EUROPE: Efficiency improvements in Fund Order Automation

Monday May 25 2009

EFAMA has published a report on recent trends in standardisation and automation rates of fund orders received by 19 Luxembourg transfer agents (TA) who took part in the survey. The report is based on a joint EFAMA-SWIFT survey covering close to 80 % of the total Luxembourg order volumes.

The report aims to inform all institutions involved in fund processing as well as the European Commission, the European Parliament and other interested stakeholders about the industry `s progress towards greater standardisation and automation.

Some of the main highlights in the report are:

* The total automation rate of orders processed by Luxembourg transfer agents has grown by 7.6 percentage points to reach 66 percent in Q4 2008. Most of this growth (6.3 percentage points) comes from the ISO messaging standard adoption by fund market players. The percentage of automated orders based on the ISO messaging standard reached 41 percent in Q4 2008, with the remaining 25 percent representing automated orders based on bilaterally agreed proprietary formats.

* 65 percent of orders received by Luxemburg transfer agents are sent by order givers based in Europe, the Middle East and Africa. 30 percent come from Asia-Pacific and 5 percent from the Americas. Whereas ISO standardisation rates reached 47 percent in the EMEA region and a similar 47 percent in the Americas, orders originated from Asia-Pacific reached only 8 percent ISO standardisation.

Peter De Proft, EFAMA Director General, said : “The survey offers a new tool to help EFAMA measure progress towards electronic and standardized processing of cross-border fund orders, and evaluate the impact of its recommendations in the area of fund processing standardisation. From this perspective, the results show that the attractiveness of UCITS in Asia could be increased further by moving from manual orders to straight-through-processing. EFAMA is committed to identify possible actions for achieving this goal.”

Jean Sonneville, Head of Funds Solutions, SWIFT, added: “The ISO standard adoption rate growth in the fund industry over the last two years (+ 6.3 percent) is very encouraging. We are committed to continue to work with fund managers, transfer agents, distributors and platforms to increase the pace of adoption and reach similar standardisation levels as for other securities. Key success factors include implementation of EFAMA `s best practice recommendations for fund processing, the new “single template ` for fund orders (ISO 20022-based) as well as focussed “kill the fax ` and large-scale standardisation campaigns by fund managers, transfer agents and platforms.”

A new report is expected to be published in the autumn to cover the Irish cross-border fund market.

EFAMA have said that they will be reporting w on the evolution of automation rates in the two main crossborder fund distribution centres twice a year after the Irish report is published.

About SWIFT:

SWIFT is a member-owned cooperative that provides the communications platform, products and services to connect over 8,500 banking organisations, securities institutions and corporate customers in more than 200 countries. SWIFT enables its users to exchange automated, standardised financial information securely and reliably, thereby lowering costs, reducing operational risk and eliminating operational inefficiencies. SWIFT also brings the financial community together to work collaboratively.