May/Jun 2010

ISJ
Volume 7 No. 47
Investor Annual membership
Services GBP 249 - UK, ROW
Journal USD 379 - America
EUR 286 - EMEA
www.ISJ.tv

THE GLOBAL CUSTODY AND ASSET SERVICING INDUSTRY MAGAZINE

Under the microscope,

UCITS - the workings

European Custody - 2011 Guide

Mark Mobius - ISJ Profile
Corporate Actions - XBRL, Swift and DTCC www.ISJ.tv
Barclays Exits - African custody

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

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

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

www.ingcommercialbanking.com

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

Front
ISJ47Cover Section
complete ISJ47.indd
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 contents Heads Up

May/Jun 2010

ISJ
Volume 7 No. 47
Investor

ISJ
Annual membership
Services GBP 249 - UK, ROW
Journal USD 379 - America
EUR 286 - EMEA
www.ISJ.tv

THE GLOBAL CUSTODY AND ASSET SERVICING INDUSTRY MAGAZINE

Under the microscope,

UCITS - the workings
Investor
Services
Journal

THE GLOBAL CUSTODY AND ASSET SERVICING INDUSTRY MAGAZINE

European Custody - 2011 Guide
Mark Mobius - ISJ Profile
Corporate Actions - XBRL, Swift and DTCC www.ISJ.tv
Barclays Exits - African custody

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

Editor
Brian Bollen Welcome to a new look ISJ and welcome to new people on our own team as Brian
brian.bollen@ISJ.tv Bollen is appointed Editor of the journal, working with Roy Zimmerhansl our E-in-C, and
Clive Gande chairs our new advisory board. Both need little introduction as readers of the
Advisory Board Chairman
Clive Gande FT will know Brians incisive style, and Clives knowledge of custody issues and people is
clive.gandeISJ.tv familiar to many who came across him at BNY Mellon. ISJ launches its first European
Senior correspondent
Custody Summit in July which is complemented by another inaugration; that of our
Craig McGlashan double-sided - or two-faced? - issue. If you flip this ISJ over you will find our review of key
craig.mcglashan@2i.tv markets in European Custody.
US correspondent Enjoy the writing, John Sandman our US correspondent guides us through corporate
John Sandman actions and SDA, we profile the legendary Mark Mobius and Euroclears John Trundle
John.Sandman@ISJ.tv formerly a central banker looks at how we should regulate from here to regain capital
Special correspondents market confidence.
Cherry Reynard
Anthony Harrington Mark Latham, publisher
Head of sales
Patricia De La Grange
CONTENTS
trish.delagrange@ISJ.tv

Account managers
Cicely Lewis
4 swings and roundabouts New People, New Positions
HSBC SS Joint Heads
cicely.lewis@ISJ.tv The HSBC Six
Eradat Munshi Colle BP2S appointment
eradat.munshi@ISJ.tv Vanderweyen leaves RBC
Wallace Takes Charge
CTO Mustoe Goes Perpetual
Peter Ainsworth
peter.ainsworth@2i.tv Andy Hughes Joins Omgeo

Operations manager
Nicolette Whittaker
nicolette.whittaker@2i.tv
8 news review African Custody
Barclays and Standard Chartered
Editor-in-Chief
Roy Zimmerhansl
roy.zimmerhansl@ISJ.tv 12 US focus Outsourcing by John Sandman
Managing director
Jon Hewson
jon.hewson@2i.tv 14 US focus Technology, Same day affirmation, ISITC Boston
Publisher
Mark Latham
mark.latham@2i.tv
16 US focus Corporate Actions by John Sandman
2i UK One Angel Wharf,
59 Eagle Wharf Road
London, N1 7ER, UK
18 Under the Microscope UCITS VI
T: +44 (0) 20 7183 7470
F: +44 (0) 20 7250 0350 26 The ISJ Profile Mark Mobius Templeton Investments
30 Regulation OTC Derivatives, Market Risk in EU
2i US 410 Park Avenue,
15th Floor, New York, NY 10022
T: +1 212 231 8421
F: +1 212 231 8121

2010 2i Media. All rights reserved.

No part of this publication may be
reproduced, in whole or in part,
32 Technology Releases
without prior written permission from
the publisher. Thomson Reuters Elektron / BNY Melllon Dashboard
ISSN 1744-151X

1
1-47 main text Final ISJ47.indd 1 04/06/2010 21:08
 contents Continued

33 Analyse This Automation

34 Fund Focus on Cyprus - sponsored section
36 The ISJ Profile Gary Probert
38 Restoring Confidence to our Capital Markets
by John Trundle, Chief Risk Officer at Euroclear
40 gains and losses Mandate News
John Lewis JP Morgan
JP Morgan Hewitt Mandate
KLP Northern Trust Mandate
Citi Japan Mandate
Quis Custodiet?
RBC Singapore Mandate
BBH Win Underlines Renewe
UOBAM Turns To BNYM
BNYM Seadrill
BNYM and Fuh Hwa

44 out and about Pugilism and Paintings

48 Directory of services

European Custody is the flip side of this issue of ISJ

Christoph Wetzel, Ulf Noren, Global Head
managing director of of Sub-Custody at SEB
CACEIS Bank Deutschland

EurOpEaNCustody

European Custody
Landscape

Germany 2
Southern Europe 4 Angelos Gregoriades,
Head of Tax and
Corporate Services of
Central & Eastern Europe 8 KPMG Cyprus

Nordic region 16
Spotlight on:
Cyprus for private equity and
hedge funds 12
Dieter Bernhard, head of
Domestic Custody Services
for Deutsche Bank in
Germany

2
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320
 Nordea Bank
Custody services with
a broader horizon
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Ms. Nina Groth, tel +45 3333 6124, email: nina.groth@nordea.com or
Mr. Teemu Pihlatie, tel +358 9 165 51008, email: teemu.pihlatie@nordea.com.

nordea.com Making it possible

1-47 main text Final ISJ47.indd 3 04/06/2010 11:41

32051_Custody_210x297.indd 1 19.12.2008 15:11:14
 swings and roundabouts New People, New Positions
Recent bulletins to emerge
from BBH s Boston redoubt
related the appointment of
Shawn R. McNinch, Senior
Vice President, as Global
ETF Product and Sales
Head. Before joining BBH
in late 2009, Mr. McNinch
worked at Barclays Global
Investors (BGI) where he
was a Senior Principal within
the iShares (ETFs) Product
Strategy Group.
Mr. McNinch worked on
numerous strategic initiatives
for the iShares business
including assisting with the
launch of new ETFs, working
on the development of an
ETF distribution strategy,
conducting a technology
assessment to position
business for ETF growth,
and assessing numerous
new business opportunities.
Also in March, BBH
confirmed the expansion
of its securites lending
presence in Asia, assigning
Robert Lees and Richard
Meek to the Hong Kong
office, in the respective
roles of Head of Securities
Lending Trading and Head
of Securities Lending
Relationship Management
for the Asia Pacific region.
Mr. Lees reports to Jeff
O Neill, Global Head
of Securities Lending
Trading, and Mr. Meek to
Elizabeth Seidel, Global
Head of Securities Lending
Relationship Management,
Business Development
Strategy and Marketing.
Both work closely with
Andrew Tucker, Partner, who
is responsible for the Asia
Pacific region and BBHs
Markets business, which
includes Global Securities
Lending.
Six Of One, Half A Dozen
Of The Other
HSBC Securities
Services (HSS) has
announced the following
1-47 main text Final ISJ47.indd 4
managementappointments
to its New York team.
Scott Karp has been
hired as the Head of Fund
Accounting and Financial
Reporting in the US.
Thomas Higgins joined the
business in April 2010 as
Head of the Regional Pricing
Team Americas, reporting
to Karp.
Roman Osidach recently
joined the Fund Services
team as a Senior Fund
Administration Manager
reporting to Karp.
Gregory Cahaly was hired
as US Head of Operational
Risk at the start of the
year, reporting to Marianne
Motley, Fund Services Chief
Administration Officer.
Gerald Donaghy was
recently hired as a Global
Tax Manager, reporting to
John Crager, Global Head
of Tax Fund Services -
Alternatives.
Robert Crowley has joined
the Fund Services team as
Head of US Tax Reporting
for the fund services
business, responsible for the
US tax reporting of global
clients.
Karp is responsible for the
accurate and timely delivery
of all fund accounting and
financial reporting services
delivered to alternative
fund clients serviced from
the US. He joined at the
end of 2009 and reports
to Tanya Nystrom, US
Country Head. Karp has
spent approximately 19
years in the financial
services industry and
was previously Director of
Financial Accounting and
Reporting for a multinational
private investment fund
group. Prior to that he
was a senior manager at
PricewaterhouseCoopers.
Higgins has been in the
financial services industry
for 14 years having spent
the majority of his career
atCitigroup s markets
and banking group.
His most recent roles
included the market risk
management responsibility
of the Municipal and Rates
business (swaps, OTC and
exchange-traded options,
structured note creation,
mortgage pass-through
trading, government and
agency trading).
Osidach is responsible
for the accurate and
timely delivery of all fund
accounting services
delivered to alternative
fund clients. With 18
years of financial services
experience, his most recent
role was as an Executive
Director, Portfolio Services
Manager for Morgan Stanley
supporting the alternative
investment team in their fund
of hedge funds and private
equity/real estate fund of
funds business.
Cahaly is responsible
for ensuring that an
effective framework is in
place to further manage
and mitigate operational
risk. His appointment
additionally enhances the
current team. With over
14 years in the financial
services industry, he was
most recently with Citi-
Global Wealth Management
Investments as a Director of
Risk and Compliance with
the Portfolio Management
Group.
With over six years
tax experience, with his
primary focus on the asset
management sector,
Donaghy will be providing
tax reporting services to
HSS global fund clients.
Prior to joining HSS,
Donaghy was a tax manager
in Ernst & Young s Financial
Services Office where he
concentrated on hedge
fund, fund of fund and
international clients.
Crowley, who reports to
Crager, has over 14 years
experience with the Big Four
public accounting firms.
Scott Epstein, Head of
Fund Services and Global
Custody Americas for
HSBC said: These are
4
great appointments for
our business. The recent
hires are in line with our
strategy to build on our
current success and grow
our business, allowing HSS
to more effectively support
our clients as they navigate
the current environment by
adding to our capabilities
and strengths .
Congratulations
Patrick Colle
BNP Paribas Securities
Services (BP2S) has lined
up Patrick Colle as CEO to
succeed Luxembourg-born
Jacques-Philippe Marson.
Patrick joined BP2S in 2006
and has been Head of its
UK business since March
2008. Jacques-Philippe
Marson was quietly but
summarily removed from his
post several months ago in
a manner which has never
been satisfactorily explained,
but which some say relate
to taking part in non-BP2S
commercial activities. Patrick
Colle has over 24 years of
experience in the industry,
of which four within BNP
Paribas Securities Services.
As head of the UK business,
he has led BNP Paribas
Securities Services
successful development
in this key financial centre.
Prior to this, Patrick
Colle was at JPMorgan
Chase which he joined in
1986 and where he held
several positions in cash
management, securities
clearing and custody in
Paris and New York before
becoming Global Head of
ADRs in London in 2001.
Laurent Vanderweyen is
leaving RBC Dexia Investor
Services SA in Luxembourg,
where he was Managing
Director and Chairman of
04/06/2010 11:41 Caceis
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1-47 advtext
main climb ENISJ47.indd
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04/06/2010 11:41
 swings and roundabouts New People, New Positions
the Executive Committee.
He will join J.P. Morgan
Bank Luxembourg as
General Manager in July.
In that role he will have
executive responsibility for
the Luxembourg office, will
serve as a Board member
of J.P. Morgan Bank
Luxembourg, and will lead
J.P. Morgan s Worldwide
Securities Services business
in Luxembourg.
Wallace Takes Charge:
Standard Chartered names
Sean Wallace as Group
Head of Origination and
Client Coverage (OCC)
Standard Chartered,
incoming 20m a year
shirt sponsor of up-for-sale
Liverpool Football Club, has
appointed Sean Wallace as
Group Head of Origination
and Client Coverage (OCC)
with immediate effect (April
19 2010).
Reporting to Mike Rees,
CEO of Wholesale Banking,
Sean will lead the Bank s
Origination and Client
Coverage Group, which
shapes the client-centric
strategy of deepening client
relationships across its key
markets. He will continue to
be based in Singapore.
Sean succeeds V
Shankar, who has been
appointed the Bank s CEO,
Middle East, Africa, the
Americas and Europe.
Commenting on the
appointment, Mike Rees,
CEO of Wholesale Banking,
Standard Chartered Bank,
said: We are pleased to
be able to draw from such
a strong internal pool of
talent. Sean has been
instrumental in accelerating
the growth of our highly
successful Corporate
Finance business. Sean s
focus and commitment
to Standard Chartered s
clients make him an ideal
choice for this key role. His
international background
and industry experience will
further enhance our strategic
1-47 main text Final ISJ47.indd 6
engagement with clients.
As Group Head of
Corporate Finance, Sean led
the business in delivering
record performances. For
the full year 2009, Corporate
Finance delivered 74% year-
on-year growth, underpinned
by the rollout of new
products and geographic
expansion.
Before joining Standard
Chartered Bank, Sean
Wallace was Managing
Director at JP Morgan where
he spent almost 10 years.
At JP Morgan, he was the
Head of Capital Markets,
Asia Pacific and before
that was the Co-Head of
Investment Banking, Asia
Pacific ex-Japan. Before
transferring to Asia, Sean
was head of JP Morgan s
North American Telecom
Group. Sean graduated from
Harvard College with an A.B.
in History and Economics
(more usually described
as Bachelor of Arts) and
holds an MBA from Harvard
Business School.
Mustoe Goes Perpetual
Invesco Perpetual has
named Nick Mustoe as
its new Chief Investment
Officer (CIO). Nick will take
up his new role on 7 June
2010 and will work closely
with Invesco Perpetual s
current CIO Bob Yerbury to
ensure a smooth transition
of responsibilities.
Nick has over 25 years
experience as an investment
professional starting with
Phillips and Drew Fund
Management as a UK Equity
manager and more recently
as CIO of Pictet Asset
Management, where he was
responsible for the equity
investment teams, and
CIO of Hermes Pensions
Management, where he
was responsible for all asset
classes including equities,
fixed income, property and
alternatives.
Bob Yerbury will continue
to work with CEO James
Robertson in his role as a
Senior Managing Director
of Invesco and as part
of the Invesco Perpetual
management team.
Andy Hughes: From
Microsoft To Omgeo
Omgeo announced the
addition of Andy Hughes
to the position of executive
director, partners. This
strategic hire marks
Omgeo s commitment to
facilitating end-to-end trade
processing by partnering
with leading independent
software vendors (ISVs) and
technology providers around
the world.
Hughes joins Omgeo
from Microsoft Corporation,
where he held a variety of
positions. Most notably,
he was responsible for the
creation and execution of
a global partner strategy
across financial services.
This covered the selection
and recruitment of ISVs and
systems integration partners
to create high margin,
solution based revenue
streams built on Microsoft s
core technology platform.
He also worked extensively
on developing partner
based solutions focused
on the buy-side of capital
markets, especially in the
areas of order management,
portfolio management and
accounting systems, and
trade compliance.
Prior to Microsoft, Hughes
worked at Bloomberg
in sales and sales
management, as well as
Dow Jones Telerate in
sales and sales support.
He holds an Honours
Degree in Business Studies
and a Chartered Institute
of Marketing Diploma.
Hughes is based in Boston
and reports to Tim Keady,
managing director, global
sales and relationship
management at Omgeo.
6
Karim Ben Rais joined
Euroclear as Managing
Director and Head of its
Single
Platform Modules division
in early May. Prior to joining
Euroclear, Karim Ben Rais
worked internationally as
an independent consultant.
Until the end of 2007, he
was Managing Partner
of Accenture Insurance
Services, where he was
responsible for all technical
and operational services for
the Accenture unit and more
than 2,000 staff located in
on- and off-shore locations.
At the start of his career
in 1987, Ben Rais joined
Accenture (previously
Andersen Consulting)
where he spent more than
twenty years working on
cost reduction, operational
performance improvement,
supply chain and IT
transformation programmes,
as well as off-shore
arrangements.
Koger, Inc. releases latest
version of NTAS in time for
Fund Forum in Monaco.
Koger, Inc., a provider
of software and services
for the fund administration
industry, has launched the
next version of NTAS, its
transfer agency solution.
NTAS 10.1 introduces a
number of enhancements
and new features that
expand the tools available to
the administrator making the
fund administration process
more robust, faster and
more automated.
We are very pleased
with the enhancements and
new features in NTAS 10.1.
Our customisable workflow
screens make NTAS even
more user-friendly , says
Ras Sipko, COO.
04/06/2010 11:41
ISJ47 complete text Jun02.indd 7 03/06/2010 22:59
 ISJ 267

news review African Custody

Barclays Exits African Custody:

End Of An Era?
Does Standard Chartered s agreement to acquire the Malawi, Morocco,
African custody business of Barclays Bank mark the end of Namibia, Nigeria, Tunisia and South Africa) provided through
an era, one that still resonates with echoes of colonialism? a network of third party sub-custodians via an operations
Those will likely be the first thoughts of anyone of an age hub in Mauritius. The new business will strengthen Standard
advanced enough to remember the days when the names Chartered s regional product offering for both international
of those two institutions were synonymous with banking in and regional businesses, strengthening client relationships,
exotic markets. In fact, older observers say they recall the whilst providing an additional source of liquidity to the Group.
words colonies and dominions were still being rather freely Rapid Development Plans
bandied around in the early 1980s. But maybe it s the effects Commenting on the deal Karen Fawcett, Group Head of
of growing senescence as they inch towards their twilight Transaction Banking at Standard Chartered, said: We are
years, and their thoughts turn away from White Mischief and very pleased to have secured the acquisition of Barclays
towards stairlifts, bath chairs and ear trumpets. African Custody business. This deal will enable Standard
Or is Barclays just doing what most banks eventually do? Chartered to rapidly develop our custody capabilities in our
Flog off a business that has become a bit of an orphan, core markets across Africa. We are already seeing ongoing
even an embarrassment, demand for regional and international investment services
We will work to concentrate on gouging across this region. Standard Chartered remains committed
closely with Standard real money out of the to providing clients with an integrated set of solutions that
developed markets? promote ongoing growth of this industry. With this acquisition,
Chartered to ensure Hard-working staff in the we will enhance our custody offering and continue to gain a
the transition does credit card division s fraudstrong foothold as Core Bank to our clients in Africa.
investigation service, after Barclays Bank PLC s
not impact our The African custody African custody business has
all, having contributed to the
clients and employees Barclays Group s reported business forms a been consistently recognised
11.6bn profit in 2009 by as the Best Custodian Bank
and remain fully reducing fraud by around key part of Standard in Africa. The world s most
committed to 28% in a single year, found Chartereds build- jaded cynics might argue
themselves rewarded with that this is like being voted
growing our banking the transfer of a number of out of international the best looking member of
operations in Africa. core jobs to India. Barclays custodian services, Wayne Rooney s family, but
stated, incidentally, with a awards are awards, and facts
straight face, in notices to its staff breaking the news, that alongside existing are facts.
this formed part of its plans to create a global centre of fraud capability in Asia and African Barclays says that the
excellence. Why soldier on with a business that is probably custody business
time-consuming and labour-intensive, and needs significant the Middle East. had gross assets of 1.9
investment to deliver even a meagre return, when much million and assets under
easier pickings are to be had elsewhere? custody of 3,862 million as at 31 December 2009. The sale
is expected to be completed in 2010, subject to regulatory
Pop-Eyed Optimism approvals and other customary conditions. Barclays exited
The press release announcing the transfer of the custody the global custody business outside Africa in 1998. It says
business touches upon none of this speculative context, the remaining custody business in Africa is profitable but
of course. Rather, as is par for the course, it views the would benefit from the synergies a global operation could
deal with the kind of pop-eyed optimism that Hugh provide. The sale realises value for its shareholders while
Laurie s character exhibited in Blackadder Goes Fourth, not impacting Barclays long-established banking business in
defending the eponymous hero against charges of being Africa, it
The Flanders Pigeon Murderer. Standard Chartered states explains. Vinit Chandra, Chief Executive, Barclays Africa
that the transaction will provide it with custody capabilities said: We will work closely with Standard Chartered to
in its markets across Africa (which qualifies handsomely ensure the transition does not impact our clients and
as a statement of the blatantly obvious). It adds that employees and remain fully committed to growing our
the acquisition is subject to certain regulatory and other banking operations in Africa.
approvals, though even after much head-scratching it is Standard Chartered says that the acquisition is another
difficult to see (a) who could possibly object and (b) who else demonstration of the significant investment it has been
would possibly want to buy it. Standard making in its African franchise over the last few years,
Chartered says it expects the deal to be completed in 2010. following its recent purchase of First Africa (a leading African
The African custody business forms a key part of Standard mergers and acquisitions advisory business) in 2009, and
Chartered s build-out of international custodian services, the opening of its new representative office in Angola, its
alongside existing capability in Asia and the Middle East. fourteenth African market in early 2010. We wish them
The acquisition adds direct custody capabilities in eight nothing but the very best in their renewed endeavours,
African markets (Botswana, Ghana, Kenya, Mauritius, likewise to Barclays as it looks ahead rather than back, and
Tanzania, Uganda, Zambia and Zimbabwe) and indirect we look forward to having any jaundiced interpretations of
capabilities in a further eight markets (Egypt, Cote d Ivoire, the deal being duly rebutted. ISJ

8
ISJ47 complete text Jun02.indd 8 03/06/2010 22:59
ISJ 267x203_28May:BP2S Ad 28/05/2009 11:53 Page 1

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ISJ47 complete text Jun02.indd 9 03/06/2010 22:59


news review African Custody
In Conversation With... Giles
Elliott, Global Product Head, Securities
Services, Standard Chartered Bank
ISJ: How much did
Standard Chartered pay
for the business?
Giles Elliott: I am afraid
this information is
confidential and has not
been disclosed. We felt
that the business was
great value to us not
only in terms of filling
an important gap in our Giles Elliott,
network coverage, but Global Product
most importantly in terms of Head, Securities
the staff that we will bring Services, Standard
into Standard Chartered Chartered
and the depth of client
base across Africa and
internationally. We see this
business growing strongly and becoming an important growth
sector across our banking services in Africa.
ISJ: What is the amount of assets under custody?
Giles Elliott: The acquisition will include $6.2 billion of client
assets across 16 markets. We will look to take on all 66 staff
employed by Barclays.
ISJ: Is it just custody or are there other services
involved?
Giles Elliott: It is primarily custody, and includes sub-custody
to foreign brokers and global custodians, local custody to
domestic funds and insurance companies and regional
custody to foreign investment funds and other local funds
investing across Africa.
ISJ: What on earth is the attraction?
Giles Elliott: There are three core reasons for this acquisition:
i. It fills an important strategic gap for us. The Banks
focus is to be the leading banking in Asia, Africa and the
Middle East for targeted client segments. This covers
investors locally, investors from these regions and investors
investing into these regions. We are building our business
footprint in the Middle East organically, but had a gap in
Africa and this presented a special opportunity to accelerate
our entry with a leading client base;
ii. Our focus is to leverage the depth of our banking
services in Africa to provide a unique set of investor
solutions. The expansion of our financial markets
business in Africa in the last 2 years has already seen
growing opportunities and demands from the investor
client segment, and coupled with the depth of our cash
and FX capabilities we are able to bring to the table a
comprehensive set of investor solutions.
iii. Africa is evolving rapidly and we have seen extensive
investment in markets infrastructure, pension fund
reform and growth of the capital market sector. There is
a gradual shift away from the debt markets to equity as a
mechanism for financing growth and the stronger capital
markets infrastructure is driving more confidence in this
area. This has translated into higher growth rates than
ISJ47 complete text Jun02.indd 10
Invest
we have seen in Asia or the Middle East over the past
three to four years.
ISJ: Surely Africa is so poor that even a large
business there is small beer by standards elsewhere?
Giles Elliott: In relative terms you are correct, however,
the complexity of the environment makes the margin
opportunities attractive. Africa is a significant contributor to
Standard Chartered s performance with 7% of our revenues
and 9% of our profits coming from Africa. Africa is a $1.1
billion business for Standard Chartered and growing at a
rate of over 20%. We feel that this is an important client
segment in Africa and therefore key to our growth agenda on
this continent. Standard Chartered is present in 14 countries
in Africa, with over 600 staff and 170 branches. We recently
opened an office in Angola as we continue to deepen our
commitment to growing this business in Africa.
ISJ: By how many years does this accelerate SC s
growth plans in Africa?
Giles Elliott: Within the Securities Services business, we had
looked at different entry options for Africa and recognised
that the business between players is largely stable. An
organic entry option would have taken many years to
execute growth to a material size and we saw merits in a
faster time to market, especially with the depth of interest
that we are seeing from investors seeking greater African
exposure.
ISJ: Who initiated the deal? Standard Chartered or
Barclays?
Giles Elliott: Standard Chartered and Barclays had discussed
this business in early 2009 and Barclays initiated the sale
process later in the year. We saw this as a perfect fit against
our strategy and business focus, and Barclays is a bank with
strong cultural alignment to our own that would make clients
and staff transition more easily.
ISJ: Were there any independent advisers involved?
Giles Elliott: None that played a notable role. We have a
strong Group Corporate Development function in-house.
ISJ: Are you still on the lookout for further acquisition
opportunities?
Giles Elliott: We are very much open to more acquisitions
if they align strongly with our strategic agenda and priority
focus areas. Our strategy is very clear and our core growth
will be organically driven, but we are absolutely focussed on
leveraging opportunities that give us acceleration along the
strategic path that we have set.
ISJ: How long will the integration take?
Giles Elliott: Integration will be finished before the end of the
year, and will involve clients transitioning onto our core IT
platforms and staff joining Standard Chartered.
ISJ: What areas will need most attention?
Giles Elliott: We do not feel that there are any notable
areas that need urgent attention. This is a very well run
business, with strong staff and excellent client service
disciplines. We will be migrating the clients onto our core
platforms so clients will see the same benefits from this
and with our Straight 2 Bank web instruction and reporting
capability. Naturally client integration will take a lot of focus
during the year, but we have seen excellent feedback to the
deal and clients recognise the commitment that Standard
Chartered has for this business and future benefits that we
can bring to the table. ISJ
10
03/06/2010 22:59
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ISJ47 complete text Jun02.indd 11 03/06/2010 22:59


US focus Outsourcing
Outsourcing for Investment
Managers, Pack Your Bags,
Visit Your Vendor by John Sandman
Outsourcing has at once become a fixture in the
financial services industry yet one that continues to mature
and evolve at the same time. Investment operations have
increasingly become an opportunity both for some providers
and firms, as investment managers seek solutions that arent
available in-house.
Some of the most significant stumbling blocks are en-
countered at the start of the project, something that can
needlessly extend the timeline. Investment managers who
contract with outsourcing firms should make sure they are
vendor-ready before work begins.
Defining Touch Points
Defining the touch points between the two organisations,
the testing strategy and having an equal involvement from
the stakeholders is key, said Steve Reydel, Boston-based
head of State Street Banks global programme office, at the
International Securities Association for Institutional Trade
Communications forum and vendor show in Boston on
March 22. Stick to the agreed model. Once we get started
Defining the touch and the client comes to us
with changes to things that we
points between the believed were resolved, a lot
two organisations, of risk is created.
If the client onboarding
the testing strategy process takes longer than
and having an equal expected, critical staff could
involvement from the move elsewhere by the time
the project gets underway,
stakeholders is key, leading to the unplanned ad-
said Reydel dition of temporary resources
and possibly more delay. The
client has to be ready, said Patrick Schena, principal of
Headstrong, a Boston-based outsourcing firm. Think about
the expectations and time horizon. If the time frame is the
next 12 months, you re probably trying mainly to get cost re-
lief. We encourage a three- to five-year horizon. Dont think
about it in immediate terms. None of us wants to go through
a second conversion in the time that was allotted for one.
Replication = Trouble
Even if investment managers outsource for all the right rea-
sons, they run into trouble if they try to replicate their current
environment, which is what caused the problems that led
them to seek an outsourcing solution to begin with. Losing
sight of the fundamental reason for outsourcing can move a
solution further into the distance. One of the first questions
I ask a prospective client is what the internal service level
agreements are between the front and back office, said
Reydel. Knowing you can hand the project over to some-
one else and say here is exactly what we expect a firm to
reproduce is key.
As outsourcing has expanded, firms that seek outsourced
solutions are no longer limited only to large institutions.
Service providers have to understand the differences be-
tween large and medium-sized firms, especially when acting
as a solution provider for both. As you get smaller, the level
of complexity has to come down, said Reydel. The market
ISJ47 complete text Jun02.indd 12
FAX_Fu
From Maybe To Must Have
Outsourcing is crucial to the success of hedge funds
and other alternative investment companies because of
the increasingly important issue of independence in the
wake of the recent financial crisis, the Madoff scandal
and the current political climate. If they dont outsource
the administrative function, which includes independent
valuations, then investors may not look at allocating to
such funds,says Andrew Rubio, chief executive officer of
Throgmorton, a specialist provider of outsourcing services
to the industry.
They need to rebuild trust and it makes sense to
outsource as part of their efforts in that direction. The
question of outsourcing has gone from maybe to must.
Fund administration work that has been done internally
must now ideally be done externally, as the use of external
administrators ticks a very big box for asset allocators.
is still trying to figure out how to play in each size. Weve
come a long way in a couple of years and there s been
success across the board, confidence that this is happen-
ing. We re in a large market that s more complex, so we
create different versions of that product.
Watch Out For Duct Tape
Regardless of the size, outsourcers are likely to confront
similar continuity problems. You will find gaps in workflow
and process, said Schena. There are still lots of duct tape
and manual workarounds for workflows that didnt work out.
Component outsourcing has emerged as an alternative to
full service or a one-size-fits-all approach that is especially
problematic
with clients of differing size. Some firms only do component
outsourcing. For example, portfolio record keeping for an
investment managers back office is a key function. Some
firms will only out source components on the back end of
that and not always to same service providers.
State Street s Reydel mentioned transaction management
and reconciliation as opportunities for component outsourc-
ing but added, As you get further into the accounting aspect
and start to customise services, you have to normalise lots of
data into that environment. Even on Requests for Proposals
(RFPs) for component outsourcing, firms issuing those RFPs
ultimately want a full range of services. You end up bidding
on custody, fund accounting, transfer agent services on an a
la carte basis, he said.
Standardisation Still An Issue
The attempt to standardise messaging across the trade
life-cycle, which has been going on for more than a decade
and touches on trade execution at the front end to clearance
and settlement at the back, continues to be an outsourcing
issue, especially when proprietary formats are used.
If a message comes in that s not FIX, Swift or FpML,
we ll have to deal with it, said Reydel. He added that if the
inbound message is proprietary, the outbound message will
require a workaround. It depends on the client s environ-
ment, he said. We have clients in the middle office space
12
03/06/2010 22:59
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 US focus Technology, Same day affirmation, ISITC Boston
that have taken it upon themselves to be SWIFT-compliant.
Moving to a common platform and a common standard
reduces our costs as well as theirs.
There are likely some things that should never be out-
sourced by investment managers. Near the top of the list,
said Schena, is trading and compliance. Probably any-
thing that s client-facing shouldn t be outsourced, said he
said. Reydel suggested that a firms core competency and
anything propriety should not be outsourced, but everything
else was on the table. I think trading could be outsourced,
but it depends on the strategy of the firm. he said. My
experience is that we ve found friction between trading desk
SDA:
Suddenly It Doesnt Seem
So Far Away by John Sandman
Although the tagline for the Same Day Affirmation panel
at the International Securities Association for Institutional
Trade Communication (ISITC) forum in Boston last March
went from the World Wrestling Federation to a wistful
Lennon and McCartney tune, the underlying issue remained:
can Same Day Affirmation improve trade settlement in the
securities industry and at what cost? What s the downside of
maintaining the status quo as opposed to a proactive attempt
at risk reduction? And is same day matchingo r a variant of
itt he answer?
One of the primary Same Day affirmation involves
reasons for fails is verifying the details of a trade
between a broker dealer and the
securities lending institutional side of the market
on the day the trade took place,
shorts ensuring that both sides agree
on what is being traded before settlement. About 11% of
all the trades that settle are not affirmed prior to settlement
date, said Hal McIntyre, managing partner of the Summit
Group, a New York-based consultancy. So we ve got a lot
of questions about what that 11% consists of. One of the
primary reasons for fails is securities lending shorts - people
who have a securities lending transaction they cant fulfill.
That causes fails.
Overall, the goal is less risk and more efficient processing,
said McIntyre. But is same day affirmation really the
answer to increasing efficiency and removing risk? Should
we mandate this process or should a best practice be
established with voluntary compliance? If a new approach
surfaces, whether it s mandated or not, should it be provided
on a central basis or bilaterally? Should the process happen
on trade date through same day affirmation, or is it sufficient
to have it occur prior to settlement?
Lurking In The Background
Lurking in the background is the abandoned attempt to
move to T+1, or next-day settlement. Is the industry ready
to revisit a shortened settlement cycle? T+1 has been
discussed on and off ever since the late 1990s when the
market last considered it, said Lee Cutrone, New York-
based manager of industry relations at Omgeo. At that
point, same day affirmation was identified as one of the
ISJ47 complete text Jun02.indd 14
and portfolio management. If this is something that can t be
resolved in-house, outsourcing is something to consider.
Practical Advice
A practical course of action for investment managers? Pack
your bags and visit your outsourcing service provider early
and often. Make sure you have a monitoring team in place
that has the support of management.
John Sandman, ISJs US Correspondent, has covered operations,
compliance and technology in the securities and banking
industries in New York for 15 years.
building blocks that needed to be in place before moving to
a shortened settlement cycle.
The catalyst this time around, Cutrone stated, was the
credit crisis of 2008 and the need to find ways to mitigate
risk. We know that there s going to be a new regulatory
landscape, he said. We want to re-introduce the concept
that you need to look not only at the front office, but the
middle and back office also. In the opinion of many,
shortening the affirmation period will make that happen.
Cutrone said SDA rates in the US have already gone to
around 36% from 21% five years ago, but added, SDA will
not happen without a mandate. You shouldn t be focusing
on same day but mandatory matching to settle. If you go
to a match-to-settle environment, do you have to have
regulations in place to affirm matching? Having 11% of your
trades unaffirmed in a match-to-settle environment is too
burdensome.
Dirty Data?
Most industry sources believe the necessary technology
exists. Ironically, clean, normalised data, a part of almost
any automated solution, was identified by panelists as a
piece that is consistently missing. Jeff Zoeller, VP of T.
Rowe Price expressed his support for SDA along with a
concern about data quality. You have to make sure your
data is clean and available early enough in the day. If a
trade is executed today, it gets entered and shows up the
next morning to provide accurate trade information. Zoeller
also cited the need to support overseas clients in different
time zones and that the loan recall process is a major
cause of failure. There are still broker/dealers running
batch processing until after the close of the cycle, Zoeller
noted. That s going to get in the way of same day matching.
Mandating SDA raises the stakes in terms of the burden on
the industry.
Russell Stamey, VP of operations and technology at
Northern Trust also had data concerns. One of the big
issues for custodians is that we are very dependent on
timely and accurate data, said Stamey. Performance
reporting, performance monitoring, securities lending,
corporate actions, cash managementa ll these functions
are dependent on getting good timely data from investment
14
03/06/2010 22:59
 US focus Technology, Same day affirmation

managers. Before entertaining solutions, he said, We have

to look at the true cost of handling manual transactions, of
reclaims and DK trades. DK, or Don t Know, is a trade that
has been uncompared and rejected.
For me, the second piece is we need a pre-match
settlement environment for US trades, said Stamey. And
as part of that, we d be remiss if we didn t look at T+0 or
same day affirmation or match as a best practice. But all
this should be put in the context of the broader, longer term
issue of shortened settlement cycles. Same Day Matching
won t be easy, another pass at
I just dont think T+0 notwithstanding. To do it
right, Stamey said, I d like to see
SDA will happen progress without a regulatory
mandate to push it forward. But
unless theres a I think we also need some well- McIntyre
mandate, defined goals.

Mandate Needed
McIntyre suggested that, left to its own devices, the industry
probably wouldn t willingly migrate to SDA and that a mandate
of some kind was necessary. Some people look back to
when we went from T+5 to T+3 and the settlement rates did
not improve, said McIntyre. So many say that the people
who were screwing up at T+5 just continued to screw up
in T+3. If we have an SDA best practice, will those people
change of their own volition?
I just don t think SDA will happen unless there s a
mandate, said Cutrone. Our industry hasn t shown a
willingness to make short term sacrifices for long term
benefits. What theyre really going to respond to the threat of
regulation. That s the only thing that will get it going. Cutrone
Canada is the first national
We have to look market to require same day
at the true cost of affirmation, where its being
phased in. Their fail rates
handling manual have gone from 3 percent to 1
transactions SHUFHQ WVDLG &XW URQ H But I
don t think anyone is arguing that
this is completely attributable to same day affirmation. The
problem with Canada is that there is no penalty behind the
mandate, said Zoeller. You have to make sure there s a
matching requirement. Squeezing the definition of what
constitutes a day will put further pressure on moving off
T+3. If we stay in T+3, do we get any benefit from an earlier
affirmation? Another way of looking at that is if we do same
day affirmation, does it matter if we stick to T+3.

Forcing The US Issue Reydel

Overseas regulation may force the US to act. Omgeo s
Cutrone noted that the EU, has been promoting a T+2
settlement cycle, parallel with the Target2 Securities
settlement and has to
harmonise settlement across the EU, with the German T+2
cycle being the driver. They have to go to T+2, Curtone
said. T+3 would mean Germany would have to roll back their
settlement cycle. Cutrone predicted that T+2 in the EU would
force the US to adopt. The other tendency is to stand pat on
the grounds that budgetary constraints remain significant.
The cheaper it is to fail trades, said Stamey, the less
incentive there is to change.
Once the industry is forced to change, however, he saw a
silver lining for firms with high touch processing. Matching to
settle is going to force SDA, said Stamey. Firms that start
this from scratch won t have to take legacy systems out of Stamey
production. ISJ

15
ISJ47 complete text Jun02.indd 15 03/06/2010 22:59
 US focus Corporate Actions
XBRL, Swift and DTCC Take
Another Run at Automating
Corporate Actions by John Sandman
Will the joint effort by XBRL US, Swift
and the Depository Trust and
Clearing Corp (DTCC) to automate
succeed where previous efforts failed?
The industry is, once again, seeking an answer. In the
past decade, various attempts have been made to auto-
mate these back office processes, only to be abandoned
when new solutions were not equal to the task. While they
fell short for a number of reasons, chief among them was
the limitations of ISO 15022, the Swift messaging stand-
ard which replaced ISO 7775 in 2002. As a source with
knowledge of Swift put it, 15022 was a good start. It began
the automation process between the intermediaries, includ-
ing custodians, transfer agents,
About 200,000 the fund administrators and their
corporate actions users. But 15022 never went the
are announced each whole way."
Now Swift and the DTCC have
year in the U.S. joined forces with XBRL US to
by publicly traded capture electronically corporate
companies actions data from the offerors
or issuers at the point the an-
nouncement is made in a standardised format. XBRL, or
the Extensible Business Reporting Language, is a standard
based on the extensible mark-up language (XML), with data
elements known as taxonomies that are similar to the data
elements in ISO 20022, which is also XML-compatible. The
two will inter-operate to form a corporate actions taxonomy
to be used by the DTCC. About 200,000 corporate actions
are announced each year in the U.S. by publicly traded com-
panies, involving merger announcements, stock splits, bond
redemptions, dividends and other corporate events.
Secret Sauce
Whether or not XBRL is the secret sauce that was missing in
the past, the XML tag-based standard has come a long way
since being introduced as an accounting standard in 1999
under the aegis of the American Institute of Certified Public
Accountants.
It has become a reporting tool used by regulators worldwide,
with the Securities and Exchange
Our role is to Commission mandating that
extend data, public companies file their 10K
reports in XBRL by 2011.
regardless of the We are currently working
geographic domicile through the taxonomy which we
want to release for public review
or format. in July, said Campbell Pryde,
chief standards officer at XBRL US. Well get feedback
from DTCC, Swift and the members of XBRL who will have
30 days to review it followed by a 90-day public review. The
goal is for the corporate actions taxonomy to be used in any
jurisdiction. It s predominantly US-based now but there s no
reason it couldn t be extended elsewhere. We ve also added
functionality for the tax consequences of corporate actions.
Pryde added, We have different entry points where the
ISJ47 complete text Jun02.indd 16
user can, based on the kind of corporate action they have,
omit fields that are irrelevant and use mapping software
that can automatically convert XBRL into ISO 20022, he
said. There s also the possibility of creating templates in
standard Word documents.
ISO 20022 captures the data of a security that will have
an impact on distribution of shares, the cash distribution a
shareholder gets or a combination, said Pryde. That s the
information we re trying to collect. Included are stock splits,
dividends, re-organisations, tender offers, mergers, bank-
ruptciest hings that affect distributions to stockholders or
that affects the value of their holdings.
Scrubbing Data
Corporate actions processing in the United States still
involves a routine of scrubbing data at the DTCC, where
securities are held and settled. In describing the data, Max
Mansur, global market manager, Swift, said Today it s all
proprietary. You go to a DTCC terminal and transform the
data into your own format.
The firms that have the least amount of automation are the
investment managers and are the most used to handling
manually processed data, said Mansur, adding, however,
that the investment managers are not the sole laggards and
that the poor consistency and quality of data received from
their custodians had a significant impact in general and in
the cost of automating corporate actions.
The DTCC would not comment on the extent of proprietary
formats now in use. Robert Epstein, vice president of DTCC
Asset Services said, The DTCC will publish corporate ac-
tions announcements using the industry standard ISO 20022
business modeling beginning in April 2011. Epstein added,
At the same time, support we support existing DTCC files
until a cut-off date in 2015 or sooner.
Unique ID
As part of the process, the DTCC is creating a unique ID for
each corporate action announcement that will be understood
between the parties in the transaction. An issuer, for exam-
ple, will be able to capture electronically data during a re-
organisation using a corresponding ID. The precise number
of corporate actions the DTCC would support was not clear,
although a DTCC spokesperson said there were nearly one
hundred and that some will be more widely used than others.
The corporate action taxonomy does not include the proxy
statement, which typically contains a lot of alphanumeric
text. We have a separate taxonomy for proxy statements
that we ve been working on but it s not included in the corpo-
rate actions taxonomy, said XBRL s Campbell Pryde. The
way that has been prepared is based on looking at the proxy
statements and what s typically reported and what s required
by law to report. We have a structure built up for the proxy.
Even if paper is the bane of the back office, Swifts Mansur
stressed that We re not trying to retire all paper-based data.
The stakeholders, which include the transfer agents, the
exchanges such as New York Stock Exchange, the central
securities depositories, the broker dealers and fund manag-
ers, have told us that they all want the same process, where
electronic records will complement paper records. It will be
similar to what happened for financial reporting. Electronic
data will have a paper counterpart which acts as a fail-safe
against potential litigation.
The narrative sections of a corporate action are where the
bulk of alphanumeric data is located and, in general, is the
most resistant to automation. Mansur stated that for 95%
16
03/06/2010 22:59

of the CA messages, narratives aren t needed. The vast
majority of those are found in the MT 564 and the 568 mes-
sage types. He described the 568s as being able to catch
the narrative overflow from the 564s.
Taxonomy Taxonomy
The corporate actions taxonomy does not necessarily cap-
ture all the details and make them completely automatable,
said XBRLs Pryde. Text fields that resist automation can be
captured. You re never going to have a taxonomy with a list
of tags for every single thing possible. Whether corporate
actions are automated or not, Things slow down when you
have to stop the process and read the corporate action to
In Conversation With
Laura Pollard
on ISJ.tv
Investor Services Journal caught up
with Laura Pollard, Executive Vice
President of Cambridge, Massachusetts-
based Fidelity Actions Xchange, who
chatted with John Sandman about their
products and their support for automating
Corporate Actions
ISJ: Where does Fidelity sit within the XBRL-Corporate
Action vendor scheme of things and what s your
approach to supporting automation?
POLLARD: We support multiple formats, including XBRL and
will be ready to support the migration to 20022 protocols. Our
role is to extend data, regardless of the geographic domicile or
format, to support broader risk mitigation solutions delivering
greater levels of control, operational efficiencies and lower
operational cost to our clients.
XBRL represents a critical industry initiative to address
a long-standing need to standardise and harmonise
information supporting a broad range of corporate
disclosures, including those surrounding corporate action
events. XBRL involves a standard process for electronic
tagging of financial and related disclosure information
and key data. Issuers can certainly support the electronic
tagging of traditional paper-based announcements and
disclosure documents in-house, but frequently utilise XBRL
translation and tagging services provided by those firms who
support their traditional financial communication services.
ISJ47 complete text Jun02.indd 17
US focus Corporate Actions
determine, for example, what the tax implications of an
event are, said Mansur. There will always be some aspect
of a corporate action that cannot really be coded and will
require a manual solution. It s the redundant scrubbing of
data that XBRL can eliminate.
That doesn t minimise the need for automation,
however. I hope eventually that the processing of corporate
actions will start to resemble clearance and settlement,
said Mansur. When you have cleaner, better data, it spells
more efficiency and reduced cost. Ideally, the costs to
reconcile data and implement risk prevention will be
correspondingly lower. ISJ
While we believe the effort to standardise corporate
actions announcements utilising common standards
at the issuer source is critical, it is largely limited to the
electronic tagging of data and does not address the scope
of complexities involved in the interpretation, validation and
analysis.
ISJ: Are translations or conversions from XBRL
instance documents to ISO 20022 something that is
or will be in demand? Is there likely to be an ongoing
market for this or is it going to be commoditised once
automation of corporate actions around XBRL and ISO
20022 becomes more widely implemented?
POLLARD: While industry efforts to standardise corporate
action messaging should remain a critical imperative, these
efforts represent only a partial solution to a comprehensive
risk mitigation process. To further mitigate risk, firms need to
access technology, tools and content expertise. This better
positions the organisation to control, interpret, communicate
and take action on specific corporate events across multiple
businesses, related asset servicing and trading groups as
well as other interested parties. We see little that would lead
us to believe the nature of corporate action events being
structured by issuing firms will decrease in the levels of
complexity.
ISJ:TheDTCCsaysithasidentifiedcloseto100
different types of corporate actions. Which ones
does Fidelity support? Do you offer template-driven
solutions?
POLLARD: The world of corporate actions is not static and
announcements are subject to increasing complexity not
limited asset class, presentation requirements and myriad
other factors beyond pure data management. We do support
all types of corporate actions and template-, business
rule and workflow driven solutions but again, we believe
guidance, interpretation and understanding nuisances are
essential in analysing the complete picture.
ISJ: XBRL US and Swift have provided functionality
to automate the reporting of the tax consequences of
a corporate action. Is this something your products
support?
POLLARD: Tax information is increasingly complex as
issues of domicile, tax treaties, domestic and foreign
withholding and eligibility and new cost basis rules,
are constantly changing and involve highly specialised
skills As experts in corporate actions, we are working
with tax specialists as best in market solutions to create
comprehensive, valued and effective tax support. ISJ
17
03/06/2010 22:59
 Under the Microscope UCITS VI

UCITS: Surprise, Surprise! * Q UDO

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LHV 6 HUYL
FHV LQ 3 DULV

The innovations that SGSS has already introduced to

It can come as something of a surprise to those enhance its capabilities and product ranges in certain
outside the financial services industry that some
locations, including Luxembourg, illustrate the extent to
investment houses only just become compliant with the
which UCITS IV is impacting upon the industry.
European Commission s UCITS III directive. There has
The potential for change as a result of UCITS IV is vast.
been so much talk in recent times of its successor, UCITS
Asset managers could benefit greatly for at least four
IV, and indeed early mutterings about the possibility of
reasons.
UCITS V as the appetite to regulate grows, that it can
One, the newly simplified procedure to launch a cross-
be easy for non-specialists to think the industry is further
border fund in the European Union could remove
advanced than it actually is.
an entire layer of costs by reducing dependence on
This is understandable. Investment managers and
consultancy services.
those who provide them with essential services and
Two, in cases where asset managers opt to merge
support, have long known that running fast in order
funds across borders, they will need fewer staff to
to stand still relative to their respective peer groups
manage those that remain.
This slow pace is isis aarguably fact of everyday life. This
truer today than
Three, they will need fewer service providers, capable
of providing securities services globally as well as
part of the reason ever before. Given the events locally.
that have affected the financial
for the long-term services industry since July
Four, the new ability to leverage a single management
company across Europe will enable asset managers
success of the 2007, it is a racing certainty
to close down those domestic asset management
that even as it finally becomes
project. UCITS IV-compliant, a new set of
companies that they have traditionally been required
to incorporate to comply with local regulatory
requirements will soon be unveiled. Some believe that the
requirements.
industry will inevitably find its goalposts being shifted once
more. Others, such as insists Jean-Michel Loehr, Chief
In this environment, providers which understand how
Industry & Government Relations at RBC Dexia, believe
the industry will need to change to meet client needs will
that the 20-year evolutionary process that has brought
have a competitive edge. Those which havent, will find
UCITS to the brink of its fourth incarnation will continue in
themselves reconsidering their very presence in the new
a slow and stately fashion. This slow pace is part of the
landscape. UCITS IV, says Sebastien Danloy, will be a
reason for the long-term success of the project, allowing
step too far for some.
appropriate levels of consultation to determine market
needs, he says.
Top Of The Agenda
Looking at the other side of the equation, asset
Centre of Attention
managers rather than their service providers, the UCITS
For the moment, though, UCITS IV remains the centre
IV survey published by RBC Dexia Investor Services and
The potential for of attention, and it is difficult to KPMG last autumn looks if anything even more relevant
overstate its impact on investment
change as a result of management. It is nothing less today than when it first saw the light, insists Jean-Michel
Loehr. As we move further into the implementation
UCITS IV is vast. than the trigger for much technical
phase the complexities that we identified earlier are being
and operational change around
confirmed, he commented to ISJ. This is one of the top
the world. Much has been written
items on my own agenda.
about the European Commission s UCITS IV directive in
The main findings of the report, which shows how some
recent months. Much more will be written before it comes
of Europe s largest asset managers plan to capitalise on
into effect (member states are required to implement it
UCITS IV and identifies how these reforms will contribute
by July 1 2011). Asset managers who haven t already
to wider changes across the investment fund landscape,
addressed the implications that the directive will have
echoing and elaborating upon topics already noted above.
for them, and what they will need to do to prepare
They can be summarised as follows: the vast majority
themselves fully, are already running out of time, warns
of UCITS managers are taking a proactive approach
6 HEDVW LHQ ' DQ O
R\ JO
REDOKHDG RI VDO HV DW6 RFL W
to UCITS IV; the number of management companies

18
ISJ47 complete text Jun02.indd 18 03/06/2010 22:59
ISJ47 complete text Jun02.indd 19 03/06/2010 22:59

Under the Microscope UCITS VI
will decrease; a new wave of fund mergers lies ahead;
Master/Feeder structures will be key for new markets/
client segments; Immediate cost savings are expected.
Peter De Proft, Director General of the European
Fund and Asset Management Association (EFAMA),
commented at the time, The fund industry is currently
facing numerous challenges in these turbulent economic
Hedge Fund Umbrella Launch
Merchant Capital launched a UCITS III umbrella
structure earlier this year, designed to provide hedge
fund managers, including small- to mid-sized firms, with a
seamless and cost-effective vehicle for running their own
UCITS III funds.
Merchant Capital claims this will enable a faster route
to market for managers. Historically, it has taken between
three and six months to construct and bring to market a
UCITS product. Funds using Merchant Capital will take
approximately four to six weeks, while also significantly
reducing the high fees the process normally incurs and
fulfilling all necessary counterparty requirements. The first
user of the umbrella was unveiled as Tressis SV, Spains
leading independent distributor of investment funds,
structured products, fixed income and other financial
products.
Hedge fund managers using Merchant Capital will not be
required to pay a standard minimum entry fee and will also
benefit from significantly reduced legal and administrative
costs. The UCITS III umbrella structure will also allow
the manager the freedom to seek competitive swap rates
in the market place and take advantage of competitively-
priced agreements in place with some of the markets
leading providers.
Additionally, the company will enable investors and
managers alike to reduce the counterparty exposure
inherent in partnering with a single institution; a manager
using an existing platform offering the full range of services
under one roof can be subject to significant counterparty
risk. Merchant Capital will supply hedge fund managers
with all the controls and systems required to manage a
UCITS III fund. As well as risk management and middle
office support, Merchant Capital also provides company
management, regulatory infrastructure and compliance
oversight.
times that have
impacted assets under management and profitability
across the industry. One of the important strategic steps
for players in the UCITS industry is to fully explore how to
take advantage of UCITS IV.
Culling Companies
The results highlight how managers will reduce the
number of management companies and will need to
consider the location of a centralised management
company carefully, taking into account concerns
surrounding tax regime (49%), the regulatory framework
(44%) and the availability of qualified personnel (33%).
Luxembourg (43%) and Dublin (18%) will be likely winners
but also the location of the group headquarters (23%) is
ISJ47 complete text Jun02.indd 20
ISITC
an important consideration.
The study also revealed that 49% of respondents
plan to restructure their fund ranges, with sub-optimal
fund size and high costs to investors being key drivers.
While UCITS IV will facilitate cross border fund mergers
the market may also see a large number of new feeder
funds which, as highlighted in the survey, will be used for
targeted fund distribution and enable managers to enter
new markets and segments. Again Luxembourg (81%) is
the favoured location for consolidating assets in master/
feeder fund structures.
By far the most important advantage to UCITS
IV for those asset managers polled is cost savings
(43%). Easier access to markets (24%) and increased
competitiveness (21%) were also highlighted as positive
outcomes of the new framework. Only 2% of respondents
said that UCITS IV brings no advantages, while 45%
acknowledged the absence of a tax framework as a key
issue.
The survey polled 52 asset managers with UCITS funds
established in their principal location in the European
Union (EU) as well as in the cross-border business
centres of Luxembourg and Ireland. The 52 asset
managers surveyed manage 54 % of the assets (UCITS
and non-UCITS) domiciled in the cross-border centres of
Luxembourg and Ireland.
Embracing The Opportunity
It is clear that the market is already readying itself
to embrace this latest phase of UCITS and has made
significant inroads in identifying the broad range of
opportunities UCITS IV creates, commented Jean-
Michel Loehr, on publication. As ever, education remains
key to ensuring that the market continues to capitalise
on regulatory changes. Vincent Heymans, Partner at
KPMG in Luxembourg, and co-author, added: The
current economic environment has presented the fund
management industry with numerous challenges. It is
therefore crucial that, now more than ever, fund managers
fully realise the efficiency and consolidation opportunities
found within UCITS IV, which allow for cost savings and
improved efficiency of operations.
But Regulatory Barriers Persist
Following a more recent poll, the results of which were
announced out of Hong Kong in April 19, RBC Dexia
Investor Services said that despite the success of UCITS
funds in Asia, regulatory barriers continue to make local
market entry difficult for the fund industry. RBC Dexias
latest industry poll also points to increased dependence
on third-party service providers as a key trend for the Asia
Pacific fund industry in the wake of the global financial
crisis.
Regulatory barriers to specific local market entry are a
major concern of the Asian Pacific fund industry, with 85%
of respondents indentifying this as a significant challenge.
Local laws and regulations across the region can make
local market entry and cross-border fund distribution
complex and costly.
The success of UCITS in the region also shows no
sign of slowing. In fact one in three (33%) respondents
believed the upcoming implementation of UCITS IV would
make UCITS even more attractive. The flexibility, sound
regulation and strong brand reputation of these products
has won strong appeal in Asia as three-quarters of the poll
respondents either already offer UCITS funds (62%) or
intend to do so in the near future (12%).
20
03/06/2010 22:59
ISITC ISJ June:Layout 1 4/22/10 11:59 AM Page 1

CRAFTING THE vision FOR THE securities industry

The Essential Work of ISITC Continues.

ISITC June 2010 Industry Forum & Working Groups

June 6 - 8, 2010
Four Seasons Hotel, Scottsdale, AZ

This conference will consist of Forums and Working Group Sessions.

Please visit www.isitc.org to register.
Dont miss the chance to represent your firm and participate in
ISITCs ongoing industry forums and working groups.
We look forward to seeing you in Scottsdale!

FOR ADDITIONAL INFORMATION VISIT www.isitc.org

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ISJ47 complete text Jun02.indd 21 03/06/2010 22:59

 Under the Microscope UCITS VI
Third-Party Help Needed!
Thiepoll suggests that third-party support is needed for
a fund manager to better understand the complexities
of local markets and to provide detailed local knowledge
and expertise to guide them through the sometimes
murky waters of cross-border or regional distribution,
argues Scott McLaren, Head of Asia Pacific Sales and
Distribution at RBC Dexia. It will become increasingly
important for service providers to become catalysts in
market evolution with the introduction of UCITS IV and
increased technology and automation becoming the
standard.
The survey indicates the widespread adoption of third-
party service (65%) amongst regional asset managers
Its Official!
UCITS is an important piece of legislation that is essential
to the integration of the financial markets in Europe and
to the benefits of its citizens. European investors need to
have access to efficient and reliable savings products, all
the more so with our ageing population. The UCITS label
has become a great European success story, renowned for
its transparency towards the investor, its reliability and
performance
even beyond Europe.
The objective of the fourth version of UCITS is to provide
a tool box to ensure the competitiveness of the European
asset management industry and to benefit European
investors. It promises more choice, greater efficiencies and
greater protection at less cost. It will also reinforce the
competitiveness of the UCITS label around the world.
The general principles of the legislation (Level 1 measures)
have already been defined and approved by the European
Parliament and the Council of Ministers. The outstanding
details of the implementing measures (Level 2) will now be
discussed, with an objective to finalise the text by July 2010.
The directive will come into force in July 2011 after national
transposition.
To make the most of the UCITS IV Directive, the
industry will need to continue to work on a number of
important issues, in particular to make fund processing
simpler and more automated. More generally, both politics
and industry have to address pension issues and the future
role that UCITS investment funds could play to meet the
challenges ahead. These challenges include: how to limit
the risk of UCITS investments, how to ensure inflation-
neutral returns and how to adapt the UCITS tax treatment
for old-age pension provisions, in order to foster a savings
culture. Industry and politicians will have to deal with these
challenges collectively.
The path to the single European market may be long and
complex but it is well under way and UCITS IV is a great
milestone in its advance.
Dr. Wolf Klinz, Member of the European Parliament,
Chairman of the Special Committee on the Financial,
Economic and Social Crisis, writing in UCITS IV, The
Transforming Event for European Asset Managers and
Distributors, a research publication from BNP Paribas
Securities Services.
with only a small percentage (20%) which did not see the
idea of outsourcing non-core functions as an option. The
balance of 15% responded that they would be looking to
use third-party providers for non-core functions in the near
ISJ47 complete text Jun02.indd 22
future, most probably (12%) within in the next 12 months.
When asked what their priority for improvement
was across the markets of Asia Pacific, over half of
the respondents (56%) said fund distribution was their
top priority. Fund administration and risk analytics and
reporting were also important, mentioned by one in four
(24-26%). Less important (15-18%) were custody,
outsourcing support and transfer agency.
Managing Expectations
Managing the expectations that are mounting about
UCITS is an important consideration for George Cadbury,
Director, Merchant Capital, whose perspective is tilted
towards hedge funds. One of the asset management
industry s major focal points this year has been the rapid
increase in hedge fund managers implementing the
UCITS III fund structure for their own offshore investment
vehicles, he observed in a recent essay on the subject
published in Investment Week. The adoption of UCITS
by absolute return managers has coincided with a period
when confidence in what are regarded by some as opaque
investment funds has never been lower.
He pointed to a recent survey carried out by Kepler
Partners, an independent fund marketing and research
adviser, which estimates that approximately $30 billion is
invested in hedge fund strategies that sit within a UCITS
III structure. Official figures from the European Fund and
Asset Management Association show that the total global
UCITS market stands at about $7 trillion. If we compare
these overall market figures to the offshore market,
where there are over 10,000 hedge funds competing for
a capital pool estimated to be a little above $1 trillion, it
is clear why hedge funds managers are starting to take
UCITS seriously, he observes. These figures, twinned
with the fact that investing institutions and retail investors
are increasingly turning to UCITS as they seek the lower
volatility and higher return characteristics of hedge funds,
show there is great growth potential at this nexus point
between alternative and traditional investment.
Post-Madoff/Nadel Clampdown
The Madoff and Nadel sagas prompted governments
to explore new ways of clamping down on hedge fund
activities; with UCITS there is a structure already in place
which addresses many governmental concerns. Although
to some extent the hedge fund industry has been used as
a political scapegoat and the survival bias is an argument
that funds which came through the recent turmoil are
carrying the crosses for those that did not, there is still a
need for the alternative investment industry to mature as it
moves into the mainstream.
With this trend in mind, it is unsurprising that swathes
of managers are exploring the possibilities of launching
one of their products within a UCITS structure. However,
dangers lurk for managers and investors alike when it is
their intention to simply replicate a strategy that may have
served them well as an offshore structure.
If a manager decides not to launch a cell (a version
of an offshore strategy in an onshore framework within
a UCITS platform) and instead do it themselves, this
can be an expensive proposal. A UCITS III fund offering
weekly liquidity with indicative daily pricing, compared with
monthly pricing and quarterly liquidity for a typical offshore
fund, will incur higher administration costs alone, placing
upward pressure on the Total Expense Ratio.
22
03/06/2010 22:59
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ISJ47 complete text Jun02.indd 23 03/06/2010 22:59


Under the Microscope UCITS VI
Investors Beware
Additionally, methods of investor protection that limit
gearing, particularly within non-sophisticated funds, could
curtail a manager s ability to match their performance
in the offshore fund. Due to the very nature of UCITS III
and its liquidity constraints, private equity, real estate and
distressed debt are not compatible as strategies with the
structure. Investors should therefore be wary of managers
who have had to make significant changes to their
portfolio in order to fit into UCITS. Although the directives
guidelines are flexible, they are likely to continue to
encourage participation predominately by equity long/short
and global macro funds.
Aside from the considerations of a specific strategy, it is
important the proper infrastructural support is in place to
ensure that the diversification mechanisms, embodied by
the 5/10/40 rule*, and again this can be expensive.
This brings us on to what the regulators state is the most
important component of managing a successful UCITS
IXQ G W KH ULVN P DQ DJHP HQ WSURFHVV 5 0 3 7KH JO REDO
financial crisis exposed significant weaknesses in the risk
management practices of many funds and investors are
now demanding that funds implement stronger RMPs.
Merchant Capital, for its part, has employed what it
believes to be the most efficient solution by hiring a global
professional risk and valuation services firm Kinetic.
Related to this, if a fund does not have a sophisticated
pre-trade compliance tool and an experienced compliance
officer in place, there is not only an inherent risk borne
by the company, but also an opportunity cost due to time
spent by the fund manager ensuring their weightings
are correct. The fund s performance will undoubtedly be
affected if the manager is perpetually concerned about
position sizes. Far better for the investment specialist to be
able to concentrate their expertise where it is best applied,
knowing that the necessary systematic support and
personnel are in place.
Risk And Regulators
In addition to performance attribution, value-at-risk
(VaR) analyses and stress testing, regulators want to
address issues such as OTC valuation, liquidity, leverage
and counterparty risk, all areas that in some cases were
conspicuous for being inadequately monitored recently. To
do so, managers must implement an internal framework if
they are to stand up to regulatory due diligence. It would
be impossible for a fund to launch a UCITS fund without
these systems in place and managers must be cognisant
of the costs involved.
Greater transparency, improved liquidity terms and
counterparty exposure controls are becoming more
important as features of the maturing absolute return
fund industry. There is a growing audience that believes
that the UCITS directive, which lays greater importance
on these features, can re-invigorate the investment
community s interest in these strategies. Nonetheless,
although the UCITS liquidity, transparency and
diversification requirements offer much more protection
than their offshore counterparts, investors would be
wise to look out for warning signals from managers
who struggle to match the performance of their existing
offshore funds or have not fully adapted to the UCITS
world. In saying that, Merchant Capital expects the
majority of managers to thrive under the UCITS umbrella
by offering institutional and retail markets the greater
returns they are so keenly seeking now with appropriate
ISJ47 complete text Jun02.indd 24
KN2244
risk management.
Looking ahead to UCITS IV and beyond to a putative
UCITS V, rather than back at UCITS III, Merchant Capital
director Christopher Day opines that Europe has a an
opportunity, after only 25 years of development of a
consistent harmonised approach, to leave the US behind.
Advances made since the original UCITS directive in 1985
should not be understated. And the UCITS IV addition to
the family represents the final nail in the coffin for those
European countries that like to make life more difficult.
If you had mentioned the words hedge fund in Spain
10 years ago you d have been thrown out of the country,
jokes Christopher Day. He continues in a more serious
vein. As long as politicians don t break it [UCITS IV],
you have something that is ahead of its time globally. It is
well ahead of the US where they are still trying to get to
grips with the regulation of hedge funds. Politicians and
other authorities should nurture it, not kill it. Let s hope
they ll be too worried about offshore hedge funds to worry
unnecessarily about UCITS. That will give it time to settle
down, and potentially become the regulatory framework of
choice. Europe s funds could become as big as the USA s,
delivering hitherto unimagined economies of scale, both in
terms of cost and expertise.
He warns, though, of the possible repeat of the carbon
trading scenario, when Europe threw away a similar
chance. Europe had the potential to lead the world until
governments cheated, snatching defeat from the jaws of
victory, he concludes.
*a UCITS structured fund may invest no more than 10% of its net
assets in transferable securities or money market instruments
issued by the same body, provided that the total value of
transferable securities or money market instruments held in issuing
bodies in each of which it can invest more than 5% is less than 40%.
Conclusions
The UCITS IV Directive should lead to a more efficient
and competitive European Union asset management
industry.
The Directive will most likely result in a shift from the
current situation of asset management companies being
organised in vertical silos to one where the set-up is more
pan-European, centralised and horizontal. Today, an asset
manager which distributes in six countries, needs to have
six management companies, handle six funds, and use six
depositaries. Under UCITS IV, the same asset manager
can choose to have only a single management company,
two funds, two feeder funds, and use four depositaries, for
the same distribution coverage.
Opportunities for asset managers will differ from
country to country, and by asset manager business
model and size. Options will open up across the various
markets depending on the local culture and tax system.
The trick for the asset managers is to approach each
country bearing in mind their investors needs and the
characteristics of their own organisations. By the same
token, local expertise in an asset-servicing provider will
continue to be desirable as accounting rules, tax treatment
and regulatory reporting will remain country-specific.
In order to take advantage of UCITS IV, asset managers
will need a strategic approach. Those dealing with UCITS
and non-UCITS funds also have to consider similarities
and differences between the AIFM and UCITS Directives.
This will allow regulatory arbitrage.
Asset managers will need to decide on the types of
investors and markets to target, first within and then
outside the European Union. ISJ
24
03/06/2010 22:59
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ISJ47 complete text Jun02.indd 25 03/06/2010 22:59

 The ISJ Profile Mark Mobius Templeton Investments

Mark Mobius on
CYCLING The Secrets of
Investment Success,
SUCCESS Cycling In Chile and
Bikini-Clad Beauties

Mark Mobius, Ph.D., executive chairman, joined Templeton in

Mark Mobius, emerging markets investment specialist at
Templeton Investments for the past 23 years, is arguably
the best known name and face in the emerging markets
investment world. As has been pointed out more than once,
he bears a striking resemblance to the late movie star Yul
Brynner. As has also been pointed out more than once, he
spends most of the year traveling from one exotic location
to another, in search of new investment opportunities and
to monitor existing investments.
1987 as president of the Templeton Emerging Markets Fund,
Inc. He currently directs the analysts based in Templetons
16 emerging markets offices and manages the emerging
markets portfolios. Dr. Mobius has spent more than 40
years working in emerging markets all over the world. In
that time he has been perfectly happy to share with the
wider world his secrets of success frankly and openly.
Investor Services Journal is delighted to be the vehicle this
time round.

In emerging markets investment, it is necessary to commonsense: implies the clarity and simplification required
be optimistic since the world belongs to optimists; the to integrate successfully all the complex information with
pessimists are only spectators. which investors are faced.

Frankly, while there are certainly numerous technical skills Creativity

one can learn to aid in making A significant amount of creativity is required for successful
Both buyers and investments or managing a investing, since it is necessary to look at investments from
sellers are acting on fund, investing is still a large a multifaceted approach, considering all the variables that
percentage psychological. Both could negatively or positively affect an investment. Also
a combination of buyers and sellers are acting creative thinking is required to look forward to the future and
instinct, information on a combination of instinct, forecast the outcome of current business plans.
information and logic. It is
and logic. important not to forget the key Independence
role that development of certain
personal characteristics can contribute to your investment
success. Mark Mobius Cycling In Chile
Hard work and discipline
Someone asked me once if I could condense the most
important qualities needed for a good investor into five words
and I replied: Motivation, humility, hard work and discipline.
If you think you It stands to reason that the
more time and effort is put
know all the answers into researching investments,
you probably dont the more knowledge will be
gained and wiser decisions will
even know the be made. Humility is needed
questions. so you are able and willing
to ask questions. If you think
you know all the answers you probably don t even know the
questions.

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

26
ISJ47 complete text Jun02.indd 26 03/06/2010 23:00
 A number of successful investors have commented on the
importance of independence and individual decision-making.
If one buys the same securities as other people, one ends up
with the same results as others. It is impossible to produce
a superior performance unless one does something different
from the majority.
Risk-taking
Investment decisions always require decisions based on
insufficient information. There is never enough time to learn
all there is to know about an investment and even if there
were, equity investments are undergoing continuous change
making it impossible to obtain the most updated information.
There always comes a time when a decision must be taken
and a risk acquired. The ability to take that risk based on the
best diligently gathered available information is the mark of a
good investor.
Flexibility
It is important for investors to be flexible and not permanently
adopt a particular type of asset. The best approach is
to mitigate from the popular to the unpopular securities
or sectors. It s also an attribute, which keeps one from
holding on to a stock out of loyalty flexibility allows one to
change as times change and new circumstances present
themselves.
Well these are the key personal qualities that affect
investment-making decisions, the following are important
investment attributes that will benefit your investments.
Diversification
It is actually possible to have all your eggs in the wrong
basket at the wrong time, especially in emerging market
investment. To reduce one s vulnerability to this eventuality,
every investor should diversify. This is particularly important
in emerging markets where individual country or company
risks can be extreme. Even given the risks, however, global
investing is always superior to investing in only your home
market or in one market. If you search worldwide, you will
find more bargains and better bargains than by studying one
nation.
Timing and staying invested
I love to reply to those who ask when they should invest in
equities by using the provocative answer provided by Sir
John Templeton: The best time to invest is when you have
money. The reality is that market timing is impossible, and
since equity investing is the best way to preserve value,
rather than leaving money in a bank account, it is best to just
get going, rather than wait for the fabled perfect moment. A
corollary to the question of when to buy is, of course, when
to sell. My feeling on that issue is that investments should
not be sold unless a much better investment has been found
to replace it.
Long-term view
I know how unsatisfying it is for investors who invested in a
fund or a stock only to see the net asset value or price do
down, or not make the fast gains they were expecting, to
hear that they should be in it for the long-term. But it s the
truth. As investment managers, we have a policy of looking
to the long-term because experience has shown us that if
we try to make short-term gains the result will work against
outstanding performance. Since most investors look at the
short term, then we certainly should not do that. By looking
ISJ47 complete text Jun02.indd 27
at the long-term growth and prospects of companies and
countries, particularly those stocks, which are out of, favor
or unpopular, the chances of obtaining a superior return are
much greater. To minimize discomfort or disappointment,
investment averaging should be undertaken.
Investment averaging
Another point that should be remembered by investors
is the importance of investment averaging by purchasing
consistently in a measured and periodic pattern. Investors
who establish a program from the very beginning to
purchases shares over a set period of time have the
opportunity to purchase at not only high prices, but also low
prices, bringing their average cost down.
Accepting market cycles
Any study of stock markets around the world will show
that bear or bull markets have always been temporary. It is
clear that markets do have cyclical behavior wit pessimistic,
Mobius Rules: The Bust Box
When you tap into an attitude in any country that
says were number one, were the best, no-one can
beat usthats the right time and the right country
to SELL.
When everyone else is dying to get in, get out.
When everyone else is screaming to get out, get in.
If a broker starts giving you the hard sell, never buy.
The best time to buy is when everyone else is
screaming that theres blood on the streets.
In times of crisis, people on the ground start coming
to their senses.
Easy times make people go soft. Hard times get
people going.
What goes down usually goes back up, if youre
willing to be patient, and dont hit the panic button.
The problem with recoveries is that they dont make
good copy.
Market meltdowns make headlines. Market
recoveries make money.
A liquid stock market is one thats easy to get out of,
not just easy to get in.
Source: Passport To Profits.
skeptical, optimistic, euphoric, panic and depressive phases.
Investors should thus expect such variations and plan
accordingly. We have all adopted the belief that the time of
maximum pessimism is the best time to buy and conversely
the best time to sell is the moment of maximum optimism. As
often noted, if it s possible to see the light at the end of the
tunnel, then it is probably already too late to buy.
And Is There Still Time For Play?
All work and no play would make Mark a dull boy, though,
and he is certainly not dull. A keen cyclist, he takes
advantage of every chance to climb into the saddle and see
more of the world than just airports, factories and balance
sheets. He has many a tale to tell that might make lesser
mortals go green with envy.
Every time we come to Vina del Mar, a two-hour drive from
27
03/06/2010 23:00
 The ISJ Profile Mark Mobius Templeton Investments
Santiago airport in Chile, and one of my favourite places in
the world, we take our folding bicycles for a short cycle to the
art deco casino and the town where there is good shopping
and restaurants. This time we
Peruvians and extended our cycling for two
Chileans each claim hours past the Army Academy
to have the best with its collection of antique
cannons and then further on
pisco but after one to the delightful beaches with
pisco sour, who stylish beachfront cafes.
cares! In and around Vina del Mar,
there are many houses and even a seaside castle built
by entrepreneurs who got rich from exploiting saltpeter
resources in northern Chile, an observation he makes that
underlines how embedded is business in his DNA. He
recalls that the boom began when in 1840, a French scientist
discovered that sodium nitrate for use as fertilizers and
explosives could be derived from both guano and caliche
Desert bordering Chile, Bolivia and Peru. Chile fought and
won the 1879 to 1883 War of the Pacific over those mineral
deposits against Bolivia and Peru and acquired control of
those countries border provinces. One result which still
rankles the Bolivians was that Bolivia lost its Pacific port
province and thus became landlocked with no access to
the sea. For a long time those nitrates were Chile s largest
export and attracted Europeans and others eager to get rich
on the valuable mineral. However when synthetic nitrates
were developed in the beginning of the twentieth century
The following is an edited
reproduction of an interview on 25
April 2010 with CNBC Asia
CNBC ASIA: The shadow on Wall Street, of course, is this
finance-related bill. The senate will vote on whether or not
to subject the biggest financials to more scrutiny and give
regulators more powers to seize controls of firms going
belly-up or hoping to avoid another global financial crisis.
Dr Mark Mobius, executive chairman of Templeton Asset
Management says that it is about time.
MOBIUS: The question now is why it wasnt done
previously. If you remember, Mrs. Bourne, who is the
head of the futures commission warned everyone about
derivatives and wanted to regulate them. But, Greenspan,
Rogan, Larry Summers were against it they didnt want
the regulation to take place so it could have happened
but it didnt. The SEC has lots of powers to regulate but
they didnt, so the proof would be in what happens at the
regulatory administrative level to implement what is passed
in congress.
But I think generally speaking, what we have to look at
is the incentives. Where are the incentives? In the case of
financial derivatives, I personally think there should be a
small tax, a small fee, put on financial derivatives, maybe 10
basis points, so that youll have exposure if you have a tax,
then youre going to have exposure. You must have liquidity,
you must have a transparency. We need to put those kinds
of reforms in place.
CNBC ASIA: What is the risk that they are going to over-
regulate?
MOBIUS: I dont think thats going to happen. The forces
ISJ47 complete text Jun02.indd 28
Chile s leading export became, and still is, copper.
Bikini-clad Beauties
There were all kinds of events on this particular visit, he
relates, including a local pisco promotion featuring bikini-
clad beauties cavorting on a temporary stage. Pisco is the
local clear brandy, he explains. It s great when made into
a picso sour, a delicious mixture of lemon juice, egg white
(creating the tempting white foam at the top of the glass),
sugar and, of course, the powerful pisco. Peruvians and
Chileans each claim to have the best pisco but after one
pisco sour, who cares! Oddly enough, some might feel
unfortunately, there s no further elaboration on the subject of
bikini-clad beauties
In the evening we took the new Metro fast train to the heart
of old Valpariso and found a quaint restaurant, Porto Viejo
which served delicious fish. Since the restaurant is mainly for
locals, the waiter didn t speak English but we were rescued
by the owner s American educated cool gangly young son
with a cute girlfriend. The food was great but so were the
quantities and we staggered out. After dinner we decided
to take a little walk to the funicular railway going to the top
of the mountain overlooking the city very much like Hong
Kong s Peak Tram. Walking up the cobblestone streets
and alleyways we encountered architectural and cultural
sites at almost every corner. No wonder the city has been
named a UNESO World Heritage Site. Climbing up a high
stairway leading to the funicular rail station we found that it
against regulation are very strong in Washington. Theres
$600 trillion of derivatives outstanding; lots of money is
being made with derivatives. Its not going to go away; I
dont think that regulators will kill that golden goose.
CNBC ASIA: Ive heard that if you take a very extremist
view of things, or maybe even not that extremist a view,
that the cowboy days the wild wild west days in the
financial industry are looming, and that they are going to
become like utilities water companies, electric companies,
gas companies - is that what could possibly happen in the
financial industry? How would that affect your view, of
whether or not you want to engage in this space?
MOBIUS: Well, I mean, my feeling is that if stock exchanges,
savings banks, and those institutions became utilities, Im all
for it because thats the service that has to happen properly
and regulated for the market to work. But I dont think
volatility will go away; I dont think turnover will go away; I
dont think trading will go away. This will continue because
everybody realises, including the administration, that this is
essential for the workings of a free economy.
CNBC ASIA: Lets bring it back to this neck of the woods,
finally. Could this be the beginning of a break out, for
emerging market financials? Asian banks, for example. I
mean, if Wall Street is going to go through another raising,
another round of this, what could happen to like the major
Chinese banks could there be heightened interest?
MOBIUS: There already is. I mean a lot of money has been
pouring into emerging market funds, particularly in Asia. Half
of all money going into emerging market funds is in Asia
so theres heightened interest because if you look at the
credit default swaps, spreads for Greece and Portugal are
28
03/06/2010 23:00
 higher than China, far higher, so people are more confident
in putting money into these banks. The danger is that the
lessons were learning now in the west are not learnt
in Asia. Hopefully, theyll adopt some of the regulatory
mechanisms that are now being learnt.
CNBC ASIA: Despite the fear on the streets of Thailands
capital, you still see plenty of value in the country?
MOBIUS: Thailand has to change; it has to be an
accommodation between the mass of people in the rural
areas and people in Bangkok in controlthe elite. That kind
of change does not come easy. It often means violence, as
weve seen; it takes time, but when it comes and I believe
it will come - youre going to see a much changed and
improved Thailand.
CNBC ASIA: You are accumulating, right now?
MOBIUS: Yes
CNBC ASIA: In the midst of all this violence
MOBIUS: In the midst of the violence, if prices come down
enough. We are frankly surprised that prices have not come
down more. We, of course, would like to see prices correct
more substantially. But we would be buyers.
CNBC ASIA: You buy the market?
Or you have to be careful, going bottom?
MOBIUS: Of course, we think bottom up; we look at
stock picks and of course as you know, our big areas are
commodities which mean the oil companies, anything
related to consumers whether it be housing or retailing
and so forth.
CNBC ASIA: What specifically do you do to leverage the
concept of higher rate of participation in the growth of the
economy?
MOBIUS: Well, the way we leverage is by getting exposure
to consumers, directly or indirectly. For example, its not
only that we think that oil prices will continue at a higher
level, its also because these companies have exposure to
consumers; consumer have to travel, have to move, have
to have more cars and therefore we want to get exposure
that way. We want exposure to the banks because they are
becoming more consumer banks. The consumer banking
revolution has hit Thailand and that would become more
and more important.
CNBC ASIA: You recently spent some time in Korea,
and youve elevated your view, your optimism over Korea,
especially in the manufacturing space, and youre also very
bullish on Vietnam as well, in terms of thrift and value. Can
you address those two markets for me?
MOBIUS: In the case of Korea, were seeing another
transformation taking place. Besides the fact that the
countrys really growing at something like 5%...so youve
seen a real recovery in the economic development of the
country. But what youre also seeing and its taking a long
ISJ47 complete text Jun02.indd 29
time, its going to be gradual, a reform of the market, is that
the Chaebols are reforming. Theres a growing realisation
that they cannot continue to have this so-called Korean
discount. Korean companies have generally been cheaper
than other markets on a price-earnings basis. And the
reason, in my view, for that is the Chaebol obstruction
of the market, and the fact that they dont pay dividends
as well as other parts of the world. Because what theyre
doing, in a Confucian way, is looking at not this generation,
but two or three generations down the road. So they are
continuing to invest.
Honours, Books and Awards
Dr. Mobius earned bachelors and masters degrees from
Boston University, and a Ph.D. in economics and political
science from the Massachusetts Institute of Technology.
He is the author of the books Trading with China,
The Investors Guide to Emerging Markets, Mobius on
Emerging Markets, Passport to Profits, Equities - An
Introduction to the Core Concepts, Mutual Funds - An
Introduction to the Core Concepts and Mark Mobius -
An Illustrated Biography.
Dr. Mobius has received numerous awards. He was
named by Asiamoney magazine in 2006 as one of Top
100 Most Powerful and Influential People. Asiamoney
said: Boasts one of the highest profiles of any investor
in the region and is regarded by many in the financial
industry as one of the most successful emerging markets
investors over the last 20 years. Despite tough times
during the financial crisis that erupted in the late 1990s,
he still commands a strong following in the investment
world and is influencing the direction of billions of
investment dollars.
Other awards include: (1) Emerging Markets Equity
Manager of the Year 2001 by International Money
Marketing, (2) Ten Top Money Managers of the 20th
Century in a survey by the Carson Group in 1999, (3)
Number One Global Emerging Market Fund in the
1998 Reuters Survey, (4) 1994 First in Business Money
Manager of the Year by CNBC, (5) Closed-End Fund
Manager of the Year in 1993 by Morningstar and (6)
Investment Trust Manager of the Year 1992 by Sunday
Telegraph. He was appointed joint chairman of the Global
Corporate Governance Forum Investor Responsibility
Taskforce of the World Bank and OECD (Organisation
for Economic Co-operation and Development).
CNBC ASIA: There is a lot of locked up value.
MOBIUS: A lot of locked up value. Vietnam is a
frontier market for us. And the big frontier markets in
our portfolio, frontier portfolios, are Vietnam, Ukraine,
Kazakhstan and Nigeria. Vietnam is very, very cheap.
However, the way the market is run is a mess, because
what happens is that we as final investors have to inform
everyone what were going to buy and when were going
to buy it and how much were going to buy in advance.
In addition, we must use only one broker. So you can
understand what happens a tremendous amount of
front running takes place. In addition, of course, that
would not be so bad if the liquidity was there, but their
liquidity is very poor. So we must nibble, we must use
tactics to get into the market slowly and gradually, but the
valuations are definitely there. With Kind Permission
29
03/06/2010 23:00
 Regulation OTC Derivatives, Market Risk in EU
OTC Derivatives
Enhancements Needed
The soundness, resilience and
transparency of OTC derivatives
markets should be enhanced. In
particular, the establishment of sound
infrastructures for OTC derivatives
should be promoted.
This is just one of a number of lessons that have been
learnt from the financial crisis according to a just-published
report from the European Central Bank. The financial
crisis encouraged securities regulators and overseers to
consider adopting consistent regulatory and oversight
measures to promote safety, resilience and transparency
of OTC derivatives markets and to support private sector
initiatives in this field, observes the ECB report. In line with
the respective G20 mandate, regulatory initiatives regarding
OTC derivatives markets are currently under consideration
across jurisdictions. One area of focus is the establishment
of market infrastructures for the trading, clearing and
settlement of OTC derivatives, as the financial crisis
highlighted severe shortcomings in the bilateral organisation
of these processes.
ECB Recommends Follow-up Action
Establishment of a sound infrastructure for OTC
derivatives.
An immediate priority identified by the ECB is to
progress towards enhanced use of CCPs for OTC
derivatives eligible for central clearing. In addition,
measures are being considered to strengthen risk
management for contracts not eligible for central clearing,
as well as to promote reporting of OTC derivatives
contracts to trade repositories (TRs). In the EU, the
European Commission issued a Communication on future
actions to improve the resilience of OTC derivatives
markets in October 2009. Legislative proposals are
expected to be delivered by mid-2010.
As part of the legislative package envisaged, the
Commission intends to develop comprehensive EU legal
frameworks for CCPs and trade repositories to ensure
the safe and efficient functioning of these infrastructures
and to limit the potential for possible regulatory arbitrage
across jurisdictions. Such legislation is expected to build
on the recently finalised ESCB-CESR Recommendations
for CCPs in the EU, which consider the specific risks
inherent in the clearing of OTC derivatives. Regulatory
reform along similar lines is being considered in the United
States, where possible measures were outlined in May
2009.
Given the global nature of OTC derivatives markets,
global convergence of the regulatory measures adopted
in the various jurisdictions will be essential. This work is
supported by the review of the CPSS and IOSCO of the
application of the 2004 CPSSIOSCO recommendations for
CCPs to clearing
arrangements for OTC derivatives, launched in June 2009.
With the impetus and support of regulators, several
private sector initiatives to enhance the functioning of OTC
derivatives markets are also underway. These involve the
ISJ47 complete text Jun02.indd 30
effective implementation of CCPs and trade repositories
for OTC derivatives, enhanced standardisation of the
legal and economic terms of OTC derivatives contracts,
portfolio compression and reconciliation, the resolution of
settlement
and restructuring issues related to credit events, and
operational improvements in the field of electronic trading
and trade matching/confirmation.
Report on the Lessons Learned from the Financial Crises
with Regard to the Fuctioning of European Financial
Market Infrastructures. European Central Bank April 2010.
EU Banks Market Risk
Now Hear This! Moodys Says Impact
of New Market Risk Regulation on
European Banks Manageable
Moody s Investors Service has provided a preliminary
assessment of the impact on selected European banks of
the changes to Basel regulations for market risk due to be
implemented by the end of 2010. In a Special Comment
published on April 15, the agency says that it expects the
short-term impact of the changes to be ratings-neutral, but
longer term challenges remain. Moody s says its estimates
show that the impact of the regulatory changes on banks
capital ratios will be material in some cases.
For banks with sizeable investment banking activities,
Moody s expects that the implementation of the market risk
amendments will lower capital ratios by up to 17%. However,
this appears to be manageable in most cases, given the
increase in capital and the deleveraging that took place
during 2009, says Alessandra Mongiardino, a London-
based Vice President, Senior Credit Officer and the main
author of the report. Second-tier banks with sizeable market
risk activities may also be affected by these regulatory
changes. Second-tier players could be under pressure
and may review their continued presence in certain market-
related activities, and may decide to concentrate on their
core activities, a development that might be credit-positive,
she adds.
The report also notes that, in the longer term, there
are other elements that need to be taken into account
when looking at banks creditworthiness in light of the
new regulatory environment, in particular as they relate
to the so-called Basel III proposals. Moody s believes
that a more accurate reflection of the risks inherent in
these activities, with capital levels better aligned with the
risks, is a credit-positive given that it improves banks
resilience to economic shocks. However, banks will be
under pressure to find ways of enhancing profitability to meet
shareholders ROE expectations, says Mongiardino. They
may therefore increase their risk profile again in order
to achieve these objectives. The way that banks will
handle these opposing requirements will likely affect their
creditworthiness.
A final element to consider is that each country must
translate the Basel Committee s recommendations into
amendments to the local market risk framework. This
leaves open the risk that the amendments might not
be applied consistently across banks headquartered in
different jurisdictions. Given the highly globalised nature of
capital markets, any regulatory arbitrage will have negative
consequences for the stability of the financial market and for
bond investors, says the report.
30
03/06/2010 23:00
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 Technology Releases Thomson Reuters Elektron / BNY Melllon Dashboard
Data: The Next Generation
If latency is reduced much further,
well be travelling back in time.
If latency is reduced much further, we ll be travelling back in
time. That is one flippant reaction to the latest news from the
frontline of the acceleration and automation of trading, with
the announcement from Thomson Reuters that it is seeking
to transform financial markets with the launch of Elektron,
which it describes as a unique global fabric delivering
supreme performance, unrivalled access and connectivity to
power trade automation.
We ll give Thomson Reuters time and space to elaborate
on their own terms in a moment or two. But it is important to
place its ambitions firmly in the context of developments over
the past two to three years arising from the implementation
of the EU s MiFID directive, which has spurred the creation
of alternative trading venues such as Chi-X, Turquoise
and BATS Europe, to name but a few. The proliferation of
these venues, and the increasing use the industry makes of
dark pools of liquidity, has increased complexity, increased
fragmentation of liquidity, raised important questions about
transparency of trading strategies and correctness of pricing,
and changed the very nature of demand.
In that time, electronic trading has stopped being the
preserve of an elite few with the necessary black boxes.
Today it is almost mainstream, within the reach of Everyman.
Algorithmic trading is much more widespread today, as
we have adapted to the demands for automation and high
performance, Mike Powell, Head of Global Enterprise
Information at Thomson Reuters, told ISJ. More and more
people want to indulge in high-frequency trading, not only
in North America and Europe, but elsewhere. Look at the
creation of Chi-X Australia, SBI Japan Next and Chi East, a
tie up between Chi-X and the Singapore Stock Exchange.
Elektron takes away a lot of the complexity and cost of
connecting to multiple markets. It levels the playing field
and opens it up to more hedge funds and smaller players. A
single connection to our cloud gets you access to low latency,
and the full depth of a market, whether locally or regionally.
In its own words, Thomson Reuters reports that
Elektron is a global, ultra-high speed network and hosting
environment that enables financial firms to access and
share information faster and more cost effectively. Hedge
funds, asset managers, banks, brokerages, exchanges and
other participants will for the first time be able to connect to
the worlds largest financial community and securely reach
trading partners over the network.
Thomson Reuters Elektron enables firms to trade faster,
using the most complete coverage of real time financial
information available, connect to more markets and interact
freely across a global, resilient and secure cloud. Firms of
all sizes will benefit from significantly lower operational costs
and drastically reduced time to market, plus the opportunity
for the open exchange of data, transactions and new
business opportunities.
The launch of Elektron marks a performance step-
change for financial information networks, argues Thomson
Reuters. Benchmark testing indicates that Elektron delivers
information up to 20 times faster than traditional aggregated
data networks. The fabric includes strategically located
proximity and co-location hosting centres, initially in New
York, Chicago, London, Frankfurt, Tokyo and Singapore.
Later this year additional centres will open in Hong Kong,
India and Brazil. Clients that have already moved their
ISJ47 complete text Jun02.indd 32
financial applications into the Elektron hosting centres
have experienced significant cost reduction and superior
performance.
Using this open and neutral network, clients, exchanges,
brokers and other liquidity providers will be able to publish
messages and content directly to their discrete counterparties
and subscribe to service providers analytics, algorithms, risk
models, as well as post trade facilities and reference data
resources.
Thomson Reuters says that Elektron builds on this by
being fully compatible with its existing middleware, metadata
and commercial model. Third parties can move all the
applications they have built on Thomson Reuters market data
system seamlessly to Elektron.
Jon Robson, President, Enterprise, Thomson Reuters
adds: This is a time of extraordinary innovation for
Thomson Reuters, our customers and our partners, as
together we respond to and shape a rapidly evolving
financial marketplace. Elektron is designed to enable
this innovation. It marks a step-change in empowering
customers, enabling them to innovate and connect to the
markets and to each other across a neutral, global and
content rich infrastructure. We are responding to the needs of
a new era in the financial industry, one which requires that all
participants benefit from increased transparency and equal
access to markets. Firms of all sizes will be able to connect
via Elektron, benefiting from greater speed, lower operating
costs and flexibility that will enable the markets to work and
evolve freely. ISJ
Dash It All: BNYMs New Functionality
BNY Mellon Asset Servicing reports that it has introduced new
dashboard-style reporting functionality to help asset owners
and asset managers gain greater visibility into their securities
lending portfolio. The new reports, it says, provide both detailed
and executive summary-level information on earnings, loan
values, credit quality and other account activity designed to help
decision-makers evaluate performance and potential exposures
across their securities lending positions.
Available to clients through BNY Mellon s Workbench reporting
platform, the new lending dashboard offers web-based access to
comprehensive and customisable data, including:
Month-to-Date Lending Revenue Analysis SURYL GHV P RQ WKO
\
earnings by security, including average market value available,
market value on loan, utilisation percentage, total and client
spreads,and client earnings;
Executive Reinvestment Portfolio Summary - details fund
characteristics, floating rate index information, credit quality,
asset class distribution, maturity schedule, top 10 issuers, daily
rating changes, and exposure by industry;
Executive Lending Summary GHVL J Q HG IRUH[HFXWLYH
management and presented in graphical format, shows lending
utilisation by security and top five borrowers by security type.
It also provides daily average returns, volumes and collateral
percentages by loan type; earnings by asset class; cash versus
non-cash collateral held by loan type; and top 10 earnings by
security.
Asset holders are clearly devoting more attention to risk and
demanding greater transparency in their reinvestment accounts,
said Kathy Rulong, global head of securities lending for BNY
Mellon. Our lending dashboard offers them a wide range of
actionable data and key metrics with just a few clicks. The new
reporting format provides clients with at-a-glance insight into their
lending portfolio, supporting the decision-making they do daily to
manage and maximise their plan s objectives. ISJ
32
03/06/2010 23:00

AnAlyse
Has Automation Become
Automatic?
The mutual fund industry appears to be embracing
automation. Dan Llewellyn, Director of Market
Innovation at Calastone, reflects on some of the key
THISHow can data management
industry developments and drivers and looks ahead to what
the industry can anticipate.
Over the past three years, the mutual fund industry
seems to have woken up to the potential of automation
processing. This may have been driven by evidence of
successful post-MiFID equities markets initiatives. It
may have resulted from an awareness of the limitations
of having a single incumbent transaction processing
provider. We believe it is certainly driven by regulatory
awareness. Not only in the form of RDR, but from a
desire for cross-border transaction harmonisation in the
form of UCITS. Setting a common goal for ISO20022 has
helped. Many firms are figuring out how they can become
ISO20022-compliant yet in reality they can become
compliant today without needing any investment in new
processes or technology.
The regulators attention on risk reduction is no passing
fad. They, like the industry associations, are keen to find
ways to make processes more efficient, ways designed
to help the entire market - whatever their size, location or
communication preference.
The settlement model has been addressed. Historically
mutual fund settlement has been conducted on a
secondary market model. Now the industry can transact
RQ D SULP DU\ P DUNHWP RGHO RQ H Z KLFK KHO SV SDUWLFLSDQ W
V language support built into it from the ground up. This is
transact more efficiently and with greater certainty.
Business processes are being reviewed and amended. In
the automation of historically manually-handled processes,
manual processes should not simply be mirrored using
technology. Sometimes they need to be re-thought,
such as the automation of reconciliations. In line with
EFAMA recommendations for greater automation and fund
processing efficiency, and the IMAs proposed principle for
automation of reconciliation reporting, processes have now
been fully automated to meet previously resource-intensive
regulatory requirements.
So whats next? We believe the most significant
developments focus on benefiting from international
transaction processing interoperability, truly cross-border
trading and more efficient post-trade services. So often,
we are asked how quickly other domestic and international
fund providers, distributors and transfer agents can be
connected so that participants can extend their reach.
Firms will quickly reap the benefits of order processing and
settlement scale, ensuring that they - and the regulators -
can be confident that more flow does not mean more risk.
ISJ47 complete text Jun02.indd 33
Analyse This Automation
systems produce the right
translations for the middle
office?
Stuart Plane, Director, Cadis
Judging by the recent flurry of local-language releases,
data management providers have stepped up translation
to try and support the global ambitions of banks and asset
managers. But many firms are still left wanting. These
enhancements provide basic data translations, but nothing
deep enough for the specific requirements of middle
offices. Local-language capabilities that are built into data
management software from the ground up are the answer
to getting the level and flexibility of translation needed. The
good news is they do exist.
The weaknesses of basic translation capabilities are
exposed by double-byte languages in Asia. Data
management systems which offer generic Kanji or Chinese
translations will provide one character when, in reality,
multiple variations are needed by the different desks, asset
classes and offices. In addition, middle offices cant rely
on poorly translated data to produce suitable client and
regulatory reports. Where a Western-educated risk officer
can bridge the gap caused by a mistranslated character, a
rural investor probably can t.
A data management system which has had double-byte
or other language support simply added on will need to
be customised to account for local variations; even then,
translations still may not be detailed enough. In cases
where the technology is legacy, IT databases would have
to be completely restructured. At a minimum this extra work
will include manual workarounds to format data, increasing
the risk of mistranslation and operational error.
So, the answer? A data management system that has
already optimised to deliver user-specific translations.
When translation capabilities are built into the technology,
data management systems are able to support the
languages inherent in the user s underlying databases.
Translations are no longer limited to the word/character
scope of the data management solution; instead the user
dictates the depth of the language support.
Building local-language capabilities from the ground up
provides added benefits, like operational efficiency. Offices
from around the world can rapidly source golden copies for
local operations while working from the same data master.
Minimal manual intervention is needed to take data from a
master set in English and input it into the format a user in
Hong Kong or Italy wants. Any middle office user can easily
get data - with the terms and labels they want - across the
life of a transaction.
No firm with global aspirations should expect their middle
offices to put up with poor translations or a language theyre
not used to. Where basic translations fail, the ground-up
approach to local-language support makes data work for
the user and delivers real benefit to the business.
33
03/06/2010 23:00
 Fund Focus on Cyprus - sponsored section
KPMG in Cyprus
partner in business
Cyprus as a financial centre
Cyprus is an attractive financial centre combining the
advantages of a traditional offshore centre with those of a full
member of the European Union.
Despite the global economic slowdown, by May 2009 more
that 6,000 new companies had been registered. Cyprus has an
excellent infrastructure allowing clients to add real substance
to their tax planning in the form of fully-fledged operations in
the island.
With a population of approximately one million, Cyprus is
much larger than the other financial centres of Bermuda, the
Caribbean, the Channel Islands, the Isle of Man, Malta or
Luxembourg and has a large number of talented professionals
available to work in the financial services industry. Yet it is still
possible to contact directly the government and legislators
in the jurisdiction, without having to deal with the layers of
bureaucracy that tend to exist in more mature and more
complex financial centres.
KPMGs profile
KPMG is a global network of professional firms providing Audit,
Tax and Advisory services. We operate in 144 countries and
have 137,000 people working in member firms around the
world. The independent member firms of the KPMG network
are affiliated with KPMG International, a Swiss cooperative.
Each KPMG firm is a legally distinct and separate entity and
describes itself as such.
KPMG in Cyprus traces its origins back in 1948 and today,
it is one of the largest and most reputable audit and advisory
firms in the Cyprus market.
KPMG classifies the services offered into three functions,
each of which includes a wide range of specialized services
aiming at providing our clients with the service that best suits
their individual needs. These three functions are:
Audit
Tax
Advisory
For each of these core functions, KPMG has specialized
departments with highly skilled professionals, headed by
partners with extensive experience.
KPMGs Tax and Corporate Services
One of KPMGs fastest growing departments is the one focusing
on tax, both local and international. The tax department of
KPMG in Cyprus provides full tax support and compliance
services, as well as tax planning and advisory services to a
significant number of local and multinational companies.
KPMGs tax department comprises a team of proficient tax
advisors who are highly experienced in the field of local and
international tax as well as accounting issues.
Among the core functions of KPMGs tax advisory department,
is the provision of specialized tax opinions in:
Corporate Taxation;
International Executive Services (I.E.S) and Personal
Income Tax;
Value Added Tax (VAT);
Capital Gains Tax (CGT);
Stamp Duty Tax.
Tax Compliance services
Corporate Taxation
Corporate tax compliance services relate to the interpretation
1-47 main text Final ISJ47.indd 34
of current tax laws and regulations stemming from Cyprus
accession to the European Union.
Preparation and annual review of tax returns
In the course of KPMGs tax advisory services, the tax
department undertakes the preparation and submission of
corporate and personal tax returns, Special Contribution for
the Defence calculations, Capital Gains computations, VAT
returns, PAYE matters, as well as Immovable Property issues.
Due Diligence
Through due diligence services, KPMG provides reports
that address the detection and correction of issues that are
inconsistent with the tax legislation. KPMG provides alternative
solutions to the businesss management and advice on the
possible tax implications that may arise from each course of
action.
Tax and Social Insurance withholding from Salaried Income
KPMG provides services to companies and individuals in
relation to the tax management of expenses and income,
the correct withholding and remittance of PAYE and social
insurance contributions as well as the structuring of the most
tax beneficial retirement plan.
Tax services to staff seconded to Cyprus
KPMG provides the following services and the relevant support
to the company as well as to the seconded individuals:
Support in the settlement of foreign citizens in Cyprus,
including issues relating to the Social Insurance Legislation,
Support for the settlement of Cypriot citizens in a foreign
country,
Provision of tax advice at the arrival of employees as well
as at their departure from Cyprus,
Preparation and submission of tax returns,
Advice on tax planning opportunities and the provision of
written tax opinions, and
Provision of tax advisory services regarding income tax
and capital gains tax issues of private pension tax and life
insurances.
Tax Advisory Services
International corporate taxation
KPMG provides the following tax advisory services:
Thorough examination of the tax consequences in relation
to inbound and outbound investments,
Tax planning regarding the implementation of efficient tax
structures through Cyprus,
Tax planning regarding exit strategies and efficient
repatriation of profits,
Analysis of the tax implications analysis resulting
from intra-group cross-border capital movement as
well as from the cross-border charge and/ or fees
collection, tax rights and dividends under the angle
of bilateral conventions and the European Tax Law.
Transfer Pricing
KPMG, with many years of experience on complex international
and cross border transactions can provide the following
services:
Planning the implementation of transactions between
related companies,
Compliance with Transfer Pricing principles and
preparation of the relevant documentation.
Review of agreements and other relevant documentation
for ensuring compliance with Transfer Pricing principles.
Corporate Services
In line with KPMGs long-standing market reputation for
providing integrated and flexible business methodologies, the
Corporate Advisory Services practice is involved in a broad
34
04/06/2010 18:33

range of corporate and commercial work for a wide variety
of clients, both domestic and international. The advice and
services we offer in the commercial arena are client-driven and
are often provided in conjunction with other KPMG services.
KPMGs Corporate Advisory Services include:
Corporate and Commercial
Company Secretarial Practice
Banking and Financial
Capital Markets
EU, Competition Law and Regulatory
Private Client services
Intellectual Property
Real estate
Employment Law
Present tax environment in Cyprus
The excellent present tax environment in Cyprus is best
illustrated by the results of a KPMG survey of European tax
jurisdictions.
Cyprus, Ireland, and Switzerland are the top three countries
in a league table of European tax systems, compiled by KPMG
International, in which major business organizations across
Europe assessed the attractiveness of their domestic tax
regimes.
All three countries were rated highly for their combination of
consistency in interpreting tax legislation, stability in resisting
frequent changes to tax laws, and comparatively low tax rate.
These views were compiled from more than 400 interviews
of tax professionals in multinational companies across Europe.
Survey participants were asked how attractive they believed
their countrys tax regime was compared with other European
states.
The survey explored participants attitudes to particular
aspects of their home tax regime, including consistency, stability
over time, volume of legislation, the tax rate and relations with
tax authorities.
Taking the percentage of respondents who thought key
aspects of their domestic systems were attractive and
subtracting those who felt they were unattractive gives a net
attractiveness score for each country.
Cyprus came out on top, with 90% of the participants giving
positive responses, leaving behind established rival holding
jurisdictions, such as Ireland (89%), Switzerland (83%), Malta
(81%), Luxembourg (61%) and the Netherlands (59%).
The unique advantages of a Cyprus holding company
Although there is a number of countries that have been
established as reputable Financial centers in the European
Union and are in a position to offer some very attractive tax
advantages, none of these countries has managed to combine
together these benefits to the same extent as Cyprus, which
in addition to the wide network of double tax treaties and the
full application of the EU directives, firmly put Cyprus in an
enviable position both in the European Union and world-wide.
Cyprus, a full member of the European Union since 2004,
has the lowest corporate tax rate in all Europe at 10%. This
low corporate rate of tax is possible mainly due to the small
size of Cyprus and consequently the size of the budget of
the Republic of Cyprus and the fact that smaller in size EU
members, that cannot compete in heavy industry-technology
can only compete by finding ways to attract foreign investment.
Cyprus has over the last two decades, been used extensively
for International Tax planning by multinational companies
from all over the world including the United States, Canada,
major European countries like Germany, the UK, Denmark
and Sweden. It is a fact that most of the investment that went
1-47 main text Final ISJ47.indd 35
Fund Focus on Cyprus - sponsored section
into Central/Eastern Europe and Russia was routed through
Cyprus because of the very advantageous tax treaty network.
Cyprus also offers excellent infrastructure facilities and
services, such as banking, telecommunications and human
capital. Professional services are of a very high standard in
Cyprus, with a considerable English influence. Many Cypriot
lawyers are members of the United Kingdom Inns of Court
or graduates of British universities and are well-versed in the
developments of international commercial law.
The standards of the accountancy profession are equally high
since the majority of its members are qualified Chartered or
Certified Accountants of the UK or Certified Public Accountants
of the USA and International Accounting Standards and
International Standards on Auditing are strictly adhered to.
The international attractiveness of the Cyprus tax regime
The main features that determine the attractiveness of Cyprus
for international clients seeking optimization of their tax
structures are:
lowest corporate tax rate in the EU 10%
no withholding taxes levied on outgoing overseas
payments
infinite profit parking and carrying forward of losses
minimal exemption requirements on dividends received
from overseas subsidiaries or permanent establishments
no taxation of profits from disposal of securities
extensive Double Tax Treaty network
OECD white list status
access to all EC directives aimed at reduction of intra-EU
taxation
an advanced tax ruling system
Cyprus attractiveness to institutional and private equity clients
Cyprus is becoming a destination of choice for fund managers
seeking new locations to conduct their business. Its credibility
as a reliable specialist center for funds is growing steadily.
Characteristically, an important advantage of Cyprus fund
management service is that it is relatively flexible and quick
to set up a fund once you have all the necessary information
and documentation in place. It is also easy for an existing
fund management firm or financial services entity to obtain
authorization to operate in Cyprus on the basis of passporting
an existing license from another EU jurisdiction.
Cyprus funds are regulated by the Central Bank of Cyprus.
There are several different types of funds that can be registered
in Cyprus, each suited to different needs.
International Collective Investment Schemes can be set up
under a number of legal structures:
A variable capital investment company (SICAV equivalent).
A fixed capital investment company (SICAF equivalent).
A unit trust.
A limited partnership.
The non-UCITS funds of Cyprus usually take one of three
forms:
Experienced investor fund.
Private scheme with a focus on risk capital investment.
Retail fund.
The can-do culture of the practitioners and the accessibility
to the regulator are further reasons for choosing Cyprus as an
alternative jurisdiction for registering and licensing a fund.
By Angelos Gregoriades
Board Member, Head of Tax and Corporate Services
of KPMG Cyprus
35
04/06/2010 18:33
 The ISJ Profile Gary Probert
From the East End to the
East Side
What do the East End of London, Boston and
New York City all have in common? The answer
is that they are all important places in Gary
Probert s career. From the Boleyn Ground in
East London (West Ham United Football Club s
home ground), to Boston, Massachusetts, to
Wall St, one lively and animated connecting
thread is the current Chairman of ISITC
(The International Securities Association for
Institutional Trade Communications).
Born in Stratford and raised in East Ham in
the London Borough of Newham, Gary moved
to Boston in 1983 with his wife Laura, whom
he met in London. The move to New York City
followed in 2000 after he was hired by the then
Salomon Smith Barney to run its equities middle
office.
After moving to Boston he found employment
at Bank of Boston, then at Fidelity Investments,
before the move to New York. Today, he
is Managing Director and a global product
manager with the Citi Electronic Markets team.,
within Citi s Securities and Fund Services. He
focuses primarily on Execution to Custody,
an initiative that links Citi s trading execution
capabilities with its custodian network.
Gary is an avid fan of West Ham United but
after moving to the States, was faced with a
new challenge. Many British expatriates fail to
adapt to life outside the UK, but with little or no
information readily available in the US about
British sport, Gary became enamoured of US
sports. I became a big Boston sports fan, he
recalls. The Red Sox (baseball), the Patriots
1-47 main text Final ISJ47.indd 36
(American football), the Celtics (basketball) and the Bruins (ice hockey).
He also ended up at Charles River Rugby Club in Boston, where he
played until the mid 1990s
Gary is focused on the dedicated work of ISITC on a daily basis as
it pursues its mission: to improve the quality of communication and the E
percentage of straight-through-processing throughout the trading life cycle.
He calculates that he spends the equivalent of two to three days a month T
on the ISITC job, with the full support of his employers.
He became Chairman at the start of January this year, and his two-
year stint in the role will end on December 31 2011. Comprised of 1,500
individuals from 350 companies worldwide, ISITC provides members with
the means to revolutionise the securities trading process. ISITC brings
together broker/dealers, custodians, investment managers, vendors/
utilities and other industry professionals to develop proposed standards
that are designed to enhance efficiencies in trade processing and
related communications. ISITC s members work hand-in-glove to reduce
inefficiencies, lower risk and build shareholder value while developing and
promoting the global securities industry. Further information can be found
on its website: www.isitc.org.
Gary is supported by the ISITC Board of Directors, comprising several
members from major financial institutions. The Board includes First Vice
Chair Jan Snitzer (of Loomis, Sayles & Company), Second Vice Chair
Norman Papazian (of State Street Corporation), Immediate Past Chair
Genevy Dimitrion (of State Street Corporation), Treasurer Tom Murphy (of
Citibank Global Markets), and Secretary Jocelyn Flaherty (of Omgeo).
ISITC is comprised of several Working Groups who focus on specific
T
areas, including Derivatives, Payments, Reconciliation, Settlements, and
Corporate Actions. These Working Groups work closely together to help
develop best practices for the industry in an effort to promote efficiency.
The most recent evidence of this work is the recently released Market
Practice Recommendations for Mutual Fund Trailer Fee Payments,
released in early February this year. Mutual fund trailer fees are the fees
paid by mutual fund companies to distributors for marketing or shareholder
servicing of funds. The Market Practice focuses on two primary challenges
surrounding trailer fee payment processing: the ability to identify payments
as being specific to trailer fee processing, and a defined method for
including required payment calculation details, which are needed to
reconcile each of the payments. The recommendations explain how
F
market participants can leverage the ISO 200022 payment clearing
and settlement message to deliver trailer fee payments and required
supporting detail information in all currencies.
This is the first Market Practice addressing messaging in support of
w
such payments. The ISITC Payments Working Group developed these
guidelines to improve payment processing across the mutual fund industry,
it reminded us at the time of launch. Historically, trailer fee payments B
have been processed manually, and there has not been a high degree of
transparency or efficiency in executing and receiving them, notes Norman o
Papazian, Executive Sponsor of the ISITC Payments Working Group.
We developed this Market Practice to address these shortcomings in
the industry, and we encourage firms to adopt these standards in order
to improve the industrys workflow as a whole. By adopting the Market
+
Practice standards, mutual fund distributors would benefit from increased
transparency into payments and a better understanding of the calculation F
methodology being used to determine the payment amount. In addition,
the non-USD currency payments process would become more automated c
and in turn, eliminate the use of paper statements and checks. i
ISITC is continually focused on the issues facing financial institutions s
today and how to address these issues head-on, says Gary Probert. This
Market Practice was developed through the valuable input of our member h
firms, who represent the worlds largest mutual fund companies. It is only a
through their insight and hard work that we are able to continue identifying
and solving our industry s challenges.
ISITC strives to continue to raise market standards. There are many
different processes we can improve, and our subject matter member
T
experts are committed to implementing data & business standards to S
increase the efficiency of trade processing, concludes Gary Probert.
O
t
36 f
04/06/2010 17:27 FinTuiti
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1-47 main text Final ISJ47.indd 37 04/06/2010 17:41

 Euroclear capital markets and risk
Restoring Confidence to our
Capital Markets by John Trundle,
Chief Risk Officer at Euroclear
The recent financial crisis hit
confidence in and within the
financial sector very quickly.
The public outrage at the sector
is disturbing, but not surprising.
Many of the questions that
stakeholders and the public are
now asking are valid.
How could it have happened?
How can we ensure that such
a crisis will not happen again?
How can we trust any financial
institution again?
The sector also lost confidence in itself, as seen in the
collapse of the interbank market. A semblance of trust has
1-47 main text Final ISJ47.indd 38
returned, but confidence remains fragile, the focus has
moved from senior members of financial institutions to
sovereign debt valuations. Despite the bail-out package
for Greece, markets remain very jittery. The restoration of
confidence in and within the capital markets will be a long
journey.
Leveraging a robust infrastructure
Not all the news is bad. Baron Lamfalussy, a leading figure
in the financial markets, summed up the pivotal role of
exchanges, central counterparties (CCPs) and central
So how were the securities depositories
(CSDs) during the crisis
knock-on impacts of in 2008: The clearing,
Lehman contained? settlement and payment
The primary factor systems deserve particular
praise. Few people, including
is that 99% of all financial market participants,
credit extended by let alone governments and
the general public, are aware
Euroclear Bank to of the amount of effort that
its clients is backed has been invested over the
by collateral. past 20 years into enhancing
the crisis resistance of
these systems. The investment has been rewarded by high
returns.
Major credit-related events, such as the collapse of
Lehman Brothers, rigorously tested risk models and
infrastructure service providers. They underscored the need
to have resilient risk management policies and programmes
in place for all types of financial institutions, including
38
04/06/2010 18:29

infrastructure service providers. The most constructive
realisation to come out of this crisis is that infrastructure
service providers such as Euroclear Bank, the only ICSD
with which Lehman chose to do business, have been able
to test and prove the effectiveness of their crisis and risk
management procedures.
So how were the knock-on impacts of Lehman contained?
The primary factor is that 99% of all credit extended by
Euroclear Bank to its clients is backed by collateral. The
remaining 1% is typically extended to very high quality
counterparties like central banks. Thus, Euroclear Banks
Public outcry over credit exposure on Lehman
Brothers was fully covered and
financial market closed out without any credit
failure has been loss, or disruption to clients or
the market. The single-purpose
exacerbated bank status of Euroclear Bank,
by perceived i.e. intra-day credit is granted compensation imbalances, which will be crucial in restoring
excesses and exclusively to avoid settlement
fails, means that credit risk is
arrogance shown very short term, transaction
by some bankers. related and managed precisely.
Other market infrastructures
proved to be equally robust. In the foreign exchange
settlement area, CLS (Continuous Linked Settlement)
withstood the turmoil, having processed a peak of over
1.5 million instructions, representing over 95% of all global
foreign exchange activity, on a single day in September
2008. CCPs like LCH.Clearnet successfully and relatively
quickly wound down Lehman Brothers OTC interest rate
swap positions, which represented a notional value of around
USD 9 trillion encompassing over 65,000 trades in five
major currencies. Lessons have been learnt in managing the
process, but the overall picture is very encouraging.
Renewed regulatory focus
Regulators worldwide want to extend the benefits of
well-constructed infrastructure further by pushing more
OTC derivatives transactions through a central clearer.
This can increase resilience, but is not a silver bullet. Such
legislation must not compromise a CCPs ability to manage
counterparty and systemic risks. The CCP needs to be able
to protect its own position and, accordingly, clear instruments must be in place covering both day-to-day business practices
only where it can price and margin them reliably. The
challenge for regulators will be to balance the extension of
a new range of securities with the need to protect the CCP
itself.
Another initiative to boost confidence in financial
institutions is the level of capital a firm should hold as Tier
1. This will rise. There is no single right answer, not only
because of measurement
Regulators want to problems in assessing risks,
ensure individual but also because it depends
on how safe the regulators
incentives are want the system to be. There
aligned with the are trade-offs to consider
long-term interests in setting new and higher
thresholds. Yes, higher Tier 1
of the firm. ratios would strengthen a firms John Trundle is the Chief Risk Officer at Euroclear SA/NV
ability to withstand adverse credit events. But, higher capital
adequacy thresholds will increase the cost of intermediation
and reduce financing needs, which may have an adverse
affect on jobs, economic growth and social welfare.
One of the important challenges facing national
governments and financial supervisory authorities is
1-47 main text Final ISJ47.indd 39
Euroclear capital markets and risk
the need to take a globally co-ordinated approach
when implementing such changes. Failure to do so will
undoubtedly result in regulatory arbitrage where financial
centres with more onerous regulations will find themselves
at a disadvantage to markets where regulations are more
relaxed. Efforts are underway to co-ordinate within Europe,
between Europe and the US, and globally though Basel and
the G20. The widest possible agreement will be needed if the
measures are to be effective.
Governance roles
Public outcry over financial market failure has been
exacerbated by perceived excesses and arrogance shown
by some bankers and the most potent symbol has been
their sizeable bonuses. Regulators want to ensure individual
incentives are aligned with the long-term interests of the
firm. The financial industry is seeking to resolve these
public confidence in the financial industry.
Ultimately whether talking
National central about regulatory effectiveness
banks have played or financial institution
management there is no
a crucial role in substitute for good judgement.
bringing some This requires countering views,
stability back to especially the voices of caution,
to be heard loudly at the top
our capital markets tables.
during the recent Risk management no longer
resides within a specific division
crisis. But, they that produces quarterly reports
need to address for management or the Board.
and implement Risk management needs to be
part of the corporate culture,
their exit strategies undertaken by all areas of
to enable the the organisation. Risks need
markets to function to be managed within a
comprehensive risk framework,
properly. with policies related to each
of the relevant risks and a
governance structure that makes clear the responsibilities
for monitoring and control. Formal but pragmatic processes
and the necessary control processes, which include the
identification, monitoring and mitigation of risks, and incident
management processes. But, the single most important
factor in good risk management is the tone from the top.
National central banks have played a crucial role in
bringing some stability back to our capital markets during the
recent crisis. But, they need to address and implement their
exit strategies to enable the markets to function properly.
It will take time. Trust, when lost, is not easily restored.
It will require a large number of small measures and a
prolonged period of providing reliable financial services
to the wider community. Infrastructure can play its part
by maintaining its resilience and adapting its services to
evolving market needs.
Financial Services Brussels Area, Belgium and a member of
the Euroclear Group Management Team.
John Trundles previous positions include Head of
Business Continuity Division at Bank of England, Head of
Market Infrastructure Division at Bank of England, and the
Governors Private Secretary
39
04/06/2010 18:29
 gains and losses Mandate News
John Lewis Anoints J. P. Morgan
J.P. Morgan s Worldwide Securities Services business
has finally made it to the top. It has been anointed by
John Lewis, England s favourite retailer.
J.P. Morgan will provide custody, accounting,
performance measurement, FX, compliance, cash
sweep and securities lending services to The John
Lewis Partnership Pensions Trust, which has in excess
of 2 billion in total assets under management. The
securities lending programme has been specifically
designed to meet The John Lewis Partnership Pensions
Trust requirements; the complex transition required
global coordination with J.P. Morgan s borrower network
to immediately meet the clients collateral investment
funding requirements.
We found J.P. Morgans offering to be superior to its
competitors, including the scope of its securities lending,
accounting and performance measurement services, and
have been very impressed with its highly efficient on-
boarding programme, said Andrew Chapman, The John
Lewis Partnerships Pension Investment Manager.
The John Lewis Partnership operates 28 UK
department stores, 225 Waitrose supermarkets and
Greenbee.com. The business has an annual turnover
of over 7.4bn. It is the UKs largest example of worker
Quis Custodiet Ipsos Custodes?
Who Guards The Guardians is the usual literal translation
of the Roman poet Juvenals oft-quoted question: Quis
Custodiet Ipsos Custodes? It suddenly became relevant
to the modern world when the Guardians of New Zealand
Superannuation announced in mid-April that they had
terminated the global equity, non-US small-cap equity and
multi-strategy equity mandates managed by GMO.
GMO was appointed in June 2004 to manage a non-US
small-cap mandate, in February 2005 to manage a growth-
oriented global equity portfolio and in June 2006 to manage
a multi-strategy equities mandate. ISJ immediately asked
the Guardians for further background to their actions, asking
politely bluntly why the mandate has been terminated. Is
it for performance-related or other reasons? We are still
waiting for an answer.
In the meantime, GMO Renewable Resources Ltd
continues to manage the Funds New Zealand timber
assets. This decision does not affect the New Zealand
Superannuation Funds strategic asset allocation to global
listed equities, the NZSUPERFUND tells us.
The New Zealand Superannuation Fund, which
commenced investing at the end of September 2003, is
designed to reduce the tax burden on future New Zealand
taxpayers of the cost of New Zealand superannuation.
An ageing population means the cost of providing New
Zealand superannuation is expected to double over the next
50 years. To prepare for this, the Government has made
contributions to the Fund while the cost of superannuation
is relatively low. The Fund will invest the money on a
prudent but commercial basis and the Government will
begin to make withdrawals from 2031, when the cost of
superannuation has increased. As at 28 February 2010 the
value of the Fund was NZ$16 billion. The Guardians work
with investment managers around the world to execute
the strategy for investing the Funds. A list of investment
managers, now, presumably, minus GMO, can be found on
the Funds website www.nzsuperfund.co.nz.
1-47 main text Final ISJ47.indd 40
co-ownership where all 70,000 staff are Partners in the
business.
It was also recently the subject of a very friendly three-
part fly-on-the-wall documentary series shown on BBC2.
Oh, and one other thing, it is arguably best known not
just for its quality of service, but for its motto: Never
Knowingly Undersold. This means that it will match any
lower price that a customer can reasonably find for the
same item elsewhere. ISJ cant help wondering whether
that same principle applied in the beauty contest for this
particular mandate.
Hewitt
J.P. Morgan s Worldwide Securities Services business
has been awarded a mandate to provide custody and
related services to pan-European defined benefit pension
schemes advised by Hewitt Delegated Consulting
Services.
J.P. Morgan will provide custody, transition
management, accounting, performance measurement,
FX, compliance, securities lending and trustee services
to support Hewitt pension fund clients throughout Europe,
three of which, with a total of more than 450 million
in assets under management, are already using J.P.
Morgan s services.
Hewitt Delegated Consulting Services allow pension
scheme investment specialists to manage and execute
a schemes investment policy efficiently. The trustees
still set the strategic framework and provide regular
oversight, but the service then manages and executes
the investment strategy against strict parameters. As
a result, a scheme benefits from rapid responses to
changing market and/or solvency conditions, and can take
opportunities to lock in gains.
KLP Awards Global Custody and Depositary Bank
Mandate to Northern Trust and Handelsbanken
Partnership
Kommunal Landspensjonskasse (KLP), one of
Norways largest life insurance companies, appointed
Northern Trust and Handelsbanken to provide custody
and depositary services for assets managed on behalf
of its funds and insurance businesses. In 2004, Northern
Trust became the first global custodian to partner with a
pan-Nordic bank to provide custody and related services
to a mutual fund. KLP was the first Norwegian mutual
fund to select Northern Trust and Handelsbanken for their
innovative mutual fund solution.
Citi Japan Mandate
Citibank Japan Ltd Securities Services has been
appointed by Interactive Brokers Securities Japan,
Inc. (IBSJ) to provide third-party clearing services for
IBSJs Japanese equities trades on the Tokyo Stock
Exchange (TSE) with immediate effect. CJL will handle
all of IBSJs clearing and settlement obligations in this
market and will implement a linkage to Japan Securities
Depository Center, Japans central securities depository,
as required by local regulations. The move follows
Interactive Brokers 2008 acquisition of Japans Moriai
Securities, a fully-licensed broker-dealer, which was
subsequently renamed IBSJ.
40
04/06/2010 19:38
 New format supplement out with the next issue of ISJ

GLOBALFUNDS deservedly
Ireland now
stands

Ireland
out as a global
centre for funds.
Brian Lenihan, T.D.
Minister of Finance

Editorial features include: KEYNoTES

- MINISTER oF FINANCE Fund Facts...
- EURoPEAN UNIoN Irish Regisitered
Annual Global Funds - full - IFIA
- NICSA UCITs Funds
review of the IFIAs Conference (Net Asset Value - Euro
Mn)
The risk reward - why Ireland
appeals to the new hedge fund investor 1991 776
1992 2,212
Return to growth - advisor FEATURES 1993 6,311
- USA & UCITS
bottlenecks and technology catch up - ADVISoR SURPISE 1994 8,053
- ASIA
1995 11,829
Ucits IV, the next chapter - PIIGS oR SoUTHERNERS?

1996 14,762
Ucits IV, the next chapter in the Ucits story, is due to be effective 1997 20,749
mid-2011. In anticipation of the Ucits IV era, tax considerations
are dominating the agenda and in this respect Ireland has already 1998 42,987
progressed to consideration of the tax issues as they relate to
Ucits management companies, master feeder structures and fund
1999 94,502
mergers. In his budget speech finance minister Brian Lenihan high- PEoPLE 2000 145,399
lighted the industry-led activity to prepare the tax environment for - INDUSTRY LEADERS
the new Ucits era to ensure that the rationalisation opportunities - FUND MANAGERS 2001 214,888
included in Ucits IV bring with them tax certainty and no adverse - FUND ADMINISTRAToRS
2002 238,467
tax implications for the funds concerned and their underlying
investors. 2003 285,642
So, what has the evolutionary tale of Ucits together with the in-
dustry activity in Ireland to enhance the efficiencies of Ucits got to 2004 343,377
DIRECToRY
do with the AIFM directive? Simply to demonstrate how, when the - FUNDS AND SERVICE 2005 465,339
fundamentals are correct, a firm foundation for a truly internation- PRoVIDERS IN IRELAND
al investment fund structure can be established, which can evolve 2006 582,737
to reflect changing conditions and requirements and whose scale
of operation will encourage the pursuit of operational efficiencies. 2007 647,469
A similar opportunity now exists in the non-Ucits space and if col- 2008 517,702
lectively we can prepare the architecture, the extent of the prize
is known. However, should we fail to achieve or fall short in our 2009 (Aug) 571,845
efforts it will certainly be an opportunity missed.
2010 ?
Gary Palmer,
chief executive of the Irish Funds Industry Association

1-47 main text Final ISJ47.indd 41 04/06/2010 19:38

 gains and losses Mandate News
Singapore Sling
RBC Dexia Investor Services has extended its
relationship with Aisling Analytics, a hedge fund in
Asia, to include custody, fund administration and transfer
agency for the Merchant Equity Fund, its recently
launched long-short resource equity fund. RBC Dexia
said the mandate strengthens its position as an end-to-
end service provider in Singapore in both the long only,
long-short, and alternative investment space.We have
a longstanding back office outsourcing relationship with
RBC Dexia, Michael Coleman, Managing Director of
Aisling Analytics reminds regular readers.
BBH Win Underlines Renewed Focus on Reputation
in Modern Markets
Out of the Dublin offices of Brown Brothers Harriman
comes news that BBH has been appointed as custodian,
administrator and transfer agent to Neuberger Berman
Investment Funds PLC.
Launched in December 2000, Neuberger Berman
Investment Funds PLC is a Dublin-domiciled UCITS
offering investors access to a broad range of equity and
fixed income asset classes. The range of nine sub-
funds includes US, China and global equity funds, as
well as high yield and currency funds. The range offers
75 share classes registered for distribution in the United
Kingdom and other major European jurisdictions including
France, Germany, Italy, Netherlands, Spain, Sweden, and
Switzerland.
Underlining the renewed focus on trust, credibility and
reputation that has developed in recent trubled times is
the otherwise anodyne PR-driven quote from Dik van
Lomwel, head of Neuberger Berman Europe and Middle
East: We are committed to delivering an exceptional
service for our clients and were impressed by BBHs
experience, expertise and ability to meet our international
business requirements. A reputable service provider is
key in the current economic environment and we are
confident in their capacity to ensure the safekeeping of
our assets.
Established in 1939, Neuberger Berman is one of the
worlds largest private, independent employee-controlled
asset management companies, managing approximately
$173 billion in assets as of December 31, 2009.
UoBAM Turns To BNYM
UOB Asset Management has named BNY Mellon Asset
Servicing as the trustee, fund administrator and custodian
of its Cayman-domiciled United Asia Bond Multi Currency
Fund. This Fund is part of UOBAMs United Multi Asset
Strategy Fund and as at 31 March 2010, the United Asia
Bond Multi Currency Fund had approaching JPY5 billion
(US$50 million) in assets under management.
UOBAM is headquartered in Singapore, with regional
business and investment offices in Malaysia, Thailand,
Brunei, Taiwan and Japan. UOBAM has more than 20
years of experience in investing in equities and fixed
income instruments of regional and global markets.
We chose BNY Mellon as our fund administrator
as they are highly regarded in the industry for having
a robust global infrastructure which can support our
1-47 main text Final ISJ47.indd 42
administration needs in Asia as well as those of our global
investor base, said Masashi Ohmatsu, Senior Director &
CEO at UOBAM Japan. The enhanced functionality and
efficiencies which BNY Mellons appointment brings will
enable us to deliver even greater value to our clients.
Seadrill Digs BNYM
BNY Mellon (BNYM) has been appointed transfer
agent for Seadrill Ltd, an international offshore drilling
company. Seadrill is listing its common shares on the
New York StockExchange in addition to its listing on the
Oslo Stock Exchange. BNY will provide transfer agent
and cross-border share transfer services for the NYSE-
listed shares. BNYMs mandate started on April 15, the
date on which Seadrills new listing took effect.
BNY Mellons global network of resources for cross-
border securities servicing was an important reason
for their selection, said Jim Dtland, Seadrills Vice
President of Investor Relations. BNY Mellon helped us
identify and work through unforeseen obstacles in the
process. We now look forward to realising the benefits of
a US-based listing, including enhanced liquidity for our
securities.
BNYM - Fuh Hwa Completes Trio of Wins
BNY Mellon Asset Servicing has been appointed as
global custodian by Fuh Hwa Securities Investment
Trust (Fuh Hwa) for its new mutual fund, Fuh Hwa Global
Commodity Fund. The new Fund launched on 6 April
2010. Fuh Hwa was established in June 1997 and claims
to be the largest securities investment trust in Taiwan with
assets under management totalling approximately US$6
billion as at 26 February 2010.
We chose BNY Mellon not only because of their
sophisticated custody platform, but because it was vital
to choose a partner who has a strong balance sheet
and high credit ratings to ensure the safekeeping of
our investment assets, said Anne Mao, Associate Vice
President at Fuh Hwa
The underlying fundamentals of Asia appear relatively
strong and the consensus is that Asias long term growth
advantage will lead to the region increasingly becoming
the engine of the worlds growth, said Chong Jin Leow,
Head of Asia, BNY Mellon Asset Servicing. The rising
number of investment vehicles is, in turn, fuelling the
need for services from custodians who can provide strong
infrastructures which are transparent, cost-effective, and
help institutions manage risk in the global markets.
BNY Mellon has had a presence in Taiwan for
almost four decades. It provides products and services
to Taiwanese institutional investors including treasury
services, asset servicing, depositary receipts and foreign
exchange services. The Taipei branch is one of the
oldest foreign banks in Taiwan having been in operation
since the early 1970s. One cannot help wondering if
perhaps Chiang Kai-Shek, the loser in the battle for
control of mainland China after the Second World War,
who then became President of the Republic of China and
served as Director-General of the Kuomintang, was one
of its early customers.
Please send details of mandate wins to editorial@ISJ.tv
42
04/06/2010 19:38
 Supported by

Tap into the brains of

your industry colleagues.
The Benche is a web community for professionals
within trade finance, cash management and custody.
Its purpose is to encourage sharing of knowledge
and experience, open discussions and networking.

Join us at www.theBenche.com

1-47 main text Final ISJ47.indd 43 04/06/2010 19:38

 out and about Pugilism and Paintings
Bankers Up For A Fight:
Is Combat Training The Next
Big Thing?
You may think that bankers are only interested in fat
bonuses, but according to combat training expert Tim
Larkin they are increasingly interested in learning how
to fight! Larkin, from Las Vegas, is the creator of Target
Focus Training (TFT) and teaches entrepreneurs and
bank executives how to protect themselves using extreme
violence. He has just launched a publicity offensive (no pun
intended).
Giiven the scraps with Governments and regulators
that look likely to lie in wait for banks in the wake of the
allegations of fraud recently laid at the door of Goldman
Sachs, it probably couldnt be better timed. I have senior
executives from banks like Credit Suisse, Goldman Sachs
and J.P. Morgan Chase enrolled on my courses, he
says. He organises training workshops to demonstrate
self-defence techniques which help bankers and other
professionals to recognise when theyre in dangerous
situations and the techniques to protect themselves when
attacked. The workshops teach practical ways to stop an
armed attacker to increase personal safety, especially when
travelling in higher-risk continents such as Africa or Latin
America.
Corporate clients principally attend Mr Larkins TFT
seminars, which include instruction in how to kill. But this
is not any old killing, which is bad. This is killing people
for protection when they are visiting markets in emerging
countries, which has an altogether different moral
tone. Most people feel very uncomfortable with the idea
of violence because we have stigmatised it so much, he
explains. But I try to impress on students that violence is
just another tool. You need visions in your head so you can
replicate them when you try to do them.
His publicity material cites as an example Krista Waddell,
the CEO of Ounces2Pounds. She has enrolled on the
courses for four-and-a-half years. She travels extensively,
organising gold parties in the UK, US and Australia, which
gives her something of an incentive to learn how to look
after herself. Sometimes I walk out of a gold party with
2,000 worth of gold and it can be dangerous especially
because I travel on my own, she said. Armed with that
knowledge, finance ministers the world over might well be
keeping an eye out for her wending her way home after
future parties.
Waddell, who is also a black belt in Tae Kwon Do, says
that she has found TFT very efficient. He teaches you the
basics on how to survive, she said. As well as learning
TFT for protection some executives have discovered that
combat training can improve their business decision-
making. Tim Larkin reports that he was recently engaged
to train traders at the New York Mercantile Exchange; not
to improve their capabilities for violence but to help them
clarify their aims when trading (ISJ, for what its worth, fails
to spot any significant distinction between the two!).
Many of them were telling me that they became
paralysed before making a trade by the amount of
information and research going round their head. The
combat training somehow helped them focus their priorities
and read the situations better, he said. Tim Larkin claims
also to have trained the US Navy SEALs, Scotland Yard,
1-47 main text Final ISJ47.indd 44
FBI Hostage Teams, US Border Patrol and US Treasury
officers. He is no less than The Man that these agencies
consult when training for a kill-or-be-killed situation. He
is co-author of the book, How to Survive The Most Critical
in
5 Seconds of Your Life (which in terms of strict publishing
style should really be called How to Survive The Most
Critical Five Seconds of Your Life, because the numbers
one to nine are normally spelled out in full while numbers
above 10 are expressed in digital terms, but that is sheer
pedantry, practised at a safe distance from The Man). He
also co-authors the online newsletter, Secrets for Staying
Alive When Rules Dont Apply.
Out and About
BNY Mellon Van Gogh
Hats off to BNY Mellon for its sponsorship of The Real
Van Gogh: The Artist And His Letters exhibition which has
just finished its three-month run at the Royal Academy on
Londons Piccadilly. Following the events that have unfolded
since July 2007, it takes guts for any financial institution to
be doling out money to projects that lie so far beyond their
non-core business, and especially to projects that some
Philistines will no doubt label elitist. The exhibition provided a
near once-in-a-lifetime opportunity to see significant volumes
of the work of this remarkable artist up close and personal,
and to discuss his often misunderstood madness with
sympathetic modern listeners. He was a manic depressive,
commented one particularly empathic journalist from the
north of England in a strong accent reminiscent of the hard-
working and versatile actress Jane Horrocks. If hed had the
right medication he would have been all right!
We tip our hats too in the direction of the Scylla and
Charybdis of the security world on duty to prevent impatient
reporters, and BNY Mellon employees, from gaining
entrance a second or two ahead of the allotted time on the
special viewing evening on April 12. There is always, though,
a way round such minor obstacles for the committed and
thirsty.
The exhibition proved well worth the effort, and the booty
bag that BNYM gifted to visitors included a jaw-dropping
book on the exhibition, but ISJ would like to offer a
suggestion, and pose one small question. The suggestion?
Keep speeches short. Steve Potter of Northern Trusts is
the model to follow on nights such as these. Hello, good
evening, welcome, enjoy the evening, the food and the
drink, is basically his entire speech. A leisurely stroll through
the history of the planning exhibition, in what seemed like
real-time, was not the note to strike. And the question? Is the
serving of prosecco rather than champagne a sign of these
straitened times???
44
04/06/2010 19:38 ISLA_a
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custody services for investment professionals. We are proud to be the For further information please
largest custodian provider in terms of assets and number of foreign contact
clients in Central & Eastern Europe. ING has been providing Securities Lilla Juranyi, Global Head
Services in CEE since 1994 and we will continue our ongoing pursuit of Custody
excellence through new technology. Innovation and client focus are the at + 31 20 7979 435
key drivers to service our clients the best way. or contact her by email:
Other activities of ING Wholesale Banking Securities Services are Lilla.Juranyi@mail.ing.nl
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 Sanpaolos Transaction Services include :

Sub Custody, Derivatives and Remote Membership Clearing Piazza della Scala 6
Global Custody and Depository Bank for mutual funds, 20121 Milan, Italy
pension funds, real estate funds, private equity funds and T: +39 02 8794 2466
hedge funds F: +39 02 8794 1519
Fund Administration for mutual funds, pension funds, real W: intesasanpaolo.com
estate funds, private equity funds and hedge funds C: Riccardo Lamanna
Paying Agent for foreign funds and sicavs E: riccardo.lamanna@
Cash and Payment services like swift to checks, mass intesasanpaolo.com
payments, checks and cash letters

Nordea is the leading financial services group in the Nordic and Baltic
region and operates through three business areas: Nordic Banking,
Private Banking and Institutional & International Banking. Nordea is the
leading custody services provider in the region. Nordea provides high
quality, tailor-made custody services for local and foreign investors
dealing with Nordic and Baltic securities. Due to the unique history of
being formed from four established banks, Nordea is the only Nordic Contact:
custody provider with strong local presence and expertise in all four Nina Groth
markets. Nordea combines Nordic competence with local expertise, Head of Sub-custody and
and has proven ability to deliver high quality services that meet both Clearing
clients and each local markets requirements. Tel: +45 3333 6124
Leading Nordic custodian: E-mail: nina.groth@nordea.com
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.

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 RBC Dexia Investor Services offers a complete range of investor
services to institutions worldwide. Our unique offshore and onshore
solutions, combined with the expertise of our 5,300 professionals in 71 Queen Victoria Street
16 markets, help clients grow their business and sustain enhanced London EC4V 4DE, UK
performance through efficiency improvements and robust risk C: Tony Johnson
management practices. T: +44 (0) 20 7653 4096
Equally owned by RBC and Dexia, the company ranks among the E: antony.johnson@rbcdexia.com
worlds top 10 global custodians with USD 2.5 trillion in client assets W: http://www.rbcdexia.com
under administration.
RBC Dexias innovative solutions include global custody, fund and
pension administration, shareholder services, distribution support,
securities lending and borrowing, reconciliation services, compliance
monitoring and reporting, investment analytics, and treasury services.

Santander is Spains leading financial institution and the largest

bank in the euro zone by market capitalization. Our commitment and
T: Europe: (34) 91 2893932 / 28
contribution to the securities industry is well established after more
T: USA: (1212) 350 39 02
than a century of providing services in this field.
W: santanderglobal.com
Santanders cutting edge technology enables it to offer a
E: globalsecurities@
comprehensive array of innovative services in a broad range of
gruposantander.com
markets. Santander currently has full local capabilities in Iberian and
Latin American markets along with a franchised presence in many
others. Santander`s experience and product range ensures that every
aspect of the securities business is fully contemplated.

SEB is the leading provider of securities services in the Nordic and

Baltic area. We are committed to custody and clearing processes for
the wholesale market. We hold securities worth over EUR 500 bn and
provide services in more that 80 markets, 11 of them under the SEB C: Goran Fors
name (Sweden, Norway, Finland, Denmark, Luxembourg, Germany, T: +46 8 763 5770
Estonia, Latvia, Lithuania, Russia and Ukraine). E: goran.fors@seb.se
We offer a full range of securities services including corporate W: http://www.seb.se
action and information services, securities lending and services to
remote members of the Nordic and Baltic stock exchanges. We
are also General Clearing Member on all CCPs covering Nordic
securities. We continuously develop new products in connection
with clients and partners to ensure we deliver the high-quality
products our clients demand. We always strive to make the
processes more efficient. With a history of 150 years in the securities
industry; we know the market and our clients well.
Sbastien Danloy
Socit Gnrale Securities Services offers institutional investors, Global Head of Sales,
asset managers and financial intermediaries a comprehensive range Investor Services
of financial securities services: custody, clearing & trustee services, Socit Gnrale Securities
fund administration, asset servicing and transfer agency. SGSS Services
currently ranks 3rd European custodian and 9th worldwide custodian T: +33 (0)1 41 42 98 65
(Source: Globalcustody.net) with EUR 2,580* billion in assets held E: sebastien.danloy@socgen.
and valuates 4,354* funds representing assets of EUR 405* billion (as com
of June 2007). W: www.sg-securities-services.
com
With an extensive network that spans over 70 countries, well-positioned in the
emerging trade and investment corridors across Asia, Africa and the Middle East,
Standard Chartereds Wholesale Banking business combines global capabilities
with local expertise to develop innovative products and services to meet the
diverse needs of our corporate and institutional clients in some of the worlds C: Giles Elliott, Global Head,
most dynamic markets. Building on a rich banking heritage, Standard Chartered Securities Services
is noted for a client-focused approach to business, unmatched on-the-ground P: +65 6517 0134
expertise and a solid track record of innovative, award-winning financial services E: Giles.Elliott@sc.com
solutions, reflecting our continued commitment to power our clients ambitions. W: www.standardchartered.com
As one of Asias leading custodians, Standard Chartered serves global, regional
and local custodians and broker-dealers, as well as local and regional fund
managers. The Bank plays a key role in promoting the development of these
markets and keeping the international investor community informed of industry
developments across the region.

Fund Administration

With more than 35 years industry experience, Capita Financial Group

provides fund managers with fast and cost effective third-party
administration services, enabling you to free up your day to focus on Leah Cox
growing your funds and business. Our main focus is to provide a Best +44 (0) 207 954 9559
in Class administration service, we work in partnership with you to leah.cox@capitafinancial.com
innovate, increase efficiency and provide the high level of customer www.capitafinancial.com.
service that you and your clients expect. With our UK and offshore
centres (Jersey, Guernsey, Ireland and Gibraltar), we offer a bespoke
service to our clients and each areas unique regulatory environment.

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 Intesa Sanpaolos Transaction Services include :
Sub Custody, Derivatives and Remote Membership Clearing
Global Custody and Depository Bank for mutual funds, Piazza della Scala 6
pension funds, real estate funds, private equity funds and 20121 Milan, Italy
hedge funds T: +39 02 8794 2466
Fund Administration for mutual funds, pension funds, real F: +39 02 8794 1519
estate funds, 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 E: riccardo.lamanna@
payments, checks and cash letters intesasanpaolo.com

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

Swiss Financial Services

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

Hedge Fund Administration

Apex Fund Services Ltd is a global hedge fund administration

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

Custom House Global Fund Services Ltd. (CHGFS), the Malta Custom House Global Fund
based parent company of the Custom House Group of Companies Services Limited
(Custom House), was established when Equity Trusts fund services
Head Office Address:
division was merged into Custom House in September 2008. CHGFS
Tigne Towers
is recognised as a fund administrator and licensed under a Category
Suite 33
4 license as a Custodian for Funds of Funds and is also an authorised
Tigne Street
Trustee for Trusts.
Sliema 3172
Custom House offers a full 24/5, round the world, round the
Malta
clock administration service out of its offices in Amsterdam, Chicago,
Dublin, Guernsey, Luxembourg, Malta and Singapore. This service, www.customhousegroup.com
which enables Custom House to offer daily dealing NAVs covers all Contacts: Dermot S. L. Butler,
aspects of day to day operations, including maintaining the funds Chairman
books and records, carrying out the valuations, calculating the NAV dermot.butler@
and handling all subscriptions and redemptions, as well as over- customhousegroup.com
seeing payment of the funds expenses. T: +353 1 878 0807
Custom House uses the PFS-PAXUS fully integrated fund Albert Cilia, Managing Director
administration system. Reporting is effected through CHARIOT, albert.cilia@
Custom Houses secure web-reporting platform for managers and mt.customhousegroup.com
investors. T: +356 2702 2799
Custom House is fully SAS70 compliant and the Dublin office was the only
hedge fund administrator in the world ever to be awarded a Moodys Management
Quality Rating. CHGFS and its subsidiaries are fully regulated, as required, by
the relevant authorities in their jurisdiction.

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Eurex
Euroclear
Fortis Bank wNederland NV
JP Morgan
SecFinex
SS&C Fund Services
UBS Global Asset Management -
Fund Services (Cayman)
raw Directory ISJ47.indd 51
EquiLend is a leading provider of trading services for the securities www.equilend.com
finance industry. EquiLend facilitates straight-through processing by EquiLend Europe Ltd.
using a common standards-based protocol and infrastructure, which 14 Devonshire Square
automates formerly manual trading processes. Used by borrowers London, EC2M 4TE
and lenders throughout the world, the EquiLend platform allows for +44 (0) 207 426 4426
greater efficiency and enables firms to scale their business globally. T: UK- +44 (0)20 7743 9510
Using EquiLends complete end-to-end services, including pre-
and post-trade, reduces the risk of potential errors. The platform A: 17 State Street, 9th Floor
eliminates the need to maintain costly point-to-point connections New York, NY, 10004
while allowing firms to drive down unit costs, allowing firms to expand T: US- +1 212 901 2224
business, move into different markets, increase trading volumes, all C: Michelle Lindenberger
without additional spend. This makes the EquiLend platform a cost- E: michelle.lindenberger
efficient choice for all institutions, regardless of size. @equilend.com
W: www.equilend.com
eSecLending is a leading global securities lending agent servicing Contact:
sophisticated institutional investors worldwide. The companys Christopher Jaynes, Co-CEO
approach has introduced investment management practices to the
securities lending industry, offering beneficial owners an alternative Tel: US +1 617 204 4500
to the custodial lending model. Their philosophy is focused on
providing clients with complete program customization, optimal Address: 175 Federal Street
intrinsic returns, high touch client service and comprehensive risk 11th Floor
management. Their process is to begin each clients program with Boston, MA 02110, USA
a competitive auction to determine the optimal route to market for
their portfolios or asset classes whether it is via agency exclusives Tel: UK +44 (0) 20 7469 6000
or traditional agency lending. Address: 1st Floor, 10 King William
This differentiated approach achieves best execution while Street, London, EC4N 7TW, UK
delivering their clients with greater transparency and control, Email: info@eseclending.com
allowing them to more effectively monitor and mitigate risks. Web: www.eseclending.com
Additional information about eSecLending is available on the
companys website,
www.eseclending.com.
Finace is currently the only fully integrated solution which supports T: +41 (0)44 298 92 00
the future business model within the areas of Securities Lending, F: +41 (0)44 298 93 00
Repo and OTC Derivatives Collateral Management. The architecture A: COMIT AG,
of Finace is based on a stable, leading edge technology platform, Pflanzschulstrasse 7,
which was developed with performance and robustness as the focus CH-8004 Zrich, Switzerland
of design. With flexibility at its core, customer-driven extensions W: www.finacesolution.com
and modifications can be quickly and easily applied to the standard www.comit.ch
component set.
Santander is the only Spanish financial institution with a team
exclusively dedicated to securities finance & with the purchase of W: www.gruposantander.com
Abbey in 2004 has expanded its capacity on a Global basis with T: (3491) 289 39 42/54
trading teams in London (UK) & Connecticut (USA). E: securitieslending@
Santanders leading local capabilities in Spain, Portugal, UK, USA & gruposantander.com
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.
Selnaustrasse, 30, 8021 Zurich, Switzerland T: +41 58 854 2066
Euroclear Belgium, Avenue de Schiphol 6, 1140 Brussels T: +32 (0)2 337 5111
Rokin 55, 1012 KK Amsterdam, The Netherlands T: +31 20 527 1637
60, Victoria Embankment, London EC4Y OJP T: +44 207 742 0256
60 Cannon Street London EC4N 6NPX T: +44 (0)20 7002 1003
80 Lamberton Road, Windsor, CT, 06095 T+1-800-234-0556
UBS House, 227 Elgin Avenue, PO Box 852 GT, Grand Cayman, KYI-1103 T: +1-345-914 1060
51
03/06/2010 20:13
 Technology

Broadridge Financial Solutions, Inc., with over $2.1 billion in revenues in

fiscal year 2009 and more than 40 years of experience, is a leading global
provider of technology-based solutions to the financial services industry.
Our systems and services include investor communication, securities
processing, and clearing and outsourcing solutions. We offer advanced, For more information about
integrated systems and services that are dependable, scalable and cost- Broadridge, please visit www.
efficient. Our systems help reduce the need for clients to make significant broadridge.com.
capital investments in operations infrastructure, thereby allowing them
to increase their focus on core business activities.Proxy Edge - our
comprehensive solution for institutional global proxy voting management.
Gloss - our leading international STP system which automates the trade
processing lifecycle from trade capture through confirmation, clearing
agency reporting and settlement. Tarot - a UK retail and private client
stockbroking, custody and fund management solution. Securities Data
Management - outsourced data services for securities operations.

Eagle Investment Systems LLC is a global provider of financial Eagle Investment Systems LLC
services technology serving the worlds leading financial institutions. The Bank of New York Mellon
Eagle provides enterprise-wide, leading-edge technology and Financial Centre
professional services for data management, investment accounting 160 Queen Victoria Street,
and performance measurement. Eagles Web-based solutions London
support the complex requirements of firms of any size including UNITED KINGDOM
institutional investment managers, mutual funds, hedge funds, EC4V 4LA
brokers, public funds, plan sponsors and insurance companies. Phone Number: 44 (0)20 7163
Eagles product suite is offered as an installed application or can be 5700
hosted via Eagle ACCESSSM, Eagles ASP offering. Eagle Investment E: sales@eagleinvsys.com
Systems LLC is a subsidiary of The Bank of New York Mellon W: www.eagleinvsys.com
Corporation. To learn more about Eagles 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. It is part of the Dharma Group W: www.f-tradeware.com
of companies and benefits from the joint contributions and experiences T: +44 (0)20 7493 2773
within the group of market traders, business analysts, financial services F: +44 (0)20 7495 4858
professionals and skilled Microsoft Certified programmers. The company C: Graham Bright
has developed a suite of applications that integrate and Straight Through E: info@f-tradeware.com
Process (STP) real-time trading, back office administration, accounting A: 31 Dover Street
and compliance. Ultra.net, S-Messenger and H-Fund arwe the London W1S 4ND UK
companys flagship products all based on Microsoft.NET infrastructure.
The company also offers a Member Concentrator for hosted SWIFT
connectivity and Member Administered Closed User Group (MA-CUG)
services for Corporates and Hedge funds.

Fidelity ActionsXchange is the leading provider of flexible, technology-

driven global corporate actions information solutions for many of
the worlds financial industry leaders. Through our two products, C: Gil Isenstein
ActionService and ActionCompare, we provide multi-sourced, Senior Manager
cleansed data and complementary event information which is Fidelity Investments
validated, enhanced and enriched by a team of in-house analysts.
By leveraging more than 10 years of analytical expertise, technology A: 82 Devonshire Street, W4A
and service, we offer solutions that source, enhance, compare and Boston, MA 02109
validate corporate action announcements, turning even the most E: Gil.isenstein@fmr.com
complex data into valuable intelligence. Our strategic value allows T: 617-563-6764
clients to reduce costs, mitigate risk, gain efficiencies and enhance
transparency giving them the highest degree of control over their
global event information.

Information Mosaic is a trusted global provider of advanced post-trade

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

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 Isis Financial Systems provides mission critical investment
management software and services to many large and small
companies. Our customers perform a broad range of accounting and
management functions covering various industries including the fund, Isis Financial Systems
hedge fund, wealth management, and pension and endowments, 14 Felton Street
etc. Our integrated solution services span from the back office to Waltham, MA 02453
the middle. Even some front office operations are available. IMS E: Sales@IsisFS.com
is built on a contemporary three tiered architecture. Our services T: (00-1) 781-209-0262
help financial companies improve operating efficiencies, increase
accuracy and reliability and improve customer service.
IsisFS has the experience and IMS is the platform to improve your
operations and save you money.
KOGER is a leading provider of technology solutions to the fund
administration industry. KOGER products are used by some of the
largest and most respected institutions in the industry. KOGER has
offices in each of the USA, Ireland, Slovakia and Australia and provides
comprehensive 24/5 technical support. C: Mr Ras Sipko
NTAS (New Generation Transfer Agency System) is the premier T: +1-201-291-7747
shareholder register and transfer agency system in the market. NTAS E: ras@kogerusa.com
modules include an extensive range of incentive fee calculation W: http://www.kogerusa.com
methods as well as an extensive list of capabilities such as dividend
processing, cash flow management, anti-money laundering, blacklist,
taxation and fee management. NTAS supports a wide variety of fund
structures including master-feeder, fund of funds, series, limited
partnerships, private equity and side pockets. Reports are fully
customizable and worldwide replication is available.
KOGERs GRID (Global Reach Interface Daemon) is a middleware
interface that integrates NTAS with any third-party system.

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, C: Suzanne McLaughlin
reduce costs and improve STP. Misys Summit is our award winning, T: +44 (0)20 3320 5000
multi-asset class solution that boasts 18 years OTC derivatives E: tcm.marketing@misys.com
market expertise. With extensive OTC buyside coverage and the W: www.misys.com
market leading structured products module, Misys Summit delivers
the solution you need for handling the end to end process for OTC.
We also provide a customisable ASP service for fast implementation
and lower costs.
Misys provides integrated, comprehensive solutions that deliver
significant results to over 1,200 financial institutions globally.

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 C: Hlne Desbiez
vanilla to the most complex derivative products. Coupled with a high Business Development Manager
degree of flexibility and customization, Mx Asset Manager features a T: +33 1 44 05 32 00
multifaceted design catering to the needs of both service providers
(prime brokers, administrators, asset servicing providers) and direct E: helene.desbiez@murex.com
clients (portfolio managers for mutual, pension or hedge funds,
insurance companies). With so many new challenges presented to W: www.murex.com
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.

peterevans is a leading independent provider of front to back office

solutions for the financial services sector. Clearly focused on the
securities and investment market, and building on over 24 years A: peterevans
experience of providing award winning solutions to this sector, peterevans New Broad Street House
presents a sophisticated boutique approach in a homogenised market 35 New Broad Street
place. With xanite our new suite of applications we can help ensure that London EC2M 1NH
you deliver extraordinary products and services to your customers.
The peterevans xanite suite offers a configurable, fully integrated, T: +44 (0)29 20402200
browser based, comprehensive front to back solution that can be either
deployed as a single application or integrated as components into your E: info@peterevans.com
existing platform.
xanite has been designed for todays market, and provides Multi-entity, W: http://www.peterevans.com
Multi- currency, and Multi-language support. User access to the system
is configurable allowing each users experience of the system to be
tailored to suit their specific needs. Each of the xanite modules can de
delivered via an ASP or self-hosted. The xanite suite of products supports
the following business areas: wealth management, custody, corporate
actions, clearing and settlement, private client and on-line stock broking,
peterevans gives full but controlled access to clients, portfolio, fund and
relationship managers, brokers, middle and back office staff on line
anywhere and everywhere.

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 Pirum provides a full suite of automated reconciliation and straight
through processing (STP) services supporting Operations within the
global securities finance industry. The companys on-line SBLREX T: +44 20 7220 0961
service encompasses daily contract compare, monthly billing F: +44 20 7220 0977
comparison, mark-to-market & exposure processing, pending trade C: Rupert Perry
comparison, income claims processing and custody reconciliation. E: rupert.perry@pirum.com
Subscribers to Pirums services significantly increase their A: Pirum Systems Limited
operational efficiency and reduce their risk by using Pirums solutions, 37-39 Lime Street
as staff are able to focus on fixing the exceptions instead of using London, EC3M 7AY
W: www.pirum.com
their time to check and process routine business. These automated
processes are more scalable and risk controlled too, allowing
significantly higher volumes to be managed without corresponding
increases in operations headcount.

SimCorp Dimension is designed to enable institutions which manage

or service investment portfolios to mitigate risk, reduce costs and T: +44 (0)20 7260 1900
position themselves for growth. F: +44 (0)20 7260 1911
It is a comprehensive, truly seamless system supporting front, C: Elizabeth Gee, sales
middle and back office functions as required. It handles NAV and other director
calculations, with full related accounting, for a huge variety of fund of SimCorp Dimension
structures and product types, including regional specialities. E: elizabeth.gee@simcorp.com
SimCorp Dimension was designed from scratch as an enterprise- W: www.simcorpdimension.
wide system, so it handles all aspects of the investment management com
process and related administration functions, consistently. Data is A: SimCorp, 100 Wood Street,
recorded once into a core database so that reporting is made easy, London EC2V 7AN
there is no need for internal reconciliation of data, no duplication
of procedures and integration with external systems is particularly
straightforward.

SunGards solutions for data management provide technology for

the management and delivery of market, historical and reference
data to financial services institutions, energy and public sector
organizations. 888 Seventh Avenue
SunGard also offers outsourced data management services, as New York 10106, US
well as real-time, interactive and flat-file data feeds for application T: +1 888 441 9935
integration. Aggregating market data and financial content from E: moreinfo@sungard.com
more than 100 third-party sources, SunGards solutions for data W: http://www.sungard.com
management add value through a range of services including
cleansing, enrichment and analytics.
To find out how SunGards solutions for data management can
help improve productivity, portfolio optimization and investment
opportunity with predictive analytics and packaged data please visit
our web site.

Advent Software
Accuity
Aquin Components GmbH
BI-SAM
Bravura Solutions
Calypso Technology
DST International
Princeton Financial Systems
Redi2 Technologies, Inc,
SmartStream Technologies
1 Bedford Avenue, London, WC1B 3AU, UK T: 0207 631 9240
Market House 124 Middleessex Street Bishopsgate London E1 7HY T: +44 20 7014 3454
Moosmatthalde 4, Meggen, CH-6045, Switzerland T: +41 44 455 62 44
1 Cornhill, London EC3V 3ND T: +44 (0)20 3008 5834
Austin Friars House 2-6 Austin Friars London EC2N 2HD, UK T: 020 7997 3000
17 Dominion Street, London, EC2M 2EF, UK T: 020 7826 2500
DST House, St Marks Hill, Surbiton, Surrey, KT6 4QD T: +44 (0)20 8390 5000
600 College Road East, Princeton, NJ 08540, USA T: +1 609-987-2400
1771 Broadway St., Oakland, CA 94612 T: +1 (510) 834-7334
1690 Park Avenue Aztec West Almondsbury Bristol BS32 4RA UK T: +44 (0)20 8390 5000

Witholding Tax

T: +44 (0) 208 760 7130

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

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 EUROPEANCUSTODY
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Germany , Southern Europe, Central & Eastern Europe, Nordic

Spotlight on: Cyprus - Private Equity & Hedge Fund Services

 EUROPEANCUSTODY
European Custody Landscape
Germany 2
Southern Europe 4
Editor
Brian Bollen Central & Eastern Europe 8
brian.bollen@ISJ.tv

Advisory Board Chairman

Nordic Region 16
Clive Gande
clive.gandeISJ.tv

Senior correspondent
Spotlight on: Cyprus for private
Craig McGlashan
craig.mcglashan@2i.tv equity and hedge funds 12
US correspondent
John Sandman
John.Sandman@ISJ.tv &KULVWRSK:HW]HOPDQDJLQJ 8OI1RUHQ*OREDO+HDGRI
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Special correspondents 'HXWVFKODQG
Cherry Reynard
Anthony Harrington

Head of sales
Patricia De La Grange
trish.delagrange@ISJ.tv

Account managers
Cicely Lewis
cicely.lewis@ISJ.tv

Eradat Munshi
eradat.munshi@ISJ.tv

CTO
Peter Ainsworth
peter.ainsworth@2i.tv

Operations manager
Nicolette Whittaker
nicolette.whittaker@2i.tv

Editor-in-Chief
Roy Zimmerhansl $QJHORV*UHJRULDGHV
roy.zimmerhansl@ISJ.tv +HDGRI7D[DQG
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Managing director .30*&\SUXV
Jon Hewson
jon.hewson@2i.tv

Publisher
Mark Latham
mark.latham@2i.tv
2i UK One Angel Wharf,
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2010 2i Media All rights reserved.

No part of this publication may be 'LHWHU%HUQKDUGKHDGRI
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 Nordea Bank
Custody services with
a broader horizon
Are you looking for a single point of entry to the Nordic and Baltic region? Or do you
have your eyes set on a specic local market? Nordea is the leading Nordic custodian
and the only truly Nordic player with well-established banks in Finland, Denmark,
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A dedicated relationship manager supported by a specialist team will always be able to

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To capitalise on our expertise, please contact

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Ms. Nina Groth, tel +45 3333 6124, email: nina.groth@nordea.com or
Mr. Teemu Pihlatie, tel +358 9 165 51008, email: teemu.pihlatie@nordea.com.

nordea.com Making it possible

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