25 - UK, ROW
New Model Banking - part 3 USD 45 - America
Trust Culture EUR 35 - EMEA
www.ISJ.tv
Panel - Hedge fund administration

THE GLOBAL SECURITIES SERVICES INDUSTRY MAGAZINE

In good hands?
Where institutional investors must take the initiative
Market changes - Clearing and Settlement
Middle and back office - Asset Managers

Front Cover ISJ40.indd 1 09/06/2009 16:08

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Front Cover ISJ40.indd 2 09/06/2009 16:08

 ISJ Investor Services Journal Heads up

P.08 Profile P.13 Technology P.15 Panel Debate P.22 Analyse This

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

Going for broker: investment managers’ reasons for

P.06 News selecting UK dealers SOURCE: Celent
Our monthly Execution Quality The graph shows the per-
selection of the key centages that investment
Liquidity managers gave a ‘very
stories, reports and
announcements from Expertise in specific markets important’ priority when
Availability of in-house research asked to give the decision
ISJ.tv criteria for selecting UK
Access to multiple markets broker dealers. All decided
Editor: Access to CSAs that the quality of execu-
Ben Roberts Commission rates tion was vital; commission
ben.roberts@2i.tv rates appeared to be
Editor’s letter Access to third party research negotiable in comparison.
Contributing editor: 0% 20% 40% 60% 80% 100%
Anthony Harrington
Post trade post haste
Account manager: such as UCITS and funds leapfrogged by the credit
Tarik Rekiouak
tarik.rekiouak@2i.tv Halfway through 2009, of funds and compliance default swap market on this
Senior account manager:
what stage are we at? Global tools such as electronic client score, when nine institutions
Patricia De La Grange stockmarkets have been reporting - will define create signed up for a CCP initative
trish.delagrange@2i.tv
simmering comfortably similarities. You are what for this market back in
Business development managers:
James Olweny
throughout May, and remain you eat, or in this case, you February. It has been a
james.olweny@2i.tv a pleasing sight against the are what you have at your busy few months for LCH.
Mark Needham nadir of March. fingertips. Clearnet, as this news follows
mark.needham@2i.tv
A weak dollar has rallied In light of the EuroCCP/ close to the annoucement of
Website developer:
Peter Ainsworth
commodities and firmly Omgeo initiative, ISJ sought its plans to clear interest rate
peter.ainsworth@2i.tv brought the pound back detailed market intelligence swaps.
Operations manager: from the brink of terminal as to the current state of In this issue, Dario
Sue Whittle
sue.whittle@2i.tv
decline. clearing and settlement Cintioli at StatPro defends
For trading, the joint in the context of trading the use of CDS – as well as
Commercial director:
Jon Hewson venture of EuroCCP and innovations and market derivatives - and their role
jon.hewson@2i.tv
Omgeo to create a clearing shocks in risk metrics in an article
CEO: Mark Latham
mark.latham@2i.tv
platform for hedge funds and The kind of trading on new technology trends in
asset managers has brought markets this magazine covers asset management.
2i Media
UK these groups firmly into has a more significant event Derivatives have had a
16-17 Little Portland Street,
London W1W 8BP, UK
the mainstream financial to look forward to: the first vital use for traders and
T: +44 (0) 20 7299 7700 initiative to eliminate phase of the first central fund managers to tentatively
F: +44 (0) 20 7636 6044
counterparty risk. counterparty in securities gain exposure to emerging
USA
410 Park Avenue, 15th Floor The move is the latest lending, spearheaded by markets. This had been the
New York, NY 10022
T: +1 212 231 8421
contribution that investor SecFinex with LCH.Clearnet case for foreign institutions
F: +1 212 231 8121 services has made in as the clearing house, for entering the highly liquid
© 2009 2i Media plc the dissolution between the Euronext markets. A Turkish market, though
All rights reserved. No part of this
publication may be reproduced,
alternative and mainstream few years and thousands recent swift developments
in whole or in part, without prior investment. This makes of industry articles later, in that country have caused
written permission from
the publishers. sense: what investors the structure is close to more investors - spoilt for
commonly use - from operational reality, and ISJ is choice in a competitive
ISSN 1744-151X.
Printed in the UK infrastructure projects such coming round to the idea. custody market - to look for
as a clearing house, trading The securities lending longer term returns. n
exchange, to funds structures industry has already been Ben Roberts, Editor

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 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

Contents
In this issue
15 Clearing the way for
COVER STORY 04 Letters to the editor
06 News and mandates
The last month of updates in
custody, clearing and settlement,
securities lending, legal and
compliance and technology.
Are you listed? ISJ’s directory
Clearing of services, starting page 24
MTF settlement -
Clearing - Claire Delnoy of
Euroclear analyses the challenge
and the options available for
post trade in the new trading
platforms
Fund Administration

17 ISJ Panel Debate

New Model Banking
07 Cover - The trust issue
Our series on New Model Banking
continues with a discussion on
the implications for a decline in
trust in the financial world.
People
08 Profile - David Aldrich,
BNY Mellon
With extensive experience in
both alternative products and
servicing alternative clients, Mr
Aldrich divulges his market views
The trust issue
to Ben Roberts.
New Model Banking, page 7
- Hedge Fund
Administration ISJ asks
industry experts about the
critical role of administration for Growing market - Turkey,
hedge funds. page 10
22 Analyse This - Clearing
and Settlement -
Guest columnists tackle the
changing clearing landscape from
their respective market positions.
24 Directory of services
ISJ’s exclusive monthly listing
of key service providers to the
global asset services industry.

Custody

10 The global appeal of Analyse This - Marco Strimer,

page 22
Turkey - Custody
Ben Roberts analyses the
securities services in one of the
world’s most promising emerging
amrest.
MEMBER - periodical
publishers association Technology

13 Technology innovation
www.abc.org.uk - Latest tools - Anthony
Harrington picks up on the
TO RENEW YOUR SUBSCRIPTION latest needs and trends for asset
PLEASE TELEPHONE:
+44 (0)20 7299 7700
managers.
OR VISIT... WWW.ISJ.TV

Panel Debate, page 17

1-23 ISJ40 Final MLa.indd 2 09/06/2009 13:24

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 Letters ISJ Investor Services Journal
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Letters
including outsourcing to
Dear ISJ reduce operational costs and Dear ISJ “OTC
integrated suites of services.
Within the traditional asset Many now critical functions While the financial system derivatives
management industry, like risk and compliance run works to curb credit
Software as a Service (SaaS) off the same portfolio data, so derivative risks, eyes are still processing can
is well established. Recent it makes sense to outsource external. Internal challenges
market events have seen these functions to a provider are crying out for attention. still paralyse
a move from deployed who can deliver an integrated, OTC derivatives processing
solutions to hosting, or can still paralyse middle and middle and
SaaS, even among larger
institutions. SaaS offers
“Regulators back offices and it’s time this
issue was openly addressed. back offices
the opportunity to reduce and investors There has been a
and it’s time
operational costs: not only distinct shift in focus from
staff costs but also the ability are demanding bottlenecks and efficiency
this issue
to leverage vendor economies towards a different
of scale for items like the levels of operational challenge; that
was openly
hardware, resiliency and DR of counterparty risk and
requirements whilst taking operational exposure management and
addressed”
advantage of increasingly underlying principles of
robust SaaS technology and robustness operational control. trade event management
proven expertise in this area As many buy-side firms that extends into contract
from vendors. Meanwhile, traditionally have focussed on solving the maintenance activities

associated with
asset managers can initial issues of confirmation of increases, amends,
concentrate on running their processing, whether terminations and novations.
business, leaving vendors to
use their skills and knowledge institutional automated or manually
processed, only a few have
Only by extending
automation and removing the
to support clients’ businesses.
Hedge funds are under managers” gone beyond that to manage
the lifecycle of the contract.
manual processing related to
contract maintenance can an
increasing cost pressures In reality many operational operation truly be controlled
owing to lower fees and multi-function SaaS. areas are geared towards effectively.
increasing operational In addition, regulators and securities processing where
burdens. They have investors are demanding the transaction can be n Geoff Harries,
traditionally benefited the levels of operational captured, confirmed and Vice President
from ‘free’ services from robustness traditionally settled same day or T+3. This Product Strategy,
their providers like prime associated with institutional does not translate easily into Fiserv
brokers, such as risk analytics. managers. Vendors are the world of OTC derivatives
However, the move to helping to meet this need by - systems need to adapt
multi-prime, prompted by providing hosted versions of to support the extended Turn to page 13 for ISJ’s
fears over counterparty risk, their platforms. operational governance report on the risk and
has rendered this model far beyond the initial contract. technology and latest trading
less viable. w n MIke Medley, director, Effective operational and asset management
Hedge funds are thus operations and service, control requires post- innovations
demanding more from Linedata Services
their software vendors Northern Europe To express your views, write to ben@2ipartners.com or blog at www.ISJ.tv

1-23 ISJ40 Final MLa.indd 4 09/06/2009 13:24 Caceis

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 News 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

Custody functionality, known as Omgeo services company, launched

Securities Lending
ALERT New Markets and Misys Credit Risk Vantage, the
CIG Trustees Limited (CIGT) Validations provides expanded latest credit risk offering from
appointed State Street to provide instrument coverage and The traded value and volume the portfolio of Risk solutions
custody services for its asset compatibility with over 150 of Singapore Exchange-listed offered from Misys.The solution
portfolio. depositories around the globe. Exchange Traded Funds (ETF) was initially developed as a new
set new monthly records for two component for Misys Risk Vision
CIGT is an indirect associate of Brown Brothers Harriman went consecutive months in April and to provide additional key credit
China Insurance (Holdings) live with its central settlement May 2009. risk modeling functionality
Company Limited (CIHC). of credit default swap payments to that already offered from
for its clients. The system is Total trading value of SGX- Misys Risk Vision. Misys Credit
State Street will provide designed to reduce settlement listed ETFs was SD836.2 million Risk Vantage brings financial
custody services for CIGT from risk for asset managers by for the month of May 2009. institutions an additional
its operations centre in Hong replacing manually processed This exceeds the previous straightforward model to reduce
Kong, including safekeeping of bi-lateral payments with record of SD533.2 million parameter uncertainty within
assets, settlements, corporate automated netted cash flows per traded in the month of April their business.
actions, income collection and account, per currency. 2009 by 57%.
tax reclaims. Aleri Inc. launched a the “Risk
TMK (Pipe Metallurgical Regulators in Greece and Survival Guide.” including
Meanwhile, the custodian also Company OJSC) has been added Australia relaxed their ban on reports by top analysts, a video
snapped up the custody mandate to those serviced through the short selling of financial stocks, and webinars.
for the global pension scheme of Speedy Settlement Scheme though the ASIC warned that it
mining giant Rio Tinto. (SSS) jointly developed by the might reverse its ruling should The European Commission
National Depository Center markets deteriorate. gave its European Systemic
Clearing (NDC) - Russia’s only settlement Risk Council (ESRC) and
depository - and ING Wholesale Technology European System of Financial
Euro CCP, the European arm of Banking. It is the 37th issuers Supervisors (ESFS) a mandate
US clearing corporation DTCC, to be serviced through SSS, Fiserv’s Investment Services to establish a central European
and Omgeo launched a clearing which aims to reduce the time released the latest version database containing “all
mechanism for asset managers needed for the delivery of shares of its multi-asset, post-trade relevant micro-prudential
and hedge funds. The move and to optimize settlements processing solution, TradeFlow™ information emanating from
underlines the drive for these between NDC and ING Wholesale Release 2.4. The release expands national supervisors” as part of
investment groups to obtain Banking clients. The Scheme has upon the range of activities that its plans for a new regulatory
protection from counterparty functioned successfully since can be handled by TradeFlow architecture. The plan was
risk to the same degree as their November 2007. for the post-trade event criticised by technology and
banking peers. management support of OTC regulation think-tank JWG-IT.
KAS Bank added the alternative Credit Derivatives. TradeFlow
Meanwhile, Omgeo enhanced trading platform Equiduct to will enable clients to manage all The International Monetary
Omgeo ALERT, the industry’s its European network of direct aspects of the post-trade event Fund (IMF) has Platform
largest Web-based global exchange links. The Dutch management lifecycle, including Symphony for high-performance
database for the maintenance bank will provide clearing & trade confirmation, post-trade grid computing to handle the
and communication of standing settlement services to its clients event management and payment increase in economic modelling
settlement and account as a General Clearing Member of processing. and risk analysis, along with
instructions (SSI). The new LCH.Clearnet. Misys, application software and boosting efficiency. n

Latest mandates

Month Winner Client Location Assignment Mandate size

June State Street CIG Trustees Ltd Boston Custody n/a

.............................................................................................................................................................................................................................................................................
June State Street Rio Tinto Boston Custody USD8 billion

May JP Morgan Flagstone Re New York Global custody USD1.3 billion

1-23 ISJ40 Final MLa.indd 6 09/06/2009 13:24

 ISJ Investor Services Journal
Part three of New Model
Banking - investor trust
Financial institutions don’t
plough huge amounts of money into
their relationship management for
nothing. Keeping clients through
strong relationship is an issue that has
magnified by the financial crisis. The
‘credit crunch’ itself saw interbank trust
at an all time low.
Though the failure and
nationalisation of banks may have
ceased, the reputation of banking will
take years to mend.
Trust, it would seem, is one of the
most precious commodities, and the
reassurances given by financial firms
through presentations, advertising and
events as to their stability and sobriety of
operation is, in contrast, probably at an
all time high.
The absence of trust is perceived as
a bad thing for all concerned - from the
pension fund that selects its custodian
and asset managers to the regulators
attempting to re-evaluate legislation,
to jurisdictions that promote
themselves as beneficial places to do
business.
The key to trust is to allow someone
else to be your eyes and ears. Volatile
markets, corporate write-downs and,
above all, investor losses all put strain
on the confidence of that investor. In the
US, this has led to a flurry of lawsuits,
particularly in the securities lending
business where losses incurred in cash
collateral reinvestment has pitched
beneficial owner against agent lender.
But the kind of changes in the
market that this magazine covers
- the rise in independent fund
administration, for example - put the
issue of trust in an interesting light.
When trust declines, investors will
no longer be satisfied with what they
are told. As last month’s interview
with T. Andrew Smith demonstrated,
institutions will demand to understand
more of their asset manager’s
operations, along with a breakdown in
performance. The importance of client
1-23 ISJ40 Final MLa.indd 7
The trust issue
reporting is increasing.
Investors will demand insight into
practices and processes that two years
ago they would not have concerned
themselves with. Nicholas Griffin,
Partner and European Head of KPMG’s
Asset Servicing Practice points out that
the middle to back office will not only
become more important to investors, but
will need to become more integrated.
“What we’ll see is greater
seamlessness of core business processes
that flow through investment managers
and into administrators and custodians.
Whereas historically there might be
three different organisations with
different approaches and processes
– in future, regulators will look for
these organisations to be more joined
up. In addition, investors will drive
investment managers to be more joined
up. Stronger and more transparent
end-to-end risk management processes
and procedures have become a more
important selection criteria.
“Part of the renewed promise
and restoring trust is bringing the
constituent parts of the value chain
closer together.”
But if institutional investors take a
greater and more thorough role, asking
for increased oversight, one could
question if the decline in trust such a
bad thing. If trust levels stay low, and
the levels of bank scrutiny remains
high, it would appear a more promising
dynamic to change the industry and help
prevent another financial crisis.
New Model Banking - Trust
Certainly risk management is
climbing the agenda for more cautious
investors and this, along with corporate
governance, are the two central concerns
that are integral to client reporting,
according to Griffin.
“We may find asset managers and
asset servicers collaborating more on
middle office services such as risk and
performance analytics.”
Institutional investors, particularly in
the UK, have traditionally relied on the
intermediation of consultants.
“The due diligence conducted
by consultants is focusing on risk
management and corporate governance
now more than ever before.
“Advisers and consultants are
strengthening their due diligence
capabilities around risk management
assessment.”
Griffin adds that many asset
managers are seeking to strengthen
their relationships with consultants and
demonstrate not only their investment
products and strategies but also their
risk management systems and processes
in the knowledge that these have become
more important and that consultants
play a critical role in the selection
process.
If this is the case, it puts the trust
issue in an unusual light. Institutional
investors rely on consultants, particularly
in the UK, to understand and assess the
risk models of banks that seek to manage
the investor’s money. Yet if, on occasion,
the banks get close to consultants, to
the apparent benefit to the consultant’s
knowledge, what does this say for the
consultants’ objectivity? Would the
investors’ trust issue be not just with the
banks, but with the middlemen?
Official initiatives to change
legislation and generate investor
confidence can on occasion, overshoot.
Last month, this took the form of
the draft legislation from the EU that
cracked down on hedge funds – an
industry almost as suspect in the wider
09/06/2009 13:24
 New Model Banking
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
world as banks - in Europe. The paper
proposed leverage limits, which would
be debilitating for start up funds, and
would restrict US managers from raising
and managing assets on the continent.
Further, managers must be established in
a EU member state and must apply for a
passport to distribute funds.
Opposition to the draft, which
could be enacted as near as 2011,
was resounding, from the Alternative
Investment Management Association to
the Hedge Funds Standards Board. An
AIMA statement said the hastily created
directive was made public “without
anything like the usual standards of
consultation we expect.” Does this
suggest that the industry bodies trusted
the EU that they would be consulted –
can it ‘expect’ that much?
Hedge funds remain one of the few
groups who do not count their chickens
by relying on trust. Certainly they must
demonstrate to their investors – as we
have seen, investors are asking more
questions - that they are both solvent
and have a clear investment strategy.
But as one senior figure in a major
custodian told ISJ: “Nobody I know
in the hedge fund market is scared of
regulation. That’s not the same as saying
they are pushing for greater regulation.
But managers don’t have anything to fear
– in the UK, all managers are regulated;
that’s different to the US: in the UK it’s
compulsory and the hedge funds in
the UK have not been the cause of the
financial crisis or major instigators of
fraud or accounting scandals.”
On this subject of, fraud and
accounting scandals, the senior figure
then moved logically on to this year’s
most infamous fund manager, whose
demise adds another angle to the trust
issue. “No-one asked Bernard Madoff
who his service providers were. You need
to know: who is the fund manager, who
is the service provider? If you get the
right answer you’re a long way to getting
a good structure. And if it’s a Cayman
fund – it’s not a red flag, you have to do
checks but it doesn’t mean it’s a problem
de facto.”
Suspicions surrounding Bernard
1-23 ISJ40 Final MLa.indd 8
Madoff had existed for a few years.
Investors, which included retail clients as
well a variety of corporate funds, trusted
one man with billions – probably
enthused by the reported year-on-year
investment returns.
Banco Santander, the Spanish bank
whose star had risen in the financial
crisis for its steadiness and acquisition
ability, has been the biggest loser from
Madoff, both monetarily and in terms
of trust. Last month the bank paid
USD235 million to the Irving Picard, the
court-appointed trustee charged with
obtaining compensation for Madoff ’s
victims, to avoid a lawsuit to recoup
profits made the Spanish bank.
The trustee has also accused some
investors of failing to use sufficient due
diligence on Madoff. Indeed, that the
bank endorsed Madoff shortly before his
scam was uncovered at the end of last
year was the most stinging indictment of
a bank’s reputation.
So where does that leave the issue of
trust in the future of banking? There
has been a lot of talk over the last year
that, post-crisis, the financial world
will never be the same again. Yet after
nearly two years the understandable,
overriding desire for all is a return to
normality. With global stockmarkets
gently lifting over the last month it is
clear that ‘normality’ will arrive quicker
than a change in the overall framework
of relationships, responsibility and
accountability, which are systemic and
cultural in their nature.
Institutional investors – particularly
beneficial owners of pension funds –
must in the meantime do what they can
to change ‘normality’.
These players must continue
the demand for independent
administration, segregated accounting,
detailed reporting. Their involvement in
financing areas such as securities lending
programs must continue to increase,
and they must ultimately become the
clear authority, reducing the historical
reliance on consultants. The issue of
their trust must ultimately return to
their abilities to best demonstrate how
they should be serviced. n
ISJ Investor Services Journal
Profile
David
Aldrich,
BNY
Mellon
Dorchester-born David Aldrich
may well have the broadest responsibility
in asset servicing. He has what he calls
two “hats” at BNY Mellon - head of the
Global Client Management division
for financial institutions in Europe,
and business manager for alternative
investment and broker dealer services in
Europe.
The first of these is what he calls
“delivering the whole bank” to brokers,
investment banks, some commercial
banks and alternative investment funds.
As a relationship role it is an overall
monitor to ensure the client gets what
they need. “If you look at the client
holistically, [you’re asking:] ‘what issues
they are facing’? If you look at the
alternative funds sector last year they
had real issues around counterparty risk,
and infrastructure collapse. We can help
with both of those concerns.”
The breadth of custody services
means that the bank can “step into
the breach” and provide the necessary
solutions. He adds that the bank never
predicts what it is going to offer to a
particular client. “We’re a broad based
securities services firm, we generally
have a capability that we can deliver to
a part segment; it doesn’t necessarily
involve reinventing the wheel,” he says.
The second role involves delivering
services to alternative fund managers,
including private equity, hedge and
funds of hedge funds. There are a range
of service that make up the P&L
– fund administration, custody, cash
management, foreign exchange - as well
as some back offices services.
It is the alternative investment clients
that cross over these two roles. And the
09/06/2009 13:24
 ISJ Investor Services Journal
bank has been proactive in analysing
the market and seeking the key areas
to provide service. Most recently this
fact-finding cam in the form of a white
paper produced with Casey Quirk, the
management consultant, called “The
hedge fund of tomorrow: building an
enduring firm”. “What we found is that
investors who took money out of hedge
funds and reallocated into cash were on
the whole high net worth individuals
who were invested through large
private banks. Individuals who weren’t
expecting to lose money in hedge funds
got a nasty shock when the industry
went into freefall, and they said: just get
my money out,” says Aldrich.
He adds that the overarching trend
found in the survey is that investors
have not lost their faith in hedge funds
to deliver absolute returns and give
investors protection in tough times.
“A lot of the institutional investors are
going to increase their allocations and
that was most aggressively made clear
in the US. Pension funds are increasing
their weight in Europe too, but at not as
fast a rate.”
Amid the credit freeze of the last
two years the issue of counterparty
risk became ubiquitous. BNY Mellon,
along with Wall Street rivals JP Morgan,
in particular, became the leading
exponent of the tri-party collateral
management system, a service that
seeks to reduce some of the exposure
for trading partners.
For securities lending and repo
deals, the custodian sits in the middle
between two trading parties, holding
the collateral received from one side to
neutralise the exposure for the other
party.
“If I’m lending securities against
securities, I don’t want to have to touch
it,” he says, from the point of view of an
agent lender. “I don’t want to manage
your equities, it’s cumbersome, so why
don’t I use the BNY Mellon to do that
for me?”
He adds that it allows the prudent
agent lender to easily maintain
standards with its collateral profile.
The tri-party system has an additional
benefit for hedge funds, he adds.
Where before a hedge fund might
1-23 ISJ40 Final MLa.indd 9
leave surplus capital with a prime
broker, they maybe reluctant to do so
given the hard evidence of the last year
that brokerages can fail.
“[Hedge funds] need the prime
brokers, but margining to the penny is
a difficult job. There’s always going to
be a surplus, and if you’ve got 40 funds
and they’ve all got an extra 100 million
with a prime broker, that’s four billion
total. So the exposure in aggregate can
be substantial.”
The tri-party agent, again, can sit in
the middle to collateralise the position.
David Aldrich spent much of his early
life in Wincanton, and after graduating
in Economics at Kent University
joined Phillips & Drew, shortly before
was bought by UBS in 1986 amid a
wave of deals made between London
stockbrokers and foreign investment.
His first role was in relative bond sales,
which, he says, “morphed” into the
futures and options business.
These ETDs, including index and
fixed income futures, were trading
in tiny amounts in the mid 1980s
compared with today, he says, but they
were on the cusp of a boom.
With growth comes standardisation,
and in 1998 he left UBS as director of
listed derivates sales in Europe and
moved to Credit Suisse First Boston
(CSFB) to help launch the “PrimeTrade”
futures trading platform, and to work
with the team on the creation of the
“PrimeClear” futures clearing system.
PRIMETrade was designed to allow
traders to directly execute futures onto
the exchanges without them having to be
exchange members.
“The development was: here’s a single
platform on which you can trade in all
the derivatives exchanges and you can
also see your position and settlements.”
He then moved to JP Morgan
Chase to become head of relationship
management and sales for its clearance
and collateral management products
in Europe. In 2003 he became head of
securities industry banking in London
for Bank of New York, responsible for
relationship management and sales
for the hedge fund and broker dealer
industries in Europe.
Just as internet-based trading was
Profile
the innovation ten years ago, he says
BNYConvergeEx is taking full advantage
as a service from today’s fragmented
market for trading liquidity, enhanced
by the proliferation of new multi-
lateral trading facilities. The system
allows users to tap into various pools of
liquidity, no matter how disparate the
spread. “If you have clever technology
like that, it doesn’t matter about about
fragmentation because you have a
mechanism that can aggregate it,”he
explains.
But are we to see consolidation in the
trading space any time soon? “Logically,
one can assume these things will be
brought together. But the advantage of
the fragmentation is whoever is quickest
and most efficient will win, and the
market will win.
“I think there is no hiding place
in today’s market; the markets are
becoming more transparent, more
efficient.”
A more pressing and topical concern,
given the make-up of his clients, is the
proposed increase in regulations on
hedge funds. At the time of interview
the EU’s draft legislation for alternative
funds – which may have a significant
impact on a US fund’s ability to
distribute funds in Europe – had stocked
a significant backlash from related
investors.
Aldrich believes hedge funds have
nothing to fear from legislation, and
points out that many UK managers in
in particular are regulated. The bigger
players, too, he adds, have been very
active in adopting any best practice
guidelines. “There’s been an enormous
swing over the last few years towards
best practice and embracing better
transparency – and the journey is not
over.
“We’re looking at hedge funds using
our broker dealer products and broker
dealers servicing our hedge fuds. It’s
a lot of cross selling and utilisation of
products in new innovative ways and
serving a higher proportion of the more
successful managers.” n
David Aldrich is head of global client man-
agement for financial institutions, Europe
and business manager of alternative invest-
ment and broker dealer services in Europe
09/06/2009 13:24
 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
Turkey has been a resilient success amid the financial crisis, and its
status as an ‘emerging’ market is receding, finds Ben Roberts
When the administration of US
president Obama selected Turkey as
the first country with a Muslim majority
in which to speak, it can be regarded
as a conservative and symbolic move.
The country stands with its two feet in
the west and east in innumerable ways,
a bridge for the president to articulate
how the two worlds can meet.
Turkey’s financial markets and
related financial services have made
significant strides in crossing that
bridge in the last ten years. Despite
infrastructure problems at the beginning
of the decade, the remarkable resilience
of its stock exchange, the initiatives
shown to develop a EU economy in
all but name, and the growing list of
foreign securities services institutions
seeing opportunities, gives a strong
demonstration of purpose.
But its potential is still in some ways
hampered by undecided issues. Its
protracted negotiation for a loan with
the IMF, for example, is significant, as
is a related issue that has challenged
economists: whether the country can
meaningfully decouple from local,
more vulnerable rivals.
Selim Cakir, chief economist for
Turkey at TEB Securities Services, a
long standing local bank that has an
international partnership with BNP
Paribas, says the chance that Turkey
can finance its balance sheet without
1-23 ISJ40 Final MLa.indd 10
The global
appeal
of Turkey
official help from the IMF is “unlikely”.
“Turkey will need an IMF program to fill
its external financing. Our calculations
show it will need about USD12 billion
for 2009, and possibly another USD10
billion for 2010. Beyond that, it is
anyone’s guess.”
He adds that the issue of external
financing is dependent on the ability of
the private sector to roll over its debt.
Another factor is that Turkey’s current
account deficit is heavily impacted by
the oil prices. “Turkey is an importer, last
year’s current account deficit was about
5.6%. So if the oil price comes down to
USD55 per barrel for the rest of year this
number will be down to 1.5% of GDP,
so there are some factors that help the
current account.”
It has been affected, as with all
emerging markets, by the financial
crisis, though one of the country’s chief
selling points is the relative size of the
loss and the continued international
popularity. The ownership of local
securities by foreign investors can
be partly used as a barometer for its
international popularity, according
to Gunsel Topbas, securities country
manager at Citi Turkey. He points out
although the percentage of foreign
ownership of local equities declined
from 72% two years ago to around
65% today, the general acceptance is
this decrease should not be seen as
10
ISJ Investor Services Journal
a liquidation. “The foreign investors
still hold a significant share of the
publically-traded equities,” he says.
“This is seen as a strong and positive
sign and been contributed to the
significant increase [on the ISE] of 30%
since start of 2009.”
He adds that Turkey did not suffer
the liquidity problems that faced a
number of markets, emerged and
emerging, and that this sent out a
strong message internationally. “The
stock market was open every day, it
never stopped trading and I think it
was a strong sign that it’s always open
for trading and you’ll never get stuck
with your assets.”
This confidence boost is a far
cry from the situation custodian
banks found in 2002 and 2003. Then,
proposed changes in tax regulation
caused a misunderstanding in the
nominee structure for custody in W
the country. It meant custodians
were responsible for their clients tax
b
implications, which some say spooked w
a lot of custodians. f
That potential for misunderstanding d
has since been removed as Turkish
regulation now dictates that all investors
e
have their own tax identification and
that these investors have segregated
F
accounts to reflect this distinction.
Topbas says Citi, which acts as sub-
G
custodian, as per market regulations, B
L
09/06/2009 13:24 Gsl_BB
 GSL |
Global
Securities

Summer in
Lending

Wednesday
8th July 2009 the City BBQ
A GSL Networking Event

When the summer finally arrives, there is nothing we all like

better than to enjoy good food, fine wine and great company
while soaking up the sunshine. With mouth watering barbequed
food, including vegetarian options, dessert and complimentary
drinks, GSL presents a unique securities lending networking
event in a relaxed atmosphere.
From 5:30 pm Tickets £67.50 limited availability.
Gibson Hall Early Bird Discount £57.50
Bishopsgate book online before Friday 19th June.
London EC2N www.GSL.TV/BBQ or 020 7299 7700
11

1-23 ISJ40 Final MLa.indd

Gsl_BBQ_Ad_ISJ.indd 1 11 09/06/2009
08/05/2009 13:24
13:11
 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
works with its global custodian clients
to establish segregated accounts for the
investors.
He adds that segregated accounting
is best viewed as a set of layers. “At the
highest level as a local custodian we
have an accounted infrastructure at
the Central Registration Agency, then
this institution requires investor-level
accounts opened separately in their
books, which would reflect the accounts
that are open in our books. So the
regulation requires the investor-basis
registration of assets in the name of
the account owners, and also the tax
regulation requires a separate tax ID.”
The central securities depositary system
remains unconventional, with Takasbank
acting as the central custodian and the
Central Registry Agency – established at
the beginning of this decade - handling
the clearing and settlement.
Turkey has attracted US and
European-based institutional investment
for a number of years, but recently the
country’s appeal has expanded to Latin
American pension funds, sovereign
wealth funds as well as further inflows
from Asia. Ertunc Gurson at TEB
Securities Services cites the stability of
the one-party political system and fall in
interest rates and inflation as key reasons
for this expansion of appeal. Indeed, on
16th April of this year Turkey’s central
bank - Türkiye Cumhuriyet Merkez
Bankası - cut its benchmark interest
rate by 75 basis points to 9.75% 25bps
beyond most analysts’ expectations.
The Turkish lira fell 0.5% against the
US dollar and 0.2% against the euro.
The central bank has an inflation target
of 7.5%, thought the Bank’s governor,
Durmus Yilmaz, recently estimate that
inflation may drop below this target.
Gurson also points out that when
international investors enter the market,
it is for a longer period – further
enhancing the country’s stability.
“Historically Turkey always attracted
more clients looking for a quick return,
but since 2003 the growth from the
clients segment has increased a lot.”
Cautious investors seeking exposure
to the market through derivatives can
also be well served. It is now four years
1-23 ISJ40 Final MLa.indd 12
since the introduction of the Turkish
Derivatives Exchange (TurkDEX). The
exchange is eager to grow, and is now
in the process of simplifying the ability
for US based funds to be listed. Single
stock futures and options are also in the
pipeline.
Ramy Bourgi, head of emerging
markets development at Societe
Generale Securities Services, says the
inflow of investment has quickened the
need to create internationally recognised
standards and infrastructure. “A UK
fund manager distributing funds in an
emerging market needs comfort that
“Since 2003 the
growth from the
client segment has
increased a lot”
Ertunc Gurson, TEB
Securities Services
the fund managers and their clients are
protected in the same way. So the flow
of money into the market is forcing that
change.”
The local pension fund industry is
only a few years old. Government and
private-company employees both have
a state issued pension automatically,
though an additional private scheme is
still voluntary. The lag in the pension
fund industry is partly down to the
government initiative in the 1990s to
retire its population at the age of 40.
That has now increased by 20 years –
another alignment with the western
norm – and the country’s young
population gives strong potential
for a new and longer-term generation
of savers.
The combination of a nascent
pension funds market and a limited
demand from local players to invest
overseas means that global custody is not
established as a service. However, this
can change quickly, and Ramy Bourgi
at SGSS points out that in the 1980s,
only around 5% of a typical US pension
12
ISJ Investor Services Journal
funds invested overseas.
“We’re keeping a close eye on the
pension funds because eventually as the
pension funds market grows the custody
services grows in that area,” says Gurson
at TEB. This seems to be the thinking of
Deutsche Bank, who in 2005 established
a sub-custody business in Istanbul
and in 2007 acquired the cross-border
custody business of Garanti Bank.
Cakir at TEB says he is bullish about
Turkey’s prospects in the long term,
though the current circumstances in the
global markets means he cannot say the
same for the short term. “We are seeing
global deleveraging, an increase on home
bias of capital, and substantial increase
in the borrowing of advanced countries
that limits the emerging countries access
to foreign financing.”
However, he adds the traditionally
high inflation means that the country’s
banks do not hold a significant amount
of mortgage loans, avoiding both a
bubble in housing prices and exposure
to the contagion of toxic assets.
Beyond this, Topbas says there
is a strong drive from the regulator
and the Capital Markets Board to
establish Istanbul as an international
finance centre.
“There are certain working groups
and committees established by different
parts of the government and market
regulators,” he says. “Establishing
Istanbul as an international financial
centre requires the further development
of the market towards best practices
and listening to more to the foreign
investors, to their expectations ; and this
is what the market authorities are willing
to do, right now ”
He adds that the market itself has a
“strong willingness” to turn
its candidacy to be part of the European
Union into a fully fledged membership.
“I believe the shorter term agenda is to
clearly understand the EU regulation
and to the extent to adapt those
regulations into the Turkish market to
the best possible extent. There’s a no
resistance or hesitance in the financial
market - to the contrary, there is a
growing interest.” n
09/06/2009 13:24
 ISJ Investor Services Journal
Tomorrow’s innovations
Anthony Harrington identifies the future for
fund managers’ middle and back offices.
Cost reductions and enhanced risk
management have become ubiquitous
in discussions surrounding software and
systems for the middle and back offices of
fund management firms. Anything that
speaks to these areas will find a budget,
even in these tough times.
Nevertheless, it is surprising how
many areas of IT can be dusted down and
reshaped to bring risk management to
the fore. Even where risk is not central,
or even a decent peripheral add on to
an application, there is always the cost
reduction issue.
Risk management is anchored in the
level of detail that investors have about the
markets, counterparties and products in
which they trade.
On the product side, Dario Cintioli,
Global Head of Risk Management and
Complex Pricing at Statpro, says that there
is now tremendous interest in systems
to help manage all aspects of derivatives,
particularly pricing risk. “The thing
about derivatives is that they span the
spectrum of complexity, ranging from the
very simple to the extraordinarily, even
scarily complex,” he says. He reveals that
in one recent discussion with a client, the
description of the payout on a derivative
product alone ran to three closely written
pages of formulae.
“This is part of the reason why there is
a lot of confusion in the market,” he says.
“The crisis was triggered by products that
were very difficult to understand and it is
now clear that some products had achieved
an unmanageable degree of complexity,”
he says.
Any pricing provider has to be prepared
to work through this complexity with
the client in detail. As Cintioli notes, the
bit you gloss over is likely to be the bit
that contains the elephant traps. Statpro
has built up a considerable amount of
1-23 ISJ40 Final MLa.indd 13
expertise at managing the details of
derivatives pricing and this has created a
real position for it in the market. “We take
on the outsourcing of pricing activities
for our clients, which takes the pain of
managing all this complexity away for
them,” he says.
Accurate data services are the basis for
successful derivatives pricing. The volume
of feeds on a really complex derivative
can make this a significant challenge,
post-trade. “There is a natural and
“Risk management
is anchored in the
level of detail that
investors have
about the markets,
counterparties and
products in which
they trade.“
understandable antipathy to derivatives
today, which is not surprising given the
damage that has been done. However,
derivatives are extremely useful for many
institutional investors and corporates, so
the appetite for them is not going to go
away,” he comments.
However, Cintioli points out that
managing the entire range of risks on even
a simple bond has its challenges. “If you
want risk control done well, even on a
simple project, then you want all the risks
modelled, including credit risk, interest
rate risk and so on,” he says. So there is still
a non trivial management challenge for
software providers to address, even at the
simple end of the spectrum.
He adds that despite their perceived
13
Risk & Technology
complexity, simple derivatives actually
worked extremely well through the crash.
Credit default swaps – the additional
insurance deals taken out on the back of
money lending – have been particularly
prominent and are now an established
market, with recent efforts from the US
regulators to establish a central clearing
house.
“Credit default swaps were actually
more liquid than bonds through the crisis,”
says Cintioli. “They provided pricing at a
time when value was hard to determine by
conventional means and they were and are
excellent.”
Statpro uses the CDS market as a
gauge of credit risk in its models, rather
than ratings agencies. “If you want to
lock in credit valuation, you can do it
very well with a CDS. Since it is a traded
product you know that the value is going
to be sensible,” he says. Statpro captures
derivatives information, including CDSs,
from all the various sources, including the
investment banks and dealer brokers and
it has swap agreements with discounted
parties to get access to the data.
Transparency with trading products
has also grown with a demand for
transparency for trading strategies. With
investors seeking clarity as to how an asset
manager operates, client reporting has
grown in significance.
Harry Thompson, Chief Technical
Officer and co-founder of Kurtosys, which
provides comprehensive end-to-end
client reporting services, says that n such
volatile markets, investors are taking much
more of a “hands-on” view of things and
are pressuring fund managers for near
real time reporting. At the same time,
intra-company reporting in investment
management companies has a real urgency
about it.
“From a risk manager’s point of view,
he is pulling our information together
with valuations and other data and then
wants to know how we can securely and
consistently – and in a scalable way –
deliver that information to his prospects,
09/06/2009 13:24
 Technology
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
investors and indeed, to third parties such
as data aggregators,” he says.
Kurtosys’s sphere of operations is in
the back office, reporting on actions and
behaviour from the middle and back office
side. “Most of our reporting is point-in-
time accounting data, taking positions,
looking at valuations and transaction
reporting. This will go together with all the
commentary and the bits and pieces that
a manager would want to get across to his
customer base,” Thompson says.
Many funds managers are facing the
challenge of moving to ad hoc reporting
on line, providing clients Internet based
access to secure extranet sites. “This used
to be a real pain for managers who were
accustomed to setting up reports for
clients on a monthly basis. Now they can
bring all the customers to a web portal
where the customers can do all their own
analysis on line. This is a real growth trend
at present,” he says.
One big new trend is the convergence
of on-line web portal reporting with social
networks. Clearly the more investors can
share information with each other about
their investments, the more they are
likely to gravitate towards successful fund
managers. This kind of viral reporting is
becoming a critical source of new funds.
Thompson points out that one of the
strongest selling points is that Kurtosys’s
customers are buying a service, not a
product. “Everything we do is accessible
via a web browser and fits well with the
new concept of cloud computing,” he says.
He emphasises that even with software
spending having turned down sharply in
the recession, revenues for software-as-a-
service, and for the ASP model have been
climbing.
“The dilemma for all IT managers,
in this sector as elsewhere, is that they
all want to own their own kit, since
traditionally that was their job. However,
cloud computing is going to dominate
everyone’s lives and IT managers are
increasingly coming to see that if someone
else can provide the service, their job
henceforth is about managing vendor
relationships, rather than hardware
1-23 ISJ40 Final MLa.indd 14
management. It is merely a matter of
the IT manager adjusting his or her
perspective and goals slightly, and this is
happening fast,” he says.
It also pays to be a good middle man
when it comes to transferring information.
Sterling Commerce has carved out a
significant market niche in a number of
different areas of business from simply
transferring messages.
Richard Spong, Industry Marketing
Manager (financial services) at Sterling
Commerce says: “The great majority of
what we do for over 800 banks worldwide,
is to move their data from place to
place, from system to system within the
enterprise, or in the larger world, between
communities, such as banks to customers,
or between geographically dispersed units
of a multi-national.”
Straight-through processing (STP), or
getting as close to this as possible, is still a
key demand in the market.
“What the current crisis has brought
into sharp focus is that all the counterparty
risk and regulation resolves down to data
integration agility. It is not just that you
need to be able to see your whole position;
you also need to be able to remould the
community that you are dealing with in a
crisis. You need to be able to speak to their
systems in a language that their systems
understand.”
This is particularly pertinent in mergers
and acquisitions. As Spong observes,
the financial crisis has shortened the
timeframe for mergers considerably. In the
past people would sort out where one bank
was strong and where another was weak,
in systems terms, and then design the
integrated system to make best use of this.”
Now, with acquisitions occurring
in days or weeks, or being forced into
existence by political or regulatory
pressure, the scrutiny on the operation
of combined middle and back offices has
decreased.
“There is now tremendous pressure on
banks to find ways of translating systems
so that they can optimise solutions in very
short order,” he says.
The “portability” standard, XML,
14
ISJ Investor Services Journal
plays a huge role in this in the US, and
in Europe EDI format transactions often
offer a way forward. “We normalise data
into XML and then “naturalise” it into,
say, SWIFT for European payments. Our
Sterling Business Integration Suite can sit
at the edge of a banking enterprise and
normalise incoming transactions, routing
them appropriately, and providing a full
audit and reporting trail,” he says. “Agile
integration is now a really big buzz word
in this space – no one knows what the next
systems integration challenge might be!”
Tom Abrahams, CEO of DST Global
Solutions, the relaunched face of what
used to be fund accounting specialist DST
International, says the company is more
focused on moving into the middle office,
rather than the back. He too reckons a
major area of innovation is in software as
a service. “We are putting a number of our
applications on an ASP basis, including
our risk application and our performance
management systems,” he says.
“We aim to address not just market and
credit risk, but also operational risk and
we have applications around risk analytics
and performance measurement which do
exactly this,” he says. DST is working with
institutional clients on the client reporting
side and on OTC derivatives processing.
“Today everyone wants to talk about
risk and performance measurement and
one of our great challenges as a company
is ensuring we have enough resource to
address the demand that is out there,”
he says. According to Abrahams there is
virtually no appetite in the teeth of this
downturn for institutions and banks
to address big, core system migration
projects. “Those are long term and very big
ticket projects and about the only place we
see these going forward today is in China.
“These are very sticky applications
and no one changes them very readily
no matter how good a new system might
look. However, in the middle office space
we see a huge amount of change going on
right now. There is huge interest in systems
that can provide a better service and more
accurate and timely OTC reporting,” he
concludes. n
09/06/2009 13:24
 ISJ Investor Services Journal
Clearing the way for
MTF settlement
Claire Delnoy,
director, equities
product management
at Euroclear analyses
the clearing challenges
in a fragmented trad-
ing market brought
about by the MiFID
directive.
It is now more than a year since
the Markets in Financial Instruments
Directive (MiFID) came into effect. Yet,
after a slow start, it is showing signs of
succeeding in its goal of encouraging
competition between trade-execution
venues and reducing execution costs.
By removing trading concentration
rules, mandating best execution
and allowing for the creation of
new trading platforms, MiFID has
established a level playing field
between the regulated exchanges, new
multilateral trading facilities (MTFs)
and systematic internalisers.
The MTFs that have been launched
since the implementation of MiFID,
for example, Chi-X, Turquoise and
NASDAQ OMX Europe, have, at the very
least, exerted downward pressure on
the tariffs from some of the regulated
exchanges.
Trading costs are only part of the
story, a fact that has been recognised
by those MTFs trying to fulfil MiFID’s
‘best execution’ requirements by also
setting up cheap clearing and settlement
arrangements for their members.
Clearing challenges
Clearing reduces counterparty and
1-23 ISJ40 Final MLa.indd 15
systemic risk, and leads to lower
settlement costs as the trades netted by
the central counterparty (CCP) result in
fewer instructions sent for settlement.
The birth of MTFs should increase the
proportion of trades that are netted as
they intend to attract business not only
from the regulated exchanges, but also
from the OTC market where trades
“There are two
models for MTF
clearing: using the
existing CCP and
using a new,
multi-market CCP”
traditionally settle on a gross basis.
There are other aspects to consider.
In essence, there are two opposing
models for MTF clearing (although
hybrids exist): one is where the MTF
uses the existing CCP already serving the
regulated exchange (e.g. the Equiduct
model) and a second model is where
the MTF uses a newly created, multi-
15
Clearing
market CCP (e.g. EMCF for Chi-X and
EuroCCP for Turquoise). Each of these
has advantages and disadvantages.
Using an established CCP affords
the considerable advantage of limiting
the settlement impact of a liquidity
shift from a regulated exchange to an
MTF. All the trades will, in the markets
where it is possible, be netted into a
single settlement instruction by a single
CCP, known as ‘cross-exchange netting’.
Also, a clearing member firm (CMF)
accessing such a CCP can leverage its
existing relationship and technical
interfaces without extra cost. On the flip
side, this model does not exert any price
competition among CCPs.
The alternative model, where
MTFs route instructions to a newly
created CCP, sets the CCPs in direct
competition with each other, resulting
in cheaper clearing tariffs. For example,
LCH.Clearnet has cut its tariffs four
times over the past two years. But this
model has its drawbacks, at least in the
short term.
For middle and back offices, a new
CCP means managing yet another
CCP relationship, monitoring the
effectiveness of the new infrastructure
and developing new operational
procedures in line with the levels of
sophistication and automation of the
new CCP. Messaging and reporting
formats also differ from one CCP to
the next, a part of the business that is
not as standardised as in the settlement
industry, ie, around ISO 15022
standards.
On the positive side, several MTFs
are using the same new CCPs, so new
relationships and communication
procedures can be amortised across
multiple markets. In addition, cross-
exchange netting will also be possible
between these trading venues.
09/06/2009 13:24
 Clearing
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Settlement impact
Initially, there will be no settlement
cost savings derived from the usage
of new CCPs. This is because trades
executed on a regulated exchange and
trades in the same security executed
on an MTF using a different CCP
will result in two separate settlement
instructions - one per CCP - being
sent to the central securities depository
(CSD). Furthermore, the MTF-
originated settlement instruction may,
in some cases, be disadvantaged versus
the exchange-originated settlement
instruction. This is because some
CSDs have separate platforms for the
settlement of on-exchange and OTC
transactions, and the initial MTF flows
would typically settle on the OTC
platform.
The reason for disparate settlement
platforms is that the on-exchange
platform needs more facilities to increase
settlement efficiency, for example,
different settlement windows, different
recycling rules and partial settlement
possibilities. The consequence, at
least in the immediate future, is that
settlement efficiency will be sub-optimal
for instructions received from the new
versus incumbent CCPs.
The incumbents have further
advantages over their upstart rivals;
certain established CCPs, such as
LCH.Clearnet S.A. for the Euronext
markets, have settlement arrangements
in place for clients trading securities
in currencies that are not eligible for
settlement in the local CSD, i.e. French
securities can be traded in US dollars
on Euronext. This is done by settling
these trades in an international CSD,
ie, Euroclear Bank. However, such
arrangements have not yet been put in
place by the new MTFs or their new
CCPs.
Clients trading on both MTFs and
regulated exchanges may face the
drawback that their trades, cleared
through different CCPs, may not
be able to settle in a ‘back-to-back
1-23 ISJ40 Final MLa.indd 16
manner’ because each CCP may settle
transactions on a different platform in
the CSD. Again, settlement efficiency
may suffer.
While in the short term, in some
markets, the new CCPs may be slightly
disadvantaged vis-à-vis the incumbents,
the situation could rapidly change.
Most CSDs, including those of the
Euroclear group, have been working
on developing generic, netting-model
agnostic interfaces for multiple CCPs to
accommodate data flows to national and
international CSDs.
There are also a number of settlement
issues to consider when trades in the
same security are cleared via several
CCPs. At the most basic level, some
CCPs use a power of attorney to send
settlement instructions on behalf of
CMFs. Because other CCPs do not
use this feature, CMFs may have to
send settlement instructions for some
CCPs and not for others when the same
security is traded on different execution
venues.
Moreover, the fact that the different
CCPs can have different buy-in rules
could have an impact on how CMFs
manage the settlement of trades. CMFs
want to prioritise certain instructions,
so that in cases where there may be
insufficient securities to deliver, they
will have the maximum time to source
them without penalty. Let’s take an
example where a CMF is to receive
100 securities OTC and deliver them
on to three CCPs (in lots of 20, 50 and
30), reflecting the three venues where
the trades were executed. If only 50
securities are received on settlement
date, which CCP(s) will receive the
50 securities will depend more on the
settlement timings and processes in the
CSD than on anything the CMF can do
itself. Thus, managing the prioritisation
of settlement instructions may be a
challenge for CMFs, and some actions
they may take, such as holding back
instructions, may reduce the settlement
efficiency of the overall market by
16
ISJ Investor Services Journal
making securities less available when
needed.
There are also potential consequences
for brokers, the CMF’s underlying
clients. At first glance, it might seem
logical for a broker to have only one
clearing arrangement in place per CCP,
whether as a ‘self-clearer’ or by using a
clearing agent. This could mean having
a mix of clearing arrangements in any
one country, which would have an
adverse effect when the broker executes a
client order across several venues that is
cleared and settled by different agents.
Resolving post-trade dilemmas
The ideal solution is CCP
interoperability whereby a broker/
CMF could choose one CCP to use for
all markets. The prerequisite for this
to happen, apart from political will, is
for several CCPs to get feeds from the
same trading venues, and then resolve
issues relating to cross-CCP netting,
such as the different netting models,
for example, continuous net settlement
versus trade-date netting.
This is starting to happen, with
EuroCCP and SIX x-clear, and
LCH.Clearnet and EMCF, recently
announcing interoperability
agreements.
As a result, clearing firms will be able
to maintain membership in only one
CCP and, because trades will be netted
across venues, collateral requirements
to cover CCP exposures will be reduced.
Until this time, there is a strong
argument in favour of using a global
clearer, which means using the same
clearing agent for all CCPs, in order to
ensure fungible settlement.
MiFID offers a bright future for
MTFs by encouraging greater levels of
competition in trade execution to the
benefit of end investors. However, the
long-term viability of MTFs depends
on getting the best CCP model in
place to offer clients the cheapest and
most efficient clearing and settlement
opportunities. n
09/06/2009 13:24
 ISJ Investor Services Journal
Hedge Fund Administration: Panel
Gavin Gray is the John Alshefski, Head David Aldrich is
managing director of of New Business head of global client
Phoenix Fund Services’ Development for SEI’s management for
offshore operation investment Manager financial institutions,
Services. SEI IMS Europe.
provides total operations
outsourcing solutions
to global investment
managers.
Hedge funds’ future growth and perception among investors
will be significantly influenced by their administrative procedures.
ISJ brings together hedge fund servicing experts.
1. The drive for independent administration has been a key
element in the reassessment of hedge funds’ operations in
the capital markets. How will it affect the funds’ operations to
comply – will it be a significant burden?
GRAY: The administration model has matured very well and is actu-
ally the standard for hedge funds with European investment man-
agers. Administrators have generally developed their operational
infrastructure in a way that they do not prove to be an operational
burden on the hedge funds operations. Quite the opposite actu-
ally. They will have developed flexible trade capture modules with
a goal of making it extremely easy for investment managers to
deliver trade information directly to the administrator. They will
also interact directly with third parties such as prime brokers and
pricing vendors, again with minimal burden on the actual fund.
ALSHEFSKI: Institutions aren’t waiting for regulation. They are
driving the requirements of what managers need to provide and
there is more emphasis being placed on independent administra-
tion. Certainly this is good for our business, but more importantly,
we think this is move in the right direction to regain some of the
trust lost by investors from recent events.
Along with pressure from their investors, managers are finding
that the rationale for outsourcing makes sense in this environ-
ment. Managers want to avoid large capital expenses involved with
building or maintaining technology, system upgrades, disaster
recovery, and so forth. Also, in this incredible competitive and
challenging market, firms want all their resources focused on their
core competencies—managing assets and servicing clients.
ALDRICH: Investors are demanding higher levels of transparency
and governance for their hedge fund investments, and they are
17
1-23 ISJ40 Final MLa.indd 17
Panel Debate
Andrew Dillon joined Peter O’ Dwyer
Baronsmead Partners is director at
Ireland as Managing Trinity Fund
Director in July 2007. He Administration
is responsible for business in Dublin
and product development,
client services and insurer
relations.
fully aware that this will come at a price. The attractiveness of
the returns from alternative investments is not in dispute; what
is not acceptable is for investors to experience shocks or losses
from avoidable non-investment scenarios, as they did in 2008.
Fortunately for the alternatives industry, there is no shortage of
published guidance on best practise nor is there a lack of suit-
able high-quality partners, with a diverse range of banking and
administration capabilities, to provide the solutions the investors
require.
DILLON: I don’t think it will be a significant burden to hedge funds’
operations. This has traditionally been a feature of the US market
where the requirement for an independent administrator did not
exist. An independent administrator may actually bring some ef-
ficiency to the operation.
The US is also where we have experienced the majority of fund
blow ups. Whilst there is no direct correlation between the two I
think having an independent administrator is going to be one of
the key factors in restoring/maintaining investor confidence. It
may also help in building a more positive image for the hedge fund
industry in the mainstream media where, mistakenly, hedge funds
are often portrayed in a poor light.
O’ DWYER: Recent scandals have highlighted the need for fund
managers to scrutinise their operational risk. Having all, or sev-
eral, core relationships with one financial firm has increased this
risk and the potential for conflicts of interest. If fund managers
wish to attract new capital and restore faith they need to ensure
that no such conflicts of interest arise.
At the forefront of these concerns is the drive for independent
administration and so, regardless of the perceived burden and
however costly and complicated the process, the vast majority of
09/06/2009 13:24
 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
funds will have to move to some form of
independent administration.
Handing over control of this important
internal process will not come easy to
many funds and while investors are
insisting on the involvement of an indepen-
dent third party administrator, some large
hedge funds are still not giving everything
away.
In the US in particular, where self admin-
istration is the norm, we may see some
form of parallel process where an indepen-
dent administrator runs the numbers to
satisfy client demand, but the fund keeps
on doing the work in-house as well. Many
of these fund managers believe they know
their assets better than anyone else and as
such, even if a hedge fund were happy to
outsource its administrative operations to
satisfy investor demands for transparency
and independence, they may not switch off
all accounting functions they have built up
over the years.
2. What benefits are there to the hedge
fund client as a large custodian bank or
administrator?
GRAY: I would come at this from a different
angle. While certain benefits may accrue
to particular fund structures from using
a large custodian bank as administrator
there are actually more significant benefits
for most funds in using a specialized ad-
ministrator who is dedicated to the admin-
istration space. A specialized administrator
is likely to be more focused and flexible in
the provision of their service. We have seen
certain instances over the last few months
where the provision of administration
services by large custodian banks has been
negatively impacted by stresses on other
parts of the custodian banks model. Plug-
ging into a specialized administrator allows
hedge funds to develop a ‘best of breed’
model whereby each of the distinct services
they receive, such as custody, prime bro-
kerage, administration, is not dependent
on another key service.
ALSHEFSKI: We are a financial stable,
independent administrator that has grown
to administer over $354 billion in assets
organically.
Increasingly, for single manager hedge
funds and managed accounts, we’ve seen
managers and investors wanting to be flex-
ible their custody/prime broker selection
and/or want to use multiple prime brokers
or custodians. Using an open architecture
approach, we can easily integrate these
best-in-class providers as part of our
solution and currently maintain over 30
relationships with custodians and prime
1-23 ISJ40 Final MLa.indd 18
brokers.
For the administration of funds of hedge
funds, SEI currently provides an in-house
custody solution which is integrated with
the administration services for cash and
external hedge fund investments in order
to satisfy various US and offshore
regulatory requirements as well as third-
party fund requirements such credit provid-
ers and end investors.
ALDRICH: The role of a custodian is funda-
mentally to protect investor assets. The
value of a strong, preferably Aaa rated,
balance sheet to investors is very clear,
in terms of security, scalability, reach,
infrastructure and quality. The immedi-
ate benefits that a custody bank servicing
USD20 trillion dollars of assets is able to
bring to the USD1 tn hedge fund industry
are manifold.
“I think the area of
segregated accounts
will continue to be
driven by how big the
investment mandate
is going to be”
Andrew Dillon,
Baronsmead Partners
DILLON: Last year when many prime bro-
kers were experiencing financial difficul-
ties, there were numerous large transfers
of assets to the global custodian banks.
In a time of great uncertainty they were
seen as the safest haven for fund assets. As
there is currently not the same demand for
leverage, many hedge funds could conceiv-
ably use a global custodian to support their
strategy. In the more regulated jurisdic-
tions the fiduciary responsibilities of the
global custodians may also give a greater
degree of comfort to investors.
O’DWYER: In Europe, hedge funds, which
are regulated as qualifying, or professional
investor funds fall under the Non-UCITS
regime and as such are required to safekeep
their assets with a custodian. The Irish
model, which is well developed, has very
specific investor protection rules where a
prime broker acts as custodian. The
Irish rules also set out detailed collateral
and other prudential requirements, in
18
ISJ Investor Services Journal
particular to ensure valuable control on
rehypothecation.
Following the collapse of Lehman
Brothers, the takeover of Bear Stearns
and the widespread concerns in Q3
of 2008 over other prime brokers, many
hedge fund promoters and investors have
been reconsidering their relationships with
prime brokers. Various alternative courses
of action have been taken, which include
multiple PB relationships, seeking to put
cash with third party banks and the use
of custodians, or trustees, even where,
as in the case of Cayman funds, such use
of custodians is not legally required. This
is a developing area and the final default
trend for non-EU hedge funds has not yet
emerged.
In addition, there is still not uniformity
as between regulators concerning the
liabilities and responsibilities of global
custodians, as has been seen with regard
to the Madoff feeder funds in different
jurisdictions.
3. As hedge funds seek assets the inves-
tor is in some ways empowered in the
specifications of how they are served
– a good example is in the demand for
segregated accounts. Does this pose any
additional problems for the administra-
tor, and how best can they be dealt with?
GRAY: While there are a significant number
of common areas between segregated
or managed accounts and hedge fund
structures, there are also a number key
differences. The documentation around
individual managed accounts may not
naturally provide for a third party admin-
istrator to value the account or may not
provide the depth of information available
through a more traditional fund prospectus
document. Additional difficulties may also
arise with asset identification or individual
valuation issues, particularly as there is
no distinct ‘board of directors’ acting to
set valuation policy and provide clarity
on ‘grey’ areas. Administrators need to be
extremely clear on the terms and form of
the documentation under which they are to
administer the account
ALSHEFSKI: Investors are now in the
driver’s seat and dictating the use of
managed accounts to give them more
transparency, control and liquidity. While
the economics for managers may be less
compelling than with their pooled vehicles,
managed accounts do present a valuable
opportunity to attract clients and assets
in this market climate. Given that they are
operationally more complex, many of our
clients have come to us to help them set up
09/06/2009 13:24
 ISJ Investor Services Journal
their managed accounts. Our operational
environment can easily accommodate man-
aged accounts and we’ve been servicing
them since 2003
ALDRICH: A segregated, or managed,
account provides equivalent servicing
requirements to an administrator as a
fund, but normally without the full transfer
agency demands. A plethora of segregated
accounts is require a similar headcount to
service as the same number of funds. The
manager may be the most stressed party in
the equation when the assets are split into
multiple slices, especially if the hedge fund
manager has been set up operationally to
handle everything in pooled vehicles and
now has to allocate to multiple buckets in a
way that is normal in the long-only world.
Not all asset types lend themselves easily
to high levels of allocations into non-stan-
dard dealing shapes.
DILLON I think the area of segregated ac-
counts will continue to be driven by how
big the investment mandate is going to be.
There is a greater degree of administration
to handle multiple segregated accounts/
portfolios. The investment needs to be
sizeable enough to merit incurring this
additional cost.
O’ DWYER Transparency is at the heart of
this shift in power as investors concentrate
as much on operational risk as previously
on performance risk.
In the future, investors will demand more
openness about the investment portfo-
lios, fee arrangements, asset valuation
models and performance monitoring. Also
investors are increasingly seeking indepen-
dent verification and assurances of quality,
concerning service providers.
We are seeing increasing due diligence
from investors of service providers
and boards, not least post Madoff. While
initially time consuming and often tedious,
we strongly support the move to more in-
vestor due diligence as it can only improve
overall industry quality and help build the
businesses of the quality administrators,
who have invested in strong risk manage-
ment systems and good people.
4. Do you anticipate any additional
strictures that market regulators will ask
of hedge funds –around liquidity provi-
sions for example – that might affect the
task of administering and accounting the
funds?
GRAY: I think regulators requirements of
hedge funds will continue to evolve. The
1-23 ISJ40 Final MLa.indd 19
recent moves have shown that certain
groups of regulators may move in a uniform
direction, making demands of investment
managers or hedge funds domiciled in their
jurisdictions directly, however it is difficult
to see that all hedge funds will move to-
wards a common model. There will continue
to be a range of hedge fund product avail-
able, some of which will indeed need to live
within new tighter regulations, perhaps
around liquidity or valuation for example,
but some hedge fund product will be struc-
tured in a manner to be more ‘flexible’, for
want of a term.
ALDRICH: Increased regulation designed
for the benefit of investors will be em-
“Administrators
need to be extremely
clear on the terms
and form of the
documentation
under which they are
to administer the
account”
Gavin Gray, Phoenix
Fund Services
braced by the alternatives industry and in-
corporated seamlessly into new structures
and vehicles. Regulation that is purely
politically motivated will meet a much
less favourable response and could end up
being completely counter-productive. The
industry, through bodies such as AIMA,
IFIA and IOSCO, is actively engaging with
regulators in every jurisdiction to ensure
that we achieve a result collectively that
is to the benefit of the customers that pay
the bills, the end-investors such as public
pension funds.
DILLON: It will be interesting to see how
this develops over the next while. Many
fund boards had to make difficult decisions
with regards to imposing “gates” during
the second half of 2008. It will be
interesting to see how investors react to
this and whether we see any litigation on
the back of it.
O’DWYER: The issue of liquidity in hedge
funds has been complicated recently and
19
Panel Debate
also has been evolving in 2009. The EU’s
own consultation paper in advance of the
new draft AIFM Directive identified that
the amount of leverage in hedge funds
globally was quite low at 1.4 to 1.7 times
equity, (albeit that the EU considered this
“significant”).
Liquidity issues have tended to arise more
in funds of hedge funds where the drive by
some investors for cash has forced the FOFs
to seek liquidity from the single strategy
underlying funds, which in some cases has
caused gates or side pockets to be imposed.
In the past quarter, a lot of these prob-
lems would anecdotally seem to be easing
and indeed liquidity is often coming out to
investors faster than anticipated. What
may evolve is a more sophisticated form
of rolling liquidity management in new
FOFs going forward, but this is probably
more likely to be market lead rather than
imposed by regulators, who are behind the
market on this issue at the moment.
5. Do you see any pertinent changes
around the area of valuation?
GRAY: This area continues to evolve, even
without direct regulatory involvement.
For example the market has already made
moves away from counterparty pricing,
which was accepted practice a very short
time ago. As instruments continue to
evolve, the valuation area has continued
to develop. Administrators continue to
evolve pricing matrices for the variety of
instruments they price. These matrices
will include preferred primary sources and
secondary sources for prices as well as
highlighting overriding guidelines, such as
ensuring prices are received directly from
third party vendors.
ALSHEFSKI: Hedge fund managers have
historically been hesitant to fully delegate
responsibility to a 3rd party administrator
to independently value their investments,
especially as it relates to OTC derivatives,
less liquid positions and private deals for
two reasons. One, the investment man-
ager maintains ultimate responsibility and
discretion of valuation as typically outlined
in the fund’s legal documents. Two, the
investment manager may be closer to the
market and investment strategy and is in a
better position to truly understand and de-
termine an investment’s value. It has been
understood in the industry that a hedge
fund administrator would add value to
the valuation process for exchange traded
securities by employing 3rd party market
data, but that the investment manager
would most likely derive, via established
09/06/2009 13:24
 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
models or broker/counterparty quotes, and
potentially override administrator-sourced
prices for non-exchange traded securities.
This has changed in the last year. Inves-
tors are requiring a greater level of inde-
pendence and oversight of the valuation
process. Investment managers are more
receptive to finding a way to incorporate
the administrator in the process whether
it be from a primary source perspective or
reasonableness reviews as compared to a
secondary independent source or tolerance
reviews.
ALDRICH: Valuation is a key area where
improved standards of governance have
resulted in greater transparency and con-
sistency in NAV production. The increased
use of third-party valuation agents in the
United States, already standard practise in
Europe since the industry grew internation-
ally, is to be welcomed. Greater availability
of complex valuation pricing vendors has
decreased the variability of valuations on
some more sophisticated instruments,
which is appreciated by investors in mul-
tiple funds with similar portfolios.
DILLON: I think that many fund boards
have had to take a more hands on approach
where there have been a large number
of illiquid positions in a funds portfolio.
Whilst this exposes them to a higher level
of litigation risk from in investors in the
event of something going wrong, they are
ultimately responsible for ensuring that
valuations are as accurate and prudent as
possible.
O’DWYER: Institutional clients are now
demanding independent valuations and
an enhancement of transparency. We have
seen a need for a more frequent valuation
cycle, moving toward daily pricing, where
it is possible and indeed a few clients have
requested these services in the last year.
There has also been a continued con-
vergence between the managed account
platform and the fund offering. In light
of these changes we have been able to
enhance our STP processing to incorporate
the demand for more frequent and indeed
more complex valuations and move into the
provision of a managed accounts platform
through our technology platform.
6. More hedge funds are seeking assets
under management by crossing over into
the UCITS space. Does this make the ad-
ministrator’s job easier to have parts of
the fund’s overall operation in the more
‘traditional’, transparent space?
1-23 ISJ40 Final MLa.indd 20
GRAY: UCITS products certainly make differ-
ent demands of administrators. While the
portfolio in general may look and feel more
‘traditional’, the portfolio may continue
to use extremely complex derivatives for
“Transparency
is at the heart
of this shift in
power as investors
concentrate as much
on operational risk
as previously on
performance risk”
Peter O’ Dwyer,
Trinity Fund
Administration
efficient portfolio management. The UCITS
structure will also typically mean additional
reporting lines, such as to a trustee or
depositary. Rather than making the admin-
istrator’s job easier it is a case of ensuring
the administrator can interact with the key
third parties in a UCITS structure to ensure
they are all provided with the relevant
information in a timely manner. This there
are different demands, such as a flexibility
of reporting from the administrator as they
may need to deliver different information
packages to the investment manager, the
manager, the trustee, the board and a 3rd
party who may be providing risk manage-
ment oversight on behalf of the board or
manager.
ALSHEFSKI: Since establishing our offshore
office in Dublin in 1995, SEI has been
providing investment managers with the
necessary tools and services to administer
UCITS funds. We have seen more hedge
fund managers switching to the UCITS
products, because of changes within the
regulatory framework in Europe under
UCITS III that allow managers to bring
some of the expertise and experience ob-
tained within the hedge fund world to the
mainstream of private investors.
Under the UCITS III requirements, more
and more emphasis has been placed on the
administrator and custodian to provide
20
ISJ Investor Services Journal
transparent reporting on an ongoing basis.
Since SEI already had the systems and pro-
cesses in place for traditional asset classes
and alternative investments, we are easily
able to assist managers looking to move to
the UCITS space.
ALDRICH: Administrators cannot be one
trick ponies, they must be able to value a
manager’s funds across all portfolios, do-
miciles, valuation periods, strategies and
jurisdictions. The 21st century manager
is not constrained by historic definitions
of what constitutes a long-only or alterna-
tive fund, and the expansion into UCITs
space by so-called “hedge” fund managers
is only the most recent development of a
well established and growing trend. An
administrator now needs to demonstrate
more value to the new “multi-capability”
firms and deliver a range of additional
capabilities in custody, cash management,
FX, collateral management and middle of-
fice outsourcing.
DILLON: Many hedge fund managers have
run “traditional” or UCITS type strategies
for many years already. I think we are likely
to see an increase in the number of
managers wishing to do so at present
and in the medium term future purely on
the basis that raising assets at present is
difficult. Under the more relaxed UCITS
investment restrictions there are numerous
hedge fund strategies that fit the UCITS
brand.
O’DWYER: There’s no doubt that hedge
funds are under much more pressure to
demonstrate that they have sound opera-
tions and that funds are valued using
transparent methodology.
As these are underlying characteristics of
UCITS, administrators such as Trinity, who
have a lot of experience and expertise with
these funds, will enjoy a more seamless
and stable experience working with hedge
funds that cross over to this space.
The differing treatment by different
regulators of UCITS, which in turn invest
in other UCITS, who have alternative as-
sets, carries with it the potential for some
confusion. While the valuation of UCITS is
prima facie simpler than some hedge fund
valuations, for hedgies to see UCITS as “the
solution” is simplistic.
Undoubtedly, the alternative community
can be expected to get stuck into the
deliberations over UCITS IV, to get a better
“cross over” product, all of which goes to
blur the boundaries between alternatives
and more traditional mutual funds. n
09/06/2009 13:24
 GSL SUMMIT REVIEW
Thoughts and observations from Jane Milner SunGard,
Securities Finance Strategy and Marketing
What were your overall impressions
of the event?
I think it was timely, well structured, and as
a discussion based, local, half day event
it offered a format welcomed by market par-
ticipants. The topic of Lending for Liquidity
is certainly ‘of the moment’ and resonated
well with the audience, drawing out good
audience participation. The Summit at-
tracted a sizable audience from a cross
section of the securities finance community,
and I believe it set a good precedent for
future events.
Was there much evidence of the
fallout from the financial crisis in the
general mood at the event?
The financial crisis is never far from any-
one’s mind, but the general mood was one
of relief that the worst is perceived to be
over, combined with the natural optimism
of many in this market. There was a feeling
that the ‘let’s wait and see what hap-
pens next’ concerns are gradually being
addressed, supply and demand is slowly
returning, bringing with it an increased abil-
ity to invest in the future. This is resulting
in the recommencement of hiring in some
quarters, and the consideration of additional
investment from a systems perspective to
address new market conditions.
What were the headline topics dis-
cussed and how were they
approached?
The headline topic was market liquidity and
the part that securities lending plays as a
vital source of liquidity to the wider markets.
The ‘State of the Industry’ address gave
statistics on what has happened to supply,
demand and spreads over recent months,
and gave a somewhat sceptical view of
what is seen by some as ‘green shoots’
of recovery. James Clunie gave a gallop
through the history of academic research
into short selling, and concluded that the
recent bans had demonstrated once again,
that there is no evidence to support the
bad press which short selling periodically
receives. Two panels then focused on dif-
ferent aspects of what needs to happen to
fuel the return of liquidity through lending.
You participated in the ‘Securities
Lending – a Front Office Investment?’
panel, what were the dominant
themes from that came out?
Much of the focus was on beneficial own-
ers and how important it is for them to have
an understanding of the wider benefits of
1-23 ISJ40 Final MLa.indd 21
the lending process in order to remain fully
engaged. The views of insurance compa-
nies and pension funds were represented
along with those of a custodian lender. The
presence on the panel of a representative
of a legal consulting firm highlighted the
unusual times that we are facing, and there
was discussion around the question of
‘who owns the risk’ and the division of re-
sponsibility between beneficial owners and
their lending agents/advisors. Their discus-
sions questioned whether the recent focus
on risk (in particular cash re-investment risk)
was due to lack of transparency on behalf
of the agents, or beneficial owners being
caught ‘asleep at the wheel’. Regardless
of where blame lies, the unprecedented
recent events certainly brought into sharp
focus the need for greater transparency
that GC lending in major indices will move
and further education of the risks and
into the world of ETFs versus a swap rather
rewards of securities finance.
than traditional stock loan.
Ò The topic of
The need to invest in solutions to
Lending for
manage the securities lending pro-
cess more efficiently is a perennial
Liquidity is certainly discussion; did this get much air time
at the event?
Ô of the momentÕ and This was not directly on the agenda for the
resonated well with
event, however, the need for greater
control and transparency was touched
the audienceÓ
on in both panel sessions. Clearly recent
market events mean that there is a close
Jane Milner,
eye on the cost situation when looking at
future investments and projects. Technol-
SunGard ogy and automation can drive cost savings
so even though there is a downturn,
technology is still a high priority. As solution
The second panel was around what
providers we have been extremely busy
the future might hold for Securities
during the last six to nine months, which
Lending, were there any startling or
may seem strange given current market
contentious predictions?
conditions, however firms recognise more
This was an interesting panel, primarily
today than ever before how important it is
made up of market participants from the
to continually review and expand technol-
‘buy’ side. It focused on what changes
ogy in order to give them an edge.
there might be to the existing business
models. The question of whether the Prime
How does SunGard’s participation at
Broker is dead was debated, with the
events such as this benefit your cus-
outcome that the model was not entirely
tomers? Did you come back with lots
broken but would need to evolve as a result
of ideas for new developments?
of fall-out from the Lehman default. It also
One of the main reasons we go to events
considered whether the introduction of
such as this is to take the pulse on the
central counterparties will speed the transi-
market and to see in which direction we
tion from bi-lateral trading to an exchange
need to evolve and enhance our products.
traded model. The consensus was that this
We believe that we are heading in the right
would provide further choice, as opposed
direction but there is always room to listen
to a mainstream change, and that the in-
and learn from leaders in the market. We
creased transparency, reduction in bi-lateral
continue to work closely with clients to
risk and balance sheet efficiency that a
provide solutions to support their ongoing
central counterparty promises would be
and new business developments.
welcomed. An interesting prediction was
www.sungard.com/securitiesfinance
21
09/06/2009 13:24
 Analyse This
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
Analyse This: Clearing/Settlement
Question: How are Europe’s settlement
infrastructure providers aiding firms in
better managing risks and liquidity?
Answered by Martin Ingell, group head of
operational risk at Euroclear
Central
securities
depositories
(CSDs) are
contributing to
market stability
during these
challenging times,
as recognised by market leaders like
Baron Lamfalussy, who recently stated:
“The clearing, settlement and payment
systems deserve particular praise. Few
people, including financial market
participants, let alone governments
and the general public, are aware of the
amount of effort that has been invested
over the past 20 years into enhancing
the crisis resistance of these systems.
The investment has been rewarded by
high returns.”
CSDs are increasingly recognised as
‘safe harbours’ by market participants
due to their ultra-conservative risk
profiles. Most domestic CSDs function
without taking on any credit risk and
without needing liquidity themselves,
as the cash component of a transaction
settles with the CSD’s national central
bank.
The ICSDs and a few domestic CSDs
provide intra-day credit to qualifying
clients using well-controlled credit
assessment and risk-management
procedures. Lehman Brothers’ default is
still fresh in our minds and serves as a
reminder of the compulsion of having
resilient risk- management methods
in place, for clients and infrastructure
providers alike.
At Euroclear Bank, the only ICSD with
a AA+ rating, 99% of credit extended
1-23 ISJ40 Final MLa.indd 22
ISJ Investor Services Journal
56
Question: How
can increased
competition and
interoperability
boost the CCP
to clients is collateralised. Thus, market structure?
Euroclear Bank’s credit exposure on
Lehman Brothers was fully covered
Answered by Marco
and was closed out without any Strimer, CEO of SIX
loss or disruption to clients or the
market. Because Euroclear Bank is x-clear
a single purpose bank, i.e. intra-day
credit is extended exclusively to avoid In the midst of
settlement fails, this type of credit risk an economic
is isolated and managed precisely. crisis not seen
We are also seeing financial in decades,
institutions turning to market clearing and
infrastructures to help them achieve settlement has
their own objectives. emerged as
For example, throughout the recent one of the few
liquidity crisis, the international CSDs success stories of 2008.
served as vital pools of intra-day The successful transfer of trades
liquidity when the interbank lending following Lehman Brothers historic
market dried up, without impacting collapse in September 2008 was
securities settlement efficiency. a major component in the clean-
At Euroclear, we are also working up operation and firmly placed
to help clients gain access to central the spotlight on the clearing and
bank liquidity by managing the settlement operations that underpin
collateral requirements for them. many markets. Those previously
Moreover, Euroclear’s Single Platform uninterested in the back office
programme will enable clients to ‘plumbing’ of the industry now
pool collateral from seven European recognise that clearing houses, or
markets to optimise their liquidity and central counter-parties (CCPs), are
collateral management possibilities. a key component of the post-trade
It will also provide clients with access infrastructure.
to a wider range of counterparties A CCP stands between parties
for securities financing and broader in case of default and act much like
trading strategies. And, we are taking an insurance agent – serving as a
the right precautionary measures to buyer to every seller and a seller to
ensure a consistently robust and secure every buyer in a transaction, using
settlement infrastructure is in place, pooled collateral posted by market
including investment in state-of-the- participants to guarantee that trades
art business continuity arrangements, are completed.
including multiple data centres and They have grown alongside the
dual-office operations. n alternate trading venues, the so-called
multi-lateral trading facilities (MTFs),
22
09/06/2009 13:24
 ISJ Investor Services Journal
that emerged in the wake of the Markets
in Financial Instruments Directive
(MiFID) reforms of 2007 to challenge
the traditional dominance enjoyed
by stalwarts like the London Stock
Exchange.
CCPs such as SIX x-clear have
pushed forward to encourage
competition and foster interoperability
across the CCP market structure.
Competition within clearing has been
focussed on the interoperability –
an agreement between CCPs and
exchanges allowing their customers
to have trades cleared across either
CCP platform. SIX x-clear is a fierce
proponent of interoperability and
believes that it benefits customers by
providing the choice and efficiencies
needed to navigate the fragmented
trading landscape.
The European Commission threw
its weight behind interoperability with
the Brussels-brokered 2006 Code of
Conduct. The code had its first success
on these shores in December 2008
when the LSE allowed its clients a
choice of CCP provider and SIX x-clear
joined LCH.Clearnet as the exchange
embraced interoperability. UBS, the
largest single provider of trading
liquidity on the LSE, immediately
moved all UK equities to SIX x-clear,
allowing the bank to combine its UK
flow at one clearer and thereby drive
down the unit cost of clearing. UBS’s
implementation highlights the worth
of the dual CCP model – namely the
ability to pass cost and operational
benefits on to clients.
Although the development of
interoperability has been a prolonged
affair, the industry is certainly moving
in the right direction. Since the LSE’s
decision we have seen Chi-X, Turquoise,
BATS Trading and NYSE Arca Europe
all proclaim the merits of a competitive
clearing system. Clearing choice in the
form of a ‘one stop shop’ for customers
can only be seen as positive for the
market as a way of reducing costs by
allowing more efficient cross netting
over a number of execution venues on
which the same stocks are traded. n
1-23 ISJ40 Final MLa.indd 23
Question: What strengths and advances are
there in FX clearing and settlement after a
major bank default?
Answered by Jonathan Butterfield, director
of communications at CLS Group
The week of
September
15th, 2008,
will always be
remembered
for the collapse
of Lehman
Brothers.
Abruptly losing
one of the biggest players in FX was a
defining moment in a week the industry
demonstrated how a global market had
indeed learnt from earlier failures. The
sheer daily size or value of this market
had made this an imperative.
This was a week that the FX market’s
robust infrastructure survived the
sternest of tests, with CLS Bank – which
has been eliminating settlement risk in
the multi trillion dollar a day market
for over six years – delivering orderly
settlement of all submitted trades from
Lehman Brothers and simultaneously
setting a new record for the volume
settled in a single day on September 17th
– 1.5million payment instructions with a
value of USD8.6trillion.
Counterparties defaulting in the
settlement of a foreign exchange
transaction – or FX settlement risk –
first came to light in the 1970s with the
collapse of Herstatt Bank, but the events
of last September and unprecedented
market volatility has propelled wider
counterparty, credit and operational
risk management to the very top of the
industry and regulatory agenda.
Despite being unregulated per se,
the FX industry remains resilient to
the accelerated growth in trading by
a widening group of investors and
traders; hedge funds, long money
funds, algorithmic traders and more
recently retail participants. The
pressure to improve the infrastructure
23
Analyse This
and processes of the ‘Buy-Side’ is
particularly high, and, has lead to a
record level of enquiries about CLS
participation.
Arguably there is still some way to
go until the interbank standards are
universally applied, the recent growth in
our participants has been encouraging,
with the total number of market
participants currently standing at 5,000
“Despite being
unregulated per
se, the FX industry
remains resilient
to the accelerated
growth in trading“
The rapid automation of FX trading
undergone over the past three years
has introduced new challenges and
operational risks to the market. Wider
participation and potential capacity
constraints provided the impetus behind
the recently announced JV between CLS
and ICAP.
The JV will provide post trade
aggregation services to its members
trading spot FX, in a bid to extract
significant operational risk from the
market, reduce costs to reshape the post-
trade processing landscape with the goal
of delivering the next level of efficiency
for this high frequency segment of the
market.
Though the FX market is considered
mature in terms of its practices and
operational infrastructure the adoption
of automated trading and trading
strategies is a reminder and an example
of the innovation and change in this
diverse, global market. n
09/06/2009 13:24
 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

24

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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

25

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 ISJ Directory of Services ISJISJInvestor
InvestorServices
ServicesJournal
Journal

Standard Chartered leading the way in Asia, Africa and the Middle East. Standard
C: Neil Daswani,
Chartered has a history of over 150 years in banking and is in many of the world’s fastest-
Global Head, Securities Services
growing markets with an extensive global network of over 1,200 branches (including
T: +65 6517 0022
subsidiaries, associates and joint ventures) in over 50 countries in the Asia Pacific Region,
E:
South Asia, the Middle East, Africa, the United Kingdom and the Americas. As one of
Neil.Daswani@sg.
Asia’s leading custodians, Standard Chartered has an impressive track record across the
standardchartered.com
16 Asian markets in which it provides securities services. It serves global, regional and
W: www.standardchartered.com
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

26

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 ISJ Investor
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 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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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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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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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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programa em
Latin America
Caesar Business Faria Lima,
Tradução
OVER 250 Sao Paulo português: simultânea
Thomas Ciampi
ATTENDEES páginas para o
IN 2008! 2009 6e7
Managing Director
LATIN ASSET MANAGEMENT
português

Re-Thinking Retail & Institutional Investment Management

In The New Global Environment
Hear From Over 60 Leading International And Regional Experts About How To Manage A Business In Challenging Times

Michael Power Carlos Curi Armando Senra Luiz Fernando Gonzalo Rengifo
Strategist Regional Director Managing Director, Figueiredo Managing Director
INVESTEC ASSET BNP PARIBAS Head of Latin Founding Partner Latin America
MANAGEMENT ASSET America MAUA PICTET & CIE
MANAGEMENT BLACKROCK INVESTIMENTOS EUROPE

Luiz Carlos
Mendonça de Barros Pedro Bastos Marcelo Serfaty Alexandre Pavan Sylvio Murad
Founding Partner, CEO Brazil Founding Partner Pavoa Director of Finance
CEO & Strategist, HSBC GLOBAL & CEO, CEO ELETROS
QUEST ASSET FIDUCIA ASSET MODAL ASSET
INVESTIMENTOS MANAGEMENT MANAGEMENT MANAGEMENT

This Is Why FundForum Latin America Is A One- Critical Business Insights Learn And Network
Stop Shop For Retail & Institutional, Hedge Fund & For Competing In With Over 60 Industry
Private Equity Experts From Across The Region Challenging Times Experts Including:
• Moneda Asset Management
A Speaker Faculty Of The Leading Latin American Voices: A Heat Map For
• Quest Investimentos
• Mercer
Hear from over 60 CEOs, CIOs and Fund Selectors, including Latin America: • Pictet & Cie Europe
Itau, Hedging Griffo, Blackrock, Pictet, Quest Investimentos Pinpointing Regional Challenges &
• Convex Asset Management
• Advent International
for the most comprehensive industry overview in the region Opportunities With Key Market • Popular S/A SAFI
• Credit Suisse Hedging Griffo
Experts From Argentina, Chile, • Safdié Private Banking
Fund Selection In The Spotlight: Get key perspectives on Peru & Columbia • Fiducia Asset Management
investor appetite and asset allocation from some of the • PR&A
• Latin Asset Management
region’s leading fund buyers including Eletros, Safdie
Optimal Product & • Watson Wyatt
Private Banking, Allfunds Bank & Bawm Investments • Maua Investimentos
Asset Allocation Strategies • Claritas Investimentos

Cutting Edge Research: Get the most up-to-date data In A Downturn Market • Principal Global Investors
• Modal Asset Management
Leading Regional Experts Share Their
from top fund analysts on fund flows, product and • EPFR Global
Top Tips For Portfolio Building For • Bawm Investments
distribution in these challenging times The Months To Come • Itau
• Bladex Asset Management
• Fama Investimentos
Economic Outlook Session: Hear Latin America’s most • Rio Bravo
respected economists give their outlook for the region What Do • Neo Investimentos
post-crisis and the business implications Customers Want? • Kinea
• Alliance Bernstein
Network With Key Retail, Wholesale & • Blackrock
Bursting The Brazil Bubble: Hear from the leading Institutional Fund Selectors And Find • Unibanco Asset Management
• Societe Generale
Brazilian industry players on the future for the largest Out What The End Client Really Wants • Ashmore
regional market post-crisis When Confidence Is Low • Harcourt
• Goldman Sachs Asset Management
• HSBC Global Asset Management
More Dedicated Q&A Time: Your chance to bring up the • BNP Paribas Asset Management
topics which matter most to you with the region’s • Schroders
15th September 2009: • UBS Pactual
leading CEOs, CIOs and Fund Selectors Pre-Conference Brazil Summit • Investec Asset Management
• KPMG
Hear From Top Brazilian Experts On • Barclays Global Investors
CEO Lunch Tables: Enabling you to discuss critical The Latest Developments In Latin • JGP Gestão de Recursos
issues with Latin America's top executives • CETIP
America’s Largest Market • Capital IQ

Lead Sponsor Co-sponsor Sponsor Endorsed by Media Partners

ICBI

Elemental Paper sourced

Chlorine Free from sustainable
(ECF) forests

To register: Call: +44 (0) 20 7017 7200 • Fax: +44 (0) 20 7017 7807 • Email: info@icbi.co.uk • Web: www.icbi-fundforumlatam.com
Inscrições: Telefone: +55 11 30176888 • Fax: +5511 30176918 • Email: fundforumlatam@informagroup.com.br • Website: www.informagroup.com.br/fundforum

Front Cover ISJ40.indd 3 09/06/2009 16:08

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