Propose practical ways of gradually achieving more process efficiency in European cross-border funds processing.
Assets invested in UCITS funds in Europe have doubled over the past five years, and this trend continues. At the same time, the European fund processing infrastructure remains fragmented. Cross-border consolidation and convergence of national market practice is slow. In 2007, this ISSA working group launched an initiative to propose practical ways of gradually achieving more process efficiency and reductions in cost and risk to investors, their custodians, fund distributors and transfer agents. The group’s vision was to describe a generic fund order handling process that is
- suitable for automation based on ISO standards
- service provider and business model neutral
- identical for domestic and cross-border trades
The group’s approach was to identify best practice that already exists locally and recommend elements that could be shared and implemented on a pan-European level. Its findings are now available. The final report contains numerous detailed and often small-step recommendations. From those, ten higher level principles were derived to guide the way forward. An annex document provides various case studies and additional background information.
Working Group Co-Chairs
Edouard-François de Lencquesaing
- Executive Summary and Guiding Principles (10/2009) > PDF 97 kB
- Report “Investment Funds Processing in Europe” (10/2009) > PDF 743 kB
- Annexes to the Report (10/2009) > PDF 2.4 MB
- Self-assessment Clearstream Inv. Funds Services (03/2010) > PDF 249 kB
Dematerialised Mutual Fund Sales Agreements Initiative
Within the context of the ISSA Fund Working group, ISSA supported the Dematerialised Mutual Fund Sales Agreements initiative driven by Schroders and a number of early contributors, aiming at the dematerialisation of mutual fund sales agreements. Dematerialised Fund Sales
One of the areas addressed by the ISSA Mutual Funds Working Group is the fund distribution process. Within that context, Schroder Investment Management presented an initiative towards more efficiency in the creation of mutual fund sales agreements. The project is led by Schroders but is a collaborative effort by a number of firms.
Sales agreements should be standardized to the extent possible (a legal issue) and they should be dematerialized, meaning that they should be made suitable for electronic creation, transmission and storage (an operational issue). A concept document drafted by Noel Fessey, Schroders’ Global Head of Fund Services, describes the way towards a common legal foundation and it includes a draft master fund sales agreement. In addition, it outlines an adaptable technical framework, based on open standards, that is capable of supporting a wide variety of business models.
ISSA endorses the initiative as a valuable contribution to the funds industry towards end-to-end process efficiency and automation.
The project has now reached a degree of maturity where wider industry participation is invited. A dedicated website has been established at www.dmfsa.info where more detailed information, updated working documents and progress reports can be accessed. In addition, a discussion forum open to all interested parties exists at www.swiftcommunity.net/dmfsa/