January 2010 GBP 25 - UK, ROW

Volume 7 No. 45 USD 45 - America

EUR 35 - EMEA
www.ISJ.tv

Fund Administration - UCITS IV

Panel - US Custody
Settlement - Mutual Funds

THE CUSTODY AND ASSET SERVICING INDUSTRY MAGAZINE

The After FX...

Uncovering the cost of custodians’
currency services
PLUS: Beneficial owners: Cash collateral Profile: Jay Hooley, State Street

Front Cover Section ISJ45.indd 1 28/01/2010 12:42

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Front Cover Section ISJ45.indd 2 22/01/2010 14:45

 ISJ Investor Services Journal Heads up

P.08 Executive Profile P.10 FX and Custody P.12 US Custody P.18 Securities Lending P.22 Analyse This

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

P.04 News

Editor-in-Chief’s letter touch regulation is over.” the bank’s foreign exchange

Custodians – partly on service highlighted questions
New challenge the back of a welter of reform as to how much even the
proposals – can also look traditional services offered by
forward to a massive year. custodians can be understood
So much of the discussion and analysed by clients. The
Editor-in-Chief: between ISJ and the industry reinvestment programmes of
Roy Zimmerhansl
[email protected] hits home on common themes cash collateral from securities
that characterise the challenge. lending is another key area
Features editor: 2010 has already shown
Ben Roberts In particular, the recognition in which transparency and
indicators that this will be
[email protected] among institutional clients client-provider interaction
a massive year for financial
of sophisticated needs for needs to remain strong. Even
Senior correspondent: markets and institutions. Rising
Craig McGlashan their portfolio – stress testing, UCITS IV will require thorough
[email protected] stock markets have encouraged
derivatives pricing – and understanding by custodians
a bullish outlook for many,
Reporter: increased consideration of areas and administrators. And if that’s
and numerous institutions
Kimberley Ferguson such as liquidity management not enough, big changes in the
[email protected] have sought record levels of
almost inevitably means it is to post-trade space, including
capital via the bond market
Contributing editor: their custodian that they seek new infrastructure choices, will
Anthony Harrington – particularly in the US – for
such services. What a few years provide further homework.
restructuring, hoping to capture
Account managers: ago were ‘value addeds’ are All four of these subjects are
Cicely Lewis the opportunities of the upside.
increasingly becoming the norm. covered in this issue, and ISJ.tv
[email protected] After the 2,000 estimated
Again, turn to our panel for this welcomes reaction and further
pages of financial proposals
Eradat Munshi testimony. ideas from readers. ■
[email protected] by regulators and industry
Custodians will also need to
bodies that accumulated by the
Shola Adeniran continue their drive for greater Roy Zimmerhansl,
[email protected] end of 2009, this month saw a
transparency and clarity of Editor-in-Chief
significant statement of intent
Head of sales: their operations. The lawsuit
Patricia De La Grange from US president Barack
against State Street surrounding
[email protected] Obama. Curbs on risk taking in
Digital media producer:
trading and a distinct echo of
Securities lending revenues 2007-2009
Peter Ainsworth the Glass-Steagall Act attempted
[email protected] GRAPH: Investor Services Journal
to ensure that – as ‘markets
350
Operations manager: return’ – new fundamentals as
300
Nicolette Whittaker to the structure of banks could
[email protected] 250
be imposed. We can expect
USD millions

State Street
200
Managing director: the dialogue between banks Bank of New York Mellon
Jon Hewson 150
[email protected]
and regulators to continue, Northern Trust
100
particularly over the details of
Chairman: this announcement. Like one of 50
Mark Latham 0
[email protected] the experts in this issue’s custody
Q1 ‘07 Q1 ‘08 Q1 ‘09
panel says: “The era of light-
2i UK 16-17 Little Portland Street, *Pro forma combined results for Bank of New York Mellon
London W1W 8BP, UK
T: +44 (0) 20 7299 7700
F: +44 (0) 20 7636 6044
Latest mandates

2i USA 410 Park Avenue, 15th Floor Month Winner Client Location Assignment Mandate size
New York, NY 10022
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© 2009 2i Media
January RBC Dexia BNP Paribas SS Toronto Sub custody n/a
All rights reserved.
No part of this
publication may January BNP Paribas Prudential Capital London Custody, administration n/a
be reproduced, in ..................................................................................................................................................................................
whole or in part, January RBC Dexia Advent Capital Luxembourg Custody, administratiom n/a
without prior
written permission from the publishers.
ISSN 1744-151X
1

1-13 ISJ45.indd 1 22/01/2010 16:39

 ISJ 267x

Contents ISJ Investor Services Journal

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Contents Letters
Dear ISJ
Fund portfolio valuation
is one area under a spotlight,
In this issue largely due to the complexities
of price determination that can
12 US custody - ISJ Panel Quantifying counterparty include vendor expertise, model
COVER STORY - ISJ birngs together three risk exposure is something implementation and data source
COVER STORY many firms have yet to get and control maintenance.
market leaders to discuss client
demands and market trends right. Why? A large part of To bring order to the process
the problem is data continues and increase transparency,
Fund Administration to sit in too many places. funds should look to introduce
Putting a figure on the level of valuation policies. In committing
14 The fourth amendment counterparty exposure is critical to a pricing policy, the fund
- Fund Administration information and stakeholders creates a blueprint for the
Kimberley Ferguson examines and regulators now expect consistent application of
UCITS IV and the important
implications for custodians institutions to have it to hand. methodologies and hierarchies,
Poor data means poor decisions. tolerance limits and a process
Securities Lending The financial crisis is littered for managing price exceptions.
with examples of trading These policies must also be
18 Reinvestment partners going to the wall and regularly reviewed and updated.
revolution? their counterparts not having a Best practice should also
Foreign exchange in custody - Beneficial owners handle on what their exposure ensure that independently
Securities lending took a was. verifying prices is distinguished
services, serious blow due to losses in
page 10 Acceptable? No. Fixable? Yes. from the more limited role
cash collateral reinvestment
and the retreat by some Data has to be linked across all played by pricing vendors.
beneficial owners. Craig offices, asset classes and entities. Pricing vendors provide
McGlashan gives a timely Time, standard and structures third-party figures for a specific
02 Letters update. are all needed. set of products, often using
This requires firms to take independently sourced data.
Settlement
04 News The last month of action now. As the crisis abates, An independent valuation
updates in custody, clearing, flows will up and this is likely service, as well as providing
securities lending, legal, 20 Let’s settle this - Post to lead to pressure from other independent numbers, combines
regulation, prime brokerage trade services - Anthony projects. pricing vendor data with
and technology. Harrington compares two
rival service providers for the Buying counterparty risk additional pricing sources such
settlement heart of mutual information off the shelf isn’t as counterparties, prime brokers
06 News analysis - Model funds. an option and waiting for a and the fund manager.
query over prime- central counterparty to remove By aggregating all prices
22 Middle Office technology the risks of OTC derivatives is available on all instruments, the
custody Plus, a new voice
enters the securities lending
- Analyse This tantamount to parking the issue. independent valuation service
Thorsten Heissel of SunGard Intelligent data management can objectively test the veracity
debate. outlines to ISJ the importance across the enterprise is an of these prices and their impact
of real-time reporting. essential foundation to any on the performance of the fund.
People
counterparty risk strategy. Can I Testing for tolerance, bias and
08 View from the top - 24 Directory of services say it again? Start with the data. stale prices – combined with
Executive Profile ISJ listing of key asset an objective valuation policy –
Jay Hooley talks growth with servicing praticioners and Daniel Simpson, assures valuation accuracy.
Ben Roberts. vendors. CEO, A valuation agent’s
Cadis ■ involvement in other activities
Custody such as execution, lending,
10 The After FX... - Foreign leverage or trading can give
Dear ISJ rise to conflicts of interest.
exchange in custody - The An independent process with
lawsuit against State Street has
prompted important enquiries
Emerging from the increased transparency will
concerning the trasnparency of
financial crisis are investors make an important contribution
whose confidence in markets and to regaining investor trust
the foreign exchange service
advisors has been shaken. The and rebuild a more robust,
offered by custodians. era when investors trusted the institutionalised market.
authenticity of their statements
is over. Investors now require Jon Anderson
TO RENEW YOUR SUBSCRIPTION PLEASE TELEPHONE verification, independently Global head of valuation and
+44 (0)20 7299 7700 OR VISIT... WWW.ISJ.TV/MEMBERSHIP provided. OTC derivatives, GlobeOp ■
To express your views, write to [email protected] or blog at www ISJ.tv
2

1-13 ISJ45.indd 2 22/01/2010 16:41

ISJ 267x203_28May:BP2S Ad 28/05/2009 11:53 Page 1

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1-13 ISJ45.indd 3 22/01/2010 15:24

 KM6326

Wh
News ISJ Investor Services Journal •C
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 •L
• In
News A “significant step” was taken Smith, former CEO of Chi-X Global •F
Fund Administration towards launching Central Technologies, was appointed vice
Securities Depositary Prague, chairman. •G
Custody Credit Suisse announced that it following an agreement between
is in exclusive talks to buy Fortis the Ministry of Finance and
Bank Nederland’s alternative asset Regulation
the Depositary to facilitate the
management services division, transfer of files of dematerialised
State Street was left facing many
Prime Fund Solutions. and locked-up securities from the US President Barack Obama
lawsuits at the end of 2009.
Missouri Public School Retirement Prague Securities Centre. launched dramatic proposals for
US-based hedge fund Crabel the reform of the financial sector.
System sued the bank following
Capital Management selected BNP Paribas Securities Services In an echo of the Glass-Steagall
the custodian’s demand for the
Citi to provide a range of hedge was appointed as post-trade banking act of 1933, Obama called
return of USD4.2 billion to its
fund administration services. The partner for Vega-Chi, which is for bans on proprietary trading
securities lending programme.
bank also signed a new five-year to be Europe’s first Multilateral and hedge fund investment by
Missouri is claiming against a
agreement with Standard Life Trading Facility (‘MTF’) for commerical banks.
breach of fiduciary duty, breach
Investments. The bank provides convertible bonds.
of contract, and is seeking a
fund administration and securities Two thousand pages of regulatory
restraining order on the bank to
services to the asset manager. J.P. Morgan became the custody, reform documentation hit the
take further action should the
securities not be returned. clearance and settlement services desks of banks in December alone,
provider to GreTai Securities as estimated by JWG Group.
Securities Lending Announcements from the G20,
British American Tobacco and Market (GTSM), Taiwan’s over-the-
Glancy Binkow & Goldberg filed counter exchange, for the trading the EU, the Basle II Committee
suits in December – the latter of foreign government bonds. among others led a crowded set of Ben
Quadriserv and SunGard gave announcements.
on behalf of the District of Lear
access to the clients on its The National Depository Center
Massachusetts on the grounds
integrated platform to straight- elected 11 new members of In the UK, Lord Myners, City • Id
that the bank made false and/or
through processing of price the companies Committee for Minister, launched the Treasury’s • L
misleading statements, and failed
discovery, central counterparty Innovations and Products, proposals for banks to develop
to disclose material adverse facts • E
clearing, settlement and open including Yekaterina Anisimova, ‘living wills’ that outline how the
about its operations.
loan contract maintenance. product development manager, firms would be wound up in case of • F
Elsewhere, the bank won Securities Department, ZAO default to improve administration
Wells Fargo has responded to Citibank, and Yuri Dubin: Director after the prolonged difficulty This
mandates from Calamos, Caldwell
reports that it is facing a probe Depository, Sberbank. following the collapse of Lehman
Investment Management, Morgan REG
from the US Securities and Brothers in September 2008.
Stanley and McCains Food, and
Exchange Commission (SEC) by RBC Dexia’s Dublin-based mutual • G
launched a Corporate Governance
claiming that an information fund custodian and investor New rules from the SEC will a
DashboardSM.and a CAD15.6
request it received from the services branch linked to “promote independent custody”,
billion mandate from MD Physician
regulator was part of a wider Calastone Limited to become a according to the US regulator, HED
Services (MDPSI) in Canada
review of securities lending in participant of its cross-border and will introduce a requirement • E
general. transaction network. The for advisers to use independent
Goldman Sachs was sued by • R
the Security Police and Fire custodian’s clients can now public accountants.
Professionals of America access its network of mutual • G
Retirement Fund over the bank’s Settlement fund providers and distributors
multi-billion dollar bonus payouts. that boasts automation and Reporting requirements would INST
transaction efficiencies. RBC also see a rise next year, • H
CME Group, the derivatives Dexia, the first user of ISO20022 according to opinion, with nearly
Jacques-Philippe Marson was fired • F
exchange, announced the initial funds messages in Ireland, 40% expecting an increase in
as CEO of BNP Paribas Securities
group of dealer founding members became one of the first firms to requirements. 29% believing that • W
Services after breaking company
supporting its initiative to clear be able to offer these services there will be a greater requirement
rules. He was replaced by Jacques PRIM
credit default swaps (CDS): in the country. Aviva Investors, for demonstrating a “culture of
d’Estais, former president.
Barclays Capital, Citi, Credit the asset management and compliance”. • E
Suisse, Deutsche Bank, Goldman securities finance firm, and
BNY Mellon Asset Servicing • E
Sachs, J.P. Morgan, Morgan its administrator, IFDS, also The New York Fed plans to address
won mandates from Jubilee o
Stanley, and UBS. Each bank connected to Calastone’s problems identified in the recent
Financial Products, Pensioenfonds • Id
executed a non-binding term network. report on the OTC derivatives
Horeca & Catering, and the ADR
sheet. market, Policy Perspectives on OTC
programmes of the Grupo TMM and
Derivatives Market Infrastructure,
Grupo Nacional de Chocolates.

RBC Dexia Investor Services

Bank of Ireland Securities
Services launched a pan-European
exchange traded fund (ETF)
Technology

SEI agreed a partnership with

by increasing additional central
clearing requirements and
ensuring greater transparency.
PL
has been reappointed by La
settlement platform - ‘BoISS ETP RiskMetrics Group to provide
Commission de la Caisse Commune
Direct’ - for ETF issuers who use indepth risk analysis reports into
des régimes de retraite de la Ville
the bank as a custodian. SEI’s Manager Dashboard tool.
de Montréal - the city of Montréal Prime Brokerage
pension fund - to provide a range
of investor services, including
LCH.Clearnet launched central
clearing for OTC interest rate
The link up reflects the greater
emphasis on transparency and risk
Hong Kong-based Shin Futures
P
custody and securities lending. It mitigation.
swaps using the firm’s global appointed Jonathan Loh Ti as
also won a custody mandate from
clearing offering SwapClear. Chi-X Global hired Steven director of client services.n
Louisbourg Investments Inc.
Silberstein CIO and Gregory E For more news, visit www.isj.tv

1-13 ISJ45.indd 4 22/01/2010 15:24

KM6326ISAD 203x267:PILLAR 2 KM6099 18/12/09 15:07 Page 1

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1-13 ISJ45.indd 5 22/01/2010 15:24

 News Analysis ISJ Investor Services Journal 3RD
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Model query for prime-custody

Deutsche Bank’s new service has still to iron out some issues
With hedge fund hedge fund with five or six services as a no cost service to service and will pull securities
managers still twitchy over people, it’s another resource.” secure the broking business. back from the custodian to
PricewaterhouseCoopers’ For some, the external However, custodians have a action any events.
model - with both Deutsche It will be provided by
initial reluctance to hand
over client assets recovered Bank and the custodian doing
completely different approach.
Byrne says that Deutsche the custodian with a list of H
from Lehman Brothers, prime all the due diligence to ensure Bank will be involved in the forthcoming actions so even
brokerage really did have to do that there can be no muddling fee setting discussion with the though it is not holding the
something to calm nerves.
On the issue of protecting
over the ownership of the
assets - has to be favourite.
custodian, but that whatever
fee is agreed, from the client’s
assets, its view of upcoming
events should be unimpeded.
B
unencombered assets, two But there are some practical point of view it will only be a Stefan Ahlner, BNY Mellon’s
questions arise: firstly, what restrictions on the choice of small part of the equation. head of product management B
model is best suited to custodian using the Deutsche One area of particular and sales for collateral
segregate unencumbered Bank Integrated Prime interest is corporate products EMEA says that he s
assets (assets not being used to Custody service (IPC). In the actions. While custodians is pretty comfortable with
support margins, for example); first instance Deutsche Bank are accustomed to offering this approach, given that BNY ✔
secondly, which of the big has worked closely with BNY corporate action services, Mellon has dealt with corporate
prime brokers would be the Mellon to present hedge funds Byrne says that with the IPC actions in its tri-party collateral ✔
first to roll out an offering? with a system that links the approach, Deutsche Bank will management programme for
✔
On 16th December German bank to the US firm. provide the corporate action many years in this way. n
Deutsche Bank provided its “A hedge fund manager

ISLA’s Field day

✔
answer to both questions. The could say: ‘I want to have
“right” model consists of the custodian A or B, instead of ✔
broker offering a platform Bank of New York Mellon as
✔

on MP claim
that gives the fund manager a my custodian, but there are
choice of custodians to hold cost and process implications,” ✔
assets that have no reason to Anthony Byrne, Deutsche Bank
co-head of European prime ✔
leave with the prime broker.
The alternative is the finance and global head of A war of words erupted in be certain.
internal model, where the bank securities lending, explains. the securities lending world McNulty suggested that an
offering the brokerage services If the custodian was a leader
and it was clear the work done
after outspoken MP Frank agreement may have been N
also has a custodian capability Field claimed that a pension made by a trustee no longer
and offers the separation to link ICP to the custodian’s fund he had spoken to had at the fund, but Field said G
between the two divisions. systems and to do all the been entered into a securities “there was no question” of
Most will prefer a model due diligence, then Deutsche lending programme by its an agreement having been in
where assets moved out of the Bank wouldn’t fret too much custodian without the trustees’ place, adding: “The custodian
broker to the custodian are about the cost and the fee permission. has admitted that it didn’t have
completely free of any contact to the hedge fund would be, In addition, the MP that permission.”
with the prime broker. well, in the ball park. A small said that UK gilts had been Field made his concerns
Custody and brokerage custodian, where the bank borrowed from the fund with known to the UK Pensions
are not natural bedfellows. could not reasonably anticipate South American bonds used as Regulator, which released new
Gavin Maguire of Citi’s further such contracts, would collateral. securities lending guidance
Global Transaction Services be decidedly less attractive. Field told ISJ sister for pension funds, although
division, pointed out in Although early days, several publication Global Securities this made reference to
Global Securities Lending that large European clients have Lending that custodians fund managers rather than “T
a custodian bank may not already signed up as IPC clients were “behaving as mini- custodians. is
be able to provide the same and hundreds of millions of Maxwells”, in reference to The regulator mentioned
services, particularly given the euros worth of securities have the former media magnate cases where lending
bespoke and often demanding been segregated, according to Robert Maxwell, who lost large programmes had been started
set up of hedge funds. “The Byrne. Deutsche Bank in the amounts of his companies’ “without full knowledge of the
traditional custody model US already has a large pipeline pension funds through fraud. trustees”, but refused to reveal
requires different infrastructure of clients interested in taking International Securities whether this implied that
requirements for hedge funds.” up the service when it is offered Lending Association chief programmes had been started S
“Hedge funds will need State-side in early 2010. executive Kevin McNulty said without permission or there
people with experience of Fees are a ticklish question. that the claims were “very was simply a lack of trustee
working in a the traditional Byrne points out that prime unlikely”, but that “we don’t understanding. n
custody process, for a small brokers tend to offer custody have enough information” to Full story: www.gsl.tv

1-13 ISJ45.indd 6 22/01/2010 15:24 5560 AD

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23/11/2009 15:24
 Executive profile ISJ Investor Services Journal
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40

View from the top G

w
Jay Hooley, State Street president, COO and soon to be CEO, tells Ben
m
Roberts of the bank’s target for foreign business revenue. a
(IFDS) – a key provider in transfer agency
Jay Hooley starts 2010 with the top - extending the joint venture’s shareholder
job at State Street less than two months servicing offering to Europe and Canada.
away. When Ron Logue, current CEO and He returned to State Street in 2000 to
chairman, steps down on 1st March to manage its global investment servicing
become a non-executive chairman, Hooley business. In 2006 he was named vice
- current president and chief operating chairman, and became president and COO
officer - will take up the mantle. two years later.
A challenging last year for the bank As he steps into a role that needs
ended with some good news for its overall to monitor all aspects of the bank,
strategy to reap 50% of its profits from he nevertheless acknowledges the
foreign business, with the purchase of transformation of securities services. “I
the securities services business of Intesa think it’s definitely become more visible.
Sanpaolo. It’s come from being ‘back office’ dealing
The EUR1.28 billion deal enhances the with very important but perhaps mundane
bank’s standing in Italy and Luxembourg activities to one where in some segments
and includes a long-term arrangement leadership in that market and positions us – such as the hedge fund market – it has
to service its investment management extraordinarily well to capture the upside become front-and-centre in terms of
affiliates, including Eurizon Capital, Italy’s growth,” he says. underlying cash, [and] the importance of
largest fund manager, with approximately Of that 50%, he estimates that getting valuations right on a portfolio.
EUR135 billion in assets under emerging markets will represent a “I think that that has only been
management as of 30th September 2009.
The acquisition increases the foreign “The Intesa deal is positive from the standpoint of people’s
appreciation of the true value of a
business income from 35% to 38%. But
how was the 50% target decided upon? the last piece in the custodian. I’d also say that it brings with
it the need to continually invest in new
“It’s a goal that’s been set based on
puzzle in us having a capabilities.” T
our belief and experience recently that in He cites the greater automation of a
the businesses of asset management and
servicing we’ll continue to see greater significant presence derivatives settlement as an example of
the technical challenges that require such y
growth outside the US,” he explains,
speaking to ISJ in December. He says
to provide in the investment – which is often a driver for the i
consolidation of the industry.
that the bank defined seven markets that
represented the majority of the growth
Italian market” “Most recently in the last three to four i
opportunity in Europe, and – just as
years there has been a direction towards a
consolidating, with fewer players, and I
the purchases of Deutsche Bank’s global “material growth” in the next five to seven think that’s driven by the desire to have a w
custody and its servicing relationship years. “Our business is in many ways a
with AXA enhanced the bank’s standing reflection of how the asset management
custodian that is focused, with adequate T
size and capital standing.”
in Germany and France, respectively – the and pension industry flows, and as long as Regardless of size, all financial c
Intesa deal represented “the last piece we’re out in front of it, we’ll participate in
of the puzzle in us having a significant that growth with our clients.”
institutions will have to be nimble i
enough to keep up with new regulation.
on-the-ground presence to provide to the His 23 years at the bank have been Hooley suggests that more demands from
Italian market”. marked with great variation and some lawmakers on State Street’s clients could
He adds that Europe’s key offshore significant success. After heading lead to further opportunities for the bank
centres – such as Luxembourg, Dublin, the company’s US mutual fund sales itself to offer solutions.
and Jersey – represent perhaps the highest organisation, Hooley joined State Street’s What is certain, regardless of the
growth opportunity across the continent. shareholder servicing joint venture with changes in the market, is his excitement
This is mainly down to the cross-border Kansas City-based DST systems. From for the upcoming role. “I most look
distribution, including into Asia, and 1988 to 1990, he served as president and forward to spending time with customers
the fact that many asset management CEO of National Financial Data Services and employees. I’ve always been very
organisations have ramped up their and went on to become president and chief disciplined about carving out 20-25% of
capabiliites in the offshore market. executive officer of Boston Financial Data my time travelling, curious about how the
“Going in with a market-leading Services from 1990 to 2000. markets unfold and how we can position
presence in Luxembourg and adding 20% He was also responsible for the creation
of the Intesa deal further advances our of International Financial Data Services State Street.” n
Keep up with State Street news at www.isj.tv

1-13 ISJ45.indd 8 22/01/2010 15:24 GSL su

 GSL |
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GSL ISJ45.indd 9ad.indd 1 22/01/2010 18:12
08/10/2009 15:24
 Custody ISJ Investor Services Journal
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

The after FX...

The CalPERS-CalSTRS lawsuit against State Street lifted the lid on foreign
exchange over-charging - but who is most accountable? asks Ben Roberts.
Transparency says foreign exchange is
2009 was to be the year that revealed particularly overlooked by an institutional
more about the workings of financial investor.
institutions than any other.
“If you think about the investment
Bail-outs - some continued from the
decision hierarchy, the decision as to ‘if
end of the previous year - government and
my currency costs are meaningful’ is the
central bank liquidity schemes, troubled
third and fourth thing down the list,” he
asset insurance programmes and new
says. ‘What’s my asset allocation, did I buy
drafts for rules on capital requirements
them low and sell high when the portfolio
and alternative funds pointed to one end:
rebalances?’ - those decisions are going to
companies would work differently as a
make or break your fund. Giving away 40
trade-off for the unprecedented scale of
basis points on every currency trade is not
the efforts to stabilise the sector.
going to make or break your fund. But they
Scrutiny among institutional investors
are costs that can and should be controlled
intensified, and third party administration,
- those are real dollars.”
more regulatory and client reporting, and
The hidden cost of foreign exchange
risk management became central issues in
for the institutional investor is linked
asset servicing.
to the foreign exchange trading that is
But in October 2009 a lawsuit by
sources of revenue. Specifically, falls in automated, rather than a ‘live’ negotiated
CalPERS and CalSTRS - California’s two
custody fees due to a decline in value of phone call. Phone dealing typically
biggest public pension schemes - against
the assets, reductions in securities lending involves exchanging large volumes that
State Street, their custodian, surrounding
activity and historically low interest rates are very close to the mid market price.
revelations of a substantial spread against
have dried up the inflows to custody But automated trades, perhaps booked for
the price of inter-bank foreign currency
balance sheets. overnight currency conversion for a client’s
trades by the bank in the last eight years,
“The ability to earn a spread when the dividends, allow room for the trader to
said much about how far transparency and
interest rates is 6% is far greater than when bump up the price of transaction.
due diligence has still to go.
it is 0.5 %,” he says. “At 6%, clients might Say there is a currency pair of yen to
The case - in which two funds
have been happy to accept a custodian sterling that over one day has a low of 140
seek recompense of USD200 million
making money of around 100 bps - but and a high of 160. A bank will be aware of
for overcharges on the charge of
you can’t do that when it’s 0.5%. the need to convert it, and will set a rate
“unconscionable fraud” - was originally
“[Custodians’] ability to earn during the day based on the market rate
filed under seal by whistleblowers
spread has declined, and for many and then add, for example, 50 basis points.
‘Associates Against FX Insider Trading’. The
securities lending revenue have dropped “If you know the market price is
suit was filed in the Sacramento Superior
dramatically - some claim as much as 50%. around 150, then if you add 1% to that you
Court by Attorney General Edmund G
If you take the combination of securities will always make money, because by the
Brown.
lending, interest revenue and fee revenue time you then cover that deal the market
An investigation by Mr Brown
from custody assets, you’re seeing only one will have not moved 1%,” explains Dennis.
confirmed expectations: that the custodian
place left: foreign exchange.” Amaces provides analysis of custodian’s
was charging their clients for currency
Low interest rates have also been activities on behalf of clients via a monthly
trades that were consistently executed at
detrimental to the funding of the pension collection of inventory from banks. This
or near the high point of the spread of the
schemes themselves, and Dennis believes includes results of a range of services,
day, rather than the mid inter-bank rate as
the pressures of under-funding may have including foreign exchange, corporate
they typically operate.
distracted managers from the activities of actions, securities lending, settlement,
The omission of time stamps detailing
their custodians. income tax and net asset value accounting.
the time of trade allowed for the alleged
“Every pension fund manager in “We look at all the foreign exchange
cover up. Some say marking up foreign
countries such as the Netherlands and conducted on behalf of particular clients
exchange fees is a widespread occurrence
the UK have been dealing with dramatic – irrespective of the size of the trade,
among custodial banks, a cheap and easy
changes in funding levels. Unfortunately currency pair,” explains Dennis. “We
way for a provider to add profit.
the focus on the nitty-gritty of a custody compare the rate given by the custodian to
For Aidan Dennis, co-founder at
operation and monitoring your custodian its pension fund client for the automated
Amaces, a consultancy that advises
is not always first on the list - not even trades to the mid-market rate.”
investors on their choice of custodian,
sixth or seventh.” Amaces also can analyse the foreign
the drive for custodians to overcharge
John Galanek of Massachusetts- exchange undertaken by the fund
on foreign exchange trades may have
based advisory and analysis firm FX managers of the client – which might
intensified due to a sharp decline in other

10

1-13 ISJ45.indd 10 22/01/2010 15:24

 ISJ Investor Services Journal Custody

typically be bigger trades by individual participants’ transacted rate and the mid- exonerate the former.
value and therefore would be negotiated market rate, times the volume of the trade. Sebastien Danloy, global head of sales
over the phone. A fund manager might In the equities world of Volume Weighted and relationship management at Societe
work with a number of counterparties Average Price - the ratio of the value to Generale Securities Services, says he is
in this business, such as custodian banks. total volume traded over a particular time “puzzled” by the State Street case on
The rate that managers will trade with horizon - selling at 20 and the market is 20 the grounds that CalPERS and CalSTRS
these entities – acting as agent - can be bid means there is no trading cost. receive cash statements, including foreign
significant to a pension fund. This is not the same for a foreign exchange, and that it has them taken many
“We’d be able to show the clients currency trade, which are often executed years as clients to highlight the problem.
that when their manager traded with to fund some other security investment. “I think it is on the part of institutional
counterparty ‘A’ they were getting a good “When you sell that security you have no investors like CalPERS to handle their FX
deal, whereas against counterparty ‘B’ it expected return on that currency other activity, as well as the execution on equities
was not so good.” than what’s already embedded on the and bonds and make sure there is a fair
This can disclose how clients might security side. When you go the other way pricing for each transaction expected. If
be getting different results from a shared you must pay a 25 offer to get out.” the price is not fair there is nothing that
custodian, as well as the price at which It could be argued that foreign prevents them from using a third party
fund managers act as agents for the exchange remains a largely unregulated provider for their FX activity.”
pension funds. These two aspects of market, facilitating to a degree the shadow He adds that SGSS can provide a report
Amaces’ service shine light into a key area activity of altering automated trades. detailing FX deals, the high and low of the
of understanding as to the relationship But PJ Di Giammarino, CEO of JWG day, and the analysis of each transaction
between institutional investor and service Group, a regulation and technology think should it be requested.
provider that might have gone overlooked. tank, argues that in Europe the Markets in Colin Rainbow at Watson Wyatt,
“You are assuming there’s been an Financial Instruments Directive (MiFID), the pension fund consultant, widens
explicit discussion between pension fund the counterparties of accountability by
and custodian as to how they are pricing “40 basis including the investment manager of the
that foreign exchange,” he adds. “I would
challenge that assumption. I would say points on every fund, and not just the trustee.
He spoke to ISJ following work with
currency trade
it’s a rare event that a pension funds or a number of custodians to encourage the
fund manager has had an open and frank production of standard reports for clients.
discussion over how the deals will be
priced.” is not going to make This would provide a concise snapshot of
the performance levels of the securities
Banks have been not just secretive but
some would say protectionist of their or break your fund... services executed, he says - and highlight
the triumvirate of responsibility.
foreign exchange revenues. In 2006, US
banks lobbied hard against the Employee but those are costs “We recognise that getting concise
monitoring reports directly from the
Retirement Income Security Act - a federal
law that aims to provide protection for the
that can and should custodian not only gives insight into the
operational efficiency of the custodian but
plan’s members - seeking an exemption
that allowed them to take up to 300 basis
be controlled.” some insight to the underlying investment
manager’s efficiency,” he says.
points on a currency trade, either 300 “On the foreign exchange side, if at the
above the high, and 300 below the low. summary level these reports [show] there
John Galanek says this reiterates the
onus for institutional investors that “unless
John Galanek, are large volumes of trades going through
the custodian then questions need to be
your custodial agreement protects you FX Transparency asked about if the underlying investment
from that, the regulation does not”. manager is allowing those trades to
FX Transparency provides analytics now two years old, included foreign happen.”
for clients based on the mid market rate exchange trading in its pledge towards However, Rainbow concedes that
- the rate at which sell side banks use for encouraging ‘best execution’ by brokers although the consultant asks the
all their pricing algorithms. The firm dealers for underlying clients. custodians for time stamps to indicate the
was created based on a growing demand However, he concedes: “It’s fair to say time a trade was executed, they are not
for clarity on custody cost from their that the level of diligence and scrutiny that always forthcoming.
institutional contacts. “Pensioners and foreign exchange has had is not as great as Like Di Giammarino, he argues that the
endowment are very anxious to start to it probably should have.” trustee is still responsible overall. “Within
quantify these costs as you can’t think He adds that the Committee of every portfolio the underlying investment
about a cost benefit analysis of a custodial European Securities Regulators, which manager has responsibility for monitoring
relationship if you don’t know the whole provided technical advice to the European what happens within that portfolio at all
cost number,” explains Galanek. Commission on MiFID, is yet to ‘come levels. From an oversight point of view, the
He says the firm uses the mid market off the fence’ in explicitly naming the responsibility falls to the client.”
rate - for example 22.5 as the middle of instruments to be included within MiFID. State Street blocked requests for
a bid of 20 and offer of 25 - as market- Amid the confusion, there is a grey area comment, stating in an email response:
making banks on average trade at the around the issue of due diligence between “We categorically deny any allegations
mid-market rate. The cost to trade is institutional investors and the broker of wrongdoing and will defend ourselves
the difference between the buy-side dealers placing their trades that does not against any litigation.” n

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 Custody ISJ Investor Services Journal
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

ISJ panel: US custody

Clients want more in
testing times, our
expert panel of
Nick Rudenstine is the
recentyly appointed head
Sam Sparhawk is Senior
Vice President and Manag-
Vince Sands is executive providers tell ISJ.
of global custody at JP vice president of Bank of
ing Director PNC Global New York Mellon Asset
Morgan Investment Servicing Servicing

1.Has 2009 seen any changes to includes increased transparency they manifested themselves? mutual funds in particular.
the relationship between you and disclosure, increased educa- It has also called for more de-
and institutional clients? tion, making sure reporting is RUDENSTINE: Investors have tailed reporting, and on our side
where it needs to be and working been severely tested by market we’ve developed an intelligent
RUDENSTINE: The market with the clients to understand conditions and are experiencing dashboard that we’re rolling out
conditions we have faced over the material. enormous pressure to reduce for clients.
the past 24 months have been There have been more dialogues expenses and risk while maximis- Initially this will be informa-
unprecedented. In the wake of around risk management and ing returns. tion on securities lending
the Lehman crisis, there was an compliance oversight, with firms These forces will continue to programmes and it will expand
extreme sense of uncertainty dedicating analysts to oversee push demand for asset safety, to information on custody and
across the industry, borne out by certain elements or securities transparency and risk-weighted other areas. These are the areas
clients’ flight to cash. That flight lending relationships, we’re returns. Clients are looking in which we’ve been seeing more
to a safe harbour has receded interacting with those clients on for improved risk management information and dialogue.
and relationships have largely a more frequent basis. I think solutions, assistance with their
‘normalised’ again. that’s a good thing. own regulatory reporting and SANDS: Like most organisations,
That being said, as institutional innovative ways to save costs, our clients are looking to save
investors and asset manag- SANDS: BNY Mellon has enjoyed a and custodians need to step up money. They are looking at cus-
ers strive to find new ways to great relationship with its clients to that challenge. todians and wondering how they
maximise returns in the current for many years with strongly pro- Whether this means pushing can leverage the investments
economic environment, they are active client response at its core further into the middle office we’ve made and the abundance
taking a much more thoughtful - I think that’s important. space by offering third-party of experienced people we have to
approach to their relationships Our clients have experienced messaging or seamless execution help them.
with their custodians. unprecedented market and in- and custody, or whether it is the The way the custodian market
Asset safety and understanding dustry events over the past year, integration of prime broker- place is evolving is that we’re be-
the relative risk profile of where and we have seen an increase in age and custody, delivering a coming the accountants for the
and what you are invested in have the need to better monitor and best-in-class service by taking a whole industry. When you look
moved centre stage. manage risk. These are issues solution-based approach will be at what we do today, we’re the
Whether it be more transparen- that are front-and- centre. critical. natural repository for investment
cy around positions, new struc- Second, clients want to ensure Above all, investors demand portfolios. We’re able to pull in-
tures to segregate instruments, the custody process remains effi- their service providers ensure formation together to be able to
or the resiliency of custodians to cient and productive. The reason the safety of their assets. The help clients with the regulatory
handle extreme market events, these two areas are so important importance of a fortress balance developments that are occurring.
what drives the business in the is that they’re dictating our tech- sheet and detailed, ongoing and Since we’re the repository of
post-crisis environment is the nology spending plans. So based continuous oversight and due dil- that information we not only
ability to provide an integrated, on client feedback we’re helping igence to all processes designed help them with the reporting,
risk management platform that them in those two ways: better to protect clients’ assets cannot but also help them manage risk
allows our clients to focus on managing risk and helping them be overstated. with our compliance and analyti-
their primary goal: generating be more productive. cal tools.
greater alpha, safely. SPARHAWK: Risk and its mitiga- Further, we have the portals
2.Have there been any new tion are definitely key. With to enable a client to access this
SPARHAWK: I would say that demands from clients – eg. respect to risk management information, often daily. The
there has been increased interac- increased focus on risk manage- we’re doing a lot more site visits custodian’s role is changing – it
tion with the client base. This ment, reporting – and how have with chief compliance office for is not only settling trades but

12

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 ISJ Investor Services Journal

managers and hedge funds has with these requirements.

also becoming the accountant trillion, so we’re seeing more created a demand for comprehen-
opportunity there. We’re also a Two potentially significant rule
for the entire industry. That’s an sive and integrated product sup-
large provider to money market changes would be the move of
important change. port that has been a key driver
funds, and over the last year and OTC derivatives from a profes-
Risk management is crucial for our integrated Prime Custody
a half we’ve seen an increase in sional agreement to a clearing
and also changing. In the past, Services offering.
balances there as investors had house, and the money market
clients might have used a tradi-
cash on the sidelines. As the US fund reform proposed by the SEC.
tional risk-return model, looking SPARHAWK: As a service provider
market has appreciated, we’ve Then there are the custody rules
at risk with traditional measures, - and specifically as it relates to
also seen more money going back created post-Madoff that could
using the analytical tools they’ve our custody offering - the focus
into the equity market. be profound, which essentially
become accustomed to. Now, cli- has been continued investment in say that sponsors - whether a
ents look for risk management to our infrastructure, both technol-
SANDS: There have been many mutual or pension fund - need to
be far more dynamic - they’re do- ogy and people.
funds seeking a flight to qual- have clear identification of all the
ing multiple scenario testing and I think the demands on trans-
ity with Treasuries and money securities they own. If you have
stress-testing their portfolios to parency and customised report-
market funds. Over the last few an omnibus account or private
better understand the potential ing is a common theme. We’re
months we’ve seen many of these equity you still have to have a
impact of varied economic and doing more with dashboards and
funds decide it’s an opportune full understanding or reporting
investment models. with our internet portals – and
time to get back into equities of the underling assets. That’s a
The whole area of performance there has also been an increase
and fixed income - in many cases, major change.
will continue to change from in performance benchmarking in
through ETFs. We see a significant It all points back to us as a
a static, calculated model to the securities lending space.
increase in ETF usage as a struc- custodian: we’re the repository
clients asking for comparisons Obviously, clients are looking at
to a benchmark, or to a more dy- ture to support these investments risk management and
namic system based on “what-if”
scenarios.
at lower cost. Our clients have
not gone back in to private equity
risk mitigation, and “The era of light-
I think more straight
3.Have you seen any significant
and hedge funds to the extent
they had in the past – but it’s
through processing touch regulation is
capability is a focus to
changes in the asset mix of your
client’s portfolios?
still early days. increase efficiency and over. Both the SEC
reduce risk.
RUDENSTINE: The global financial
4.If so, what effect or changes
has this developed on the cus-
We talk to the major- and the European
ity of our clients re-
meltdown has changed the rules
and has caused everyone to re-
tody side? garding this issue: the Commission have
more automated the
examine their business. We have
seen a continued convergence
RUDENSTINE: As investors are
increasingly looking to deploy/
more control. We’ve announced plans for
heard some of these
between hedge funds and tradi-
tional long-only managers. The
redeploy their capital to take ad-
vantage of the market recovery,
themes in the past, increased investor
but with an increase
ability to support the full spec-
trum of investment strategies in
we have seen increasing flows
into emerging and frontier mar-
in the transparency of protection ”
things among the risk
a seamless, integrated manner kets. Clients are asking us to sup- management compo-
has become a key requirement port new asset classes, including nent, we continue to
for any custodian.
At the same time, investors are
instruments they may have
serviced internally and that they
investment infra- Nick Rudenstine,
structure to be more
increasingly looking for simple,
transparent and low cost struc-
now want their custodian to sup-
port. Moreover, we are seeing the
efficient and effective. JP Morgan
tures. Witness the popularity of trading and settlement methods SANDS: We are fully
passive investment vehicles such for certain existing instruments prepared to support our clients
changing, for example the new of the information.
as ETFs and trackers, which can through providing normal custo-
then be enhanced with targeted clearinghouse for OTC deriva- dian and accounting services. The
tives. Even where custodians have 5. A recent study by TABB Group
alpha strategies, achieving the key is working out how to make
always supported a product, found more hedge funds con-
twin objective of maximizing this a competitive advantage, to
market or instrument, our clients sidering separate accounts with
return in a controlled, risk- put together a set of products
are now asking us to enhance custodians. Further, a service
adjusted environment. and actions to allow us to provide
service levels and improve control merge between classic custody
clients with the services they and prime brokerage has been
SPARHAWK: Overall, a general and efficiency. really value. evident among some institu-
trend we’re seeing is increased Regulatory reporting is a key
Across our franchise, there has tions this year. Has this been
cross-border investing, we’re concern. Today we’re monitoring
been an increased focus on the case with your bank and
opening more emerging market 47 proposed legislative changes
operational support for funds how might this evolve?
accounts, more international in the US, along with an ad-
custody mandates and an expan- as investment vehicles. This ditional 25 potential accounting
includes full automation of funds RUDENSTINE: Integrated prime
sion of investments overseas. So rule changes. We’re investing a
order routing and support for the brokerage and custody is a reality
our global book growing more fair portion of our capital plan
issuance of global ETFs. Further- at J.P. Morgan. Our acquisition
quickly, obviously the alterna- this year on potential regulatory
more the move to long/short of Bear Stearns has helped us to
tive investment space is an area reporting requirements. If these
strategies to maximise alpha in deliver an integrated Prime-
we provide services. The hedge changes are enacted, our clients
a risk-remediated manner for Custody offering that provides
fund market had appreciated to will be looking to us to help them
both traditional long-only asset a comprehensive and fully inte-
USD2 trillion from lows of USD1.5

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 Custody ISJ Investor Services Journal
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grated long/short asset manage- tion by reducing losses arising derivatives clearing house, there SPARHAWK: Our programme
ment product covering the full from fraud and the misuse of are many questions. Who would has always focused on intrinsic
spectrum of services across prime investor’s assets.’ In the U.S. be the clearing house? How value lending with a conserva-
brokerage, securities lending and specifically, the SEC is proposing would it be structured? Would it tive cash collateral manage-
financing, collateral manage- changes such as surprise audits be independent? What would be ment programme. We’ve had no
ment, custody and accounting. of asset managers using affiliates the timing and reporting neces- client losses and we’re going to
As we are witnessing the contin- by an independent account- sary by constituents? Today we continue to focus on intrinsic
ued convergence between hedge ing firm to audit all positions, serve in that role as an exchange value trading philosophy and
fund and traditional long-only including alternative assets. In in information, where in a clear- conservative cash management
strategies, delivering an end-to- general, regulators are going to ing house you would be using approach and this message is
end solution across both longs be looking for more transparency more technology. It takes time to playing very well with clients.
and shorts within a structure from our clients around positions do it properly, but I’m in support The market is generally seeing
that ensure asset safety, reduces and where those positions are of executing and clearing trades the return to intrinsic value
financing and operating costs held, and our clients will look to in a more structured way. lending and evidenced by our
and provides a consistent service us to facilitate that reporting. pipeline of prospects around
model across all funds will be key. J.P. Morgan is actively engaged in 7.Securities lending has had the philosophy of adding alpha
the reform efforts and involved a transformative year, with as well as mitigating risk. It’s a
SPAWHAWK: We have seen dialogue that we’re having more
that happening. Just as we’ve
seen multiple prime brokers
“Clients look for risk frequently and it’s welcome.

to diversify their needs, we’ve

seen hedge funds come to us for
management to be far more SANDS: Securities lending has
gone through historic change.
k
long only custody mandates as
well as other services we offer
dynamic ” It’s a time of not cyclical but
structural change. With that,
in alternative. We’ve tradition- there are the implications to
ally offered multiple services to custody and how we serve our
hedge funds – such as account-
ing, administration and record
Vince Sands, BNY Mellon clients. Right now our clients
are trying to understand how
keeping – and now we’re seeing it should fit within the pro-
more requests on the custody in relevant industry forums. We increased attention from inves- gramme, to ask ‘Is it worth the
side for the long positions. are also advancing our product tors, regulators and the wider risk or not?’ If so, what are the
development agenda to respond market. Is there any change in proper investment guidelines for
SANDS: One relevant question to these changes. the prominence or structure of the collateral?
these days is, what exactly is a securities lending programme For a long time in the US
hedge fund? You could have a SPARHAWK: We monitor the regu- within your general custody every constituent in the market
long investment manager that latory environment very closely, offering? understood there was a close
looks like a hedge fund. For a from short selling and dark pools relationship between securities
long time we’ve supported asset to derivatives and leverage. Each RUDENSTINE: Securities lending lending and custody. If there’s a
managers in both their longs of those rules could theoretically continues to be a core component change it relates to pricing.
and their shorts – now we’re have some effect on our custody of our general custody offering.  A client may make a significant
seeing that they are looking or securities lending offering. The structure of our program has change to the stock lending
for the same services as any We’re committed to working with remained consistent throughout programme, from reducing the
other constituent. Looking for a trade groups and regulators to as we’ve continued to focus on collateral investment to with-
provider that does more than just improve efficiency and support offering our clients customised drawing from the programme.
custody, that can provide valua- risk mitigation efforts. separate cash collateral invest- Since it was initially priced
tion, online access to information From a pure custody perspec- ment accounts designed to meet in a bundled way, pricing will
– not just feeds. We’re seeing tive, we’ll work with clients to their individual risk/reward have to change to reflect the
more managers overall looking help them to adhere to any new requirements.  custodial fee, given that you no
for higher quality fiduciary and rules - in the hedge fund space in Our program’s conservative longer have the securities lend-
custody services. particular. philosophy has remained intact ing revenues to supplement it.
There will be agreements work- as demonstrated by our histori- That’s an open dialogue we’re
6.What regulatory develop- ing more closely with prime bro- cally low mismatch (the differ- having – clients understand it
ments in 2010 might be kers and hedge funds regarding ence between the maturity of and support it, just as they did
influential to the custody part asset control. Generally speaking the investments and maturity of when we shook hands on an ini-
of financial institutions and the industry saw quite a bit of the loans) and key duties remain tial deal that securities lending
how do you assess the relation- turmoil, the regulators have been segregated among independent was supplementing the custody
ship between rules makers and very active and we’ll work very parts of our firm to ensure effec- contract.
institutions? closely with them to see how the tive management and control of If they reduce their securi-
rules pan out. securities lending activities.  ties lending involvement, they
RUDENSTINE: The era of ‘light- J.P. Morgan’s financial strength understand, recognise and
touch’ regulation is over. Both SANDS: BNY Mellon has full time continues to support our industry support that there would have
the SEC and the European staff involved in the debate in leading indemnification against to be a discussion relating to the
Commission have set out plans Washington related to some of borrower default.  custodial contract. n
to ‘increase investor protec- these changes. Regarding the

14

1-13 ISJ45.indd 14 22/01/2010 15:24 London

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 Fund Administration ISJ Investor Services Journal
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The fourth amendment

UCITS IV is about to hit A feeder UCITS is a UCITS fund that
European shores, carrying with it invests at least 85% of its assets in one
new opportunity, but also increased other UCITS. The UCITS that hosts
responsibility for custodians and fund the investment is called the Master
administrators and significant tax issues. UCITS. The Master and Feeder may be
The fourth instalment of the directive, established in the same or in different
now in its twenty fifth year, is to be member states. Under UCITS III, virtual
implemented in July 2011 as the European pooling techniques have neither been
Union continues its mission to break down forbidden nor specifically allowed, whereas
the legislative barriers for funds between Master-Feeder structures were specifically
member states. excluded due to fund diversification rules.
UCITS , or the ‘Undertakings for Of this particular change, Mr Mantrisi
Collective Investments in Transferable suggests that “the Master/feeder structure
Securities’, is a set of EU directives for
allowing open ended funds investing in Custodians and should allow managers to efficiently
structure fund ranges in the future,
transferrable securities to operate freely
throughout the European Union - subject
administrators should however it is not yet clear how the various
fund management groups will make use of
to the same regulation in every member keep an eye on UCITS this potential”.
state and sold publicly without further
authorisation. IV’s details, says The notification procedure for
‘passporting’ a UCITS fund, as opposed
However, state-specific marketing Kimberley Ferguson. to a UCITS manager, characterises the
rules meant that the reality was continued third change outlined in UCITS IV. The
segregation. While amendments to the in any EU member state. “So what this objective is to facilitate cross-border
1985 directive attempted to eradicate these means for institutional investors is that distribution by replacing a clumsy country
issues in pursuit of a single European they will probably be dealing with larger, by country registration process by a mere
market, UCITS II was soon abandoned for more professional institutional types of notification. “This is pretty big” says Lasry.
being too ambitious. funds. Because you now no longer have to “The passport idea was always a great
UCITS III launched in 2001 contained set up a separate management company in one, but didn’t always work that well.
significant amendments that substantially each jurisdiction where you have a fund, The way you would do it under the old
boosted its investment powers. The chances are businesses are more likely to directive is, you would inform the host
European Commission continued to use just one Management Company to regulator that you wanted to enter into
monitor the success of UCITS III, leading service all of your UCITS funds,” he says. their market, and they would speak to
to the presentation of the first draft of Mario Mantrisi, senior vice president the home regulator. But because you
UCITS IV on July 2008. This preceded a of product innovation and regulatory would have to get approval from the host
successful first reading by the European relationships, KNEIP, says: “Larger groups regulator, they would sneakily impose lots
Parliament on 13th January 2009, may now re-insource the management of requirements on you, for example, the
whereupon the member states were given company closer to the decision centre, requirement to translate any documents
until 1st July 2011, to implement the while small- and medium-sized companies into their language was common.
directive into local law. will look to their centres of competency”. “Even at best, the funds were not able
UCITS IV adds to the harmonisation UCITS IV aims to facilitate the cross to talk to the host regulator directly; they
of fund laws in European member states border merger of funds by establishing a would have to appoint counsel in the host
by imposing legal requirements to add standardised framework for fund mergers jurisdiction in order to apply. Now, you
standardised Key Investor Information in the EU - applicable on cross border and just need to tell your regulators where you
(KII) and notification procedures. It also domestic funds, sub-funds and classes. want your passport, and they will organise
aids fund mergers and master-feeder “Whilst fund mergers have before been the rest.”
fund structures, allows for management possible, from a legal point of view, this The KIIs aim to enhance transparency
company passports and encourages has always been very complicated,” Mr and comparability through a short and
regulatory alignment and communication. Lasry explains. “There was not a lot of law standardised fact sheet that is easy to read
For James Lasry, a senior partner of surrounding the cross border merger of and understandable to the investor. UCITS
Hassans, an international law firm, the funds. With the UCITS IV changes, this III offered a simplified prospectus, but was
most important of these changes is the will be a lot more straightforward”. deemed sometimes unclear and not always
passport of the management company. Mr Mantrisi believes that this change up-to-date.
Under UCITS III, the management was spurred by the sheer number of UCITS IV is also focused on ‘Regulator
company and UCITS had to be domiciled funds - often meaning that the total assets to Regulator Co-Operation’, which
in the same country, and despite per fund does not obtain critical mass - aims to achieve regulatory alignment
passporting possibilities foreseen, this especially in comparison with the US and and reduce administrative burden by
possibility was not accepted by EU Asian markets. enhanced collaboration. Regulators will be
supervisory authorities. UCITS IV allows The concept of Master-Feeder funds expected to upgrade existing mechanisms
the management company to be situated is being encouraged under UCITS IV.

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 ISJ Investor Services Journal Fund Administration

for exchanging information to a more fund and you have acquired a new interest implement UCITS IV. Until these tax
sophisticated model. in the Luxembourg fund”. barriers are removed, UCITS IV will not
KIIs will become a standard fixture This could thus potentially translate be effective” says Mr Kazimi.
until UCITS IV. “UCITS III allowed for into quite a hefty bill for the investor. Ian Headon, product manager for
a shortened prospectus, which is meant “Another example is, if you own UK alternative asset administration at
to be a synopsis of the larger prospectus, shares held in an Irish fund, and UK shares Northern Trust, is positive on UCITS IV,
however when you read the requirements held in a Luxembourg fund. When one but considers the extent to which hedge
of what had to be in the shorter prospectus fund is collapsed into another, some of fund strategies can be accommodated as
compared to the larger one, there wasn’t a these shares could be viewed as having a the crucial point. “There are clearly some
whole lot of difference,” Lasry explains. ‘change of beneficial owner’. This transfer restrictions within UCITS on leverage and
Mantrisi adds that UCITS III’s could also incur stamp and other taxes. distribution. However, by and large, our
simplified prospectus did not obtain the “The Master-Feeder funds face clients, particularly our more conservative
expected success because it neither reduced similar issues. If you have a feeder fund hedge fund clients, and our clients with
the complexity of the document nor help in Luxembourg, and you decide you are less complex strategies, have been able
the investor to better understand the going to buy into a fund in Ireland, which to accommodate their business in a
product. “The KIIs should be comprised of you seed with securities, this too could UCITS vehicle. It remains to be seen if
a maximum of three pages, and be written incur a transfer tax. Withholding tax also this investor demand is just a short term
in a style that is easily understandable by could become an issue, because depending response to particular market events and
all. In brief, this document must succeed in on which jurisdiction you are based in, to the credit crisis, or whether this is a
being understood by the end investor,” he some will have a wider network of tax more significant shift.”
says. In addition, its standardised format treaties than others.” Mantrisi believes UCITS IV will
and especially its focus on performance Mr Kazimi and colleagues say in strengthen the UCITS brand enhancing its
transparency, efficiency and attractiveness.
and risk profile should allow for easy
comparison of funds.” “A custodian will “Achieving household savings within
Europe is one important aspect. In
UCITS IV also highlights an increase
of custodian liability regarding its sub be asked to take on addition, making the European product a
gateway to other promising markets such
custody network.
Previously, a custodian was responsible more responsibility as Asia and the Middle East is crucial to
international harmonisation and growth”
if a sub-custodian defaulted. However,
custodians often asked to opt out of this in the case of a sub- he says. However, he is also concerned

custodial default ”
responsibility clause, with the client liable. about the tax implications.
“This will change with UCITS IV where “While UCITS IV is a great step in the
the custodian will be asked to take on right direction, broader considerations at
more responsibility in the event of a sub- a European level such as the lack of tax
custodial default,” says Lasry.
On the surface, the UCITS IV changes
James Lasry, Hassans harmonisation, could hamper its success,”
he says. “In addition, the proposed
seem to aid and encourage the uniformity measures, which are already challenging
of European funds. However, deeper order for UCITS IV to be beneficial EU market participants, will become even
research exposes some significant flaws in commercially, the tax laws must be more complex when applied to non-EU
the form of tax implications. amended throughout the member states to countries”.
Ali Kazimi, a partner at Deloitte LLP, enable the proposed investment structures Across the pond, David Friedland,
attended a series of public consultations and transactions to happen in a tax neutral president of the Hedge Fund Association
held by the European Commission in the manner. is not entirely convinced. “Given the
lead up to the UCITS IV launch. While the issue of tax barriers to cost of compliance and registration, the
At these events, the changes - the cross UCITS IV was acknowledged at the real beneficiaries in my opinion will be
border mergers of funds, the master-feeder consultations, it was felt that introducing the larger hedge funds who can afford
structure and the management company any tax matters would hinder the progress compliance and are targeting institutional
passport, in particular - were discussed at and it would not be feasible to implement investors as their predominant client base.
length from a tax perspective. UCITS IV by the proposed July 2011. All The majority of hedge funds in the US
“The cross border mergers of funds tax decisions at the European level require have less than USD250 million and so are
are based on the assumption that if a fund unanimity across all the member states. less likely to be attracted to setting up a
manager was running a North American The Commission has accordingly UCITS compliant fund.”
fund in Ireland, and a North American brought in the principal legislation, Todd Groome, non-executive
fund in Luxembourg, then perhaps it without directly addressing the tax issues. chairman of the Alternative Investment
would be easier to merge the two funds The resolution? “The EU plans to rely Management Association (AIMA), adds:
into one” explains Mr Kazimi. on market operators to come forward “There are US managers with offices
“However, if you were an investor in, and challenge these tax laws. When this in London who are looking to access
for example, an Irish domiciled fund, and happens, they will be instructed to go the UCITS system as a way to reach
your fund manager decided to collapse this to the European Union to start legal other class of investor. Some managers
into a Luxembourg domiciled fund, under proceedings on a discrimination basis. The are comfortable with the added level
some domestic laws, this may be seen as Commission will then start proceedings of complexity of reaching out to
a ‘deemed disposal’, which means that in against the member state, saying that they new investors under new or different
regards to tax purposes it could be viewed have a taxation system that is thwarting regulatory regimes, and UCITS provides a
that you had sold your interest in the Irish attempts by the European Union to way to access another class of investors.” n

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 Securities Lending ISJ |ISJ Investor
Investor Services
Services Journal
Journal
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Reinvestment revolution?
In the whirlwind that hit the have to hold risk capital against those asset
financial world over the last two years, liability mismatches on the loan side and
securities lending was one of the most on the asset side - which is what you would
demonised sections of the markets, with have to do if you were writing an insurance
even the mainstream media picking up on contract - you just would not see those
what had previously been seen by many sorts of mismatches arising. It would be
as a plain-sailing, back-office part of an too apprehensive.”
institutional investor’s portfolio. Mark Payson, global head of trading
In particular, the reinvestment of cash and asset liability management at Brown
used as collateral in these transactions was Brothers Harriman (BBH), believes that
deemed by many to have been at the root disclosure from agent lenders is vital.
of losses and instability, with numerous “It is the responsibility of every lending
lawsuits appearing from clients outraged agent to make sure that they are aware of
that their cash had been reinvested in what Craig McGlashan asks their clients’ trading practices,” he says. “So
if a client has USD500 million on loan,
they deemed poor quality instruments.
The maelstrom has begun to die down,
what changes to the but suddenly needs to reduce the on-loan
but the lawsuits continue, and many in oversight of cash balance to USD250 million, the agent must
ensure that the USD250 million can be
the industry believe that there are more
on the way. No-one doubts that a lot of
collateral programmes redeemed from the collateral pool.  Strong
money was lost through cash collateral can be expected after a asset and liability management is the key.”
However, Payson believes that the
reinvestment, but the effect on the future
involvement of beneficial owners in tumultuous last year. BBH approach is different from many
lending programmes, and what collateral other lenders and that it is important to
they will accept if they do, is still to be
decided.
“Collateral differentiate between securities lending
and what he calls securities finance.
Certainly, cash collateral reinvestment schedules “In its purest form, securities lending
refers to the generation of revenue
received a grilling at the US Securities and
Exchange Commission (SEC) roundtable will from the intrinsic value or borrowing
demand of securities, with the transaction
normally have no
discussion on securities lending in
September of last year. supported by the exchange of collateral
that is liquid and of a high quality,” he says.
Jerry Davis, chairman of the board of
trustees for the New Orleans Employees’ mention of the “Securities finance is a different
practice, and results when securities
Retirement System, told the discussion
that he was unhappy with the level type of instruments lending is used to generate cash collateral
with the sole purpose of reinvesting said
of disclosure from his fund’s lending
agent on exactly how the cash would be allowed” collateral in riskier products as a means to
reinvested. generate higher revenue.
“The exhibits to that agreement were “In some cases, agent lenders got into
marvels of simplicity,” he said. “The
exhibit number three, I will never forget. It
Sonja Spinner, trouble because the lending and borrowing
of securities with low intrinsic value and
purported to list the allowable investments
for collateral alone. And it said cash,
Mercer with low demand was encouraged in order
to raise loan and utilisation levels. In
securities and letters of credit, period, the Associate at Mercer Investment Consulting, order to facilitate these transactions and
full content of that page. says: “I see a fair number of collateral to generate large cash balances beneficial
“There was nothing about the rating schedules and when you look at one, owners were required to be increasingly
of these various instruments, there was there will normally be no mention of the aggressive on the collateral reinvestment.”
nothing at all about the monitoring of the allowable duration mismatch, there will Payson believes that cash collateral
instruments, there was nothing at all that be no mention of the type of instruments reinvestment should be seen as a
described how the bank was going to care that are allowed and the type of credit risks “complementary product” and not the
for those instruments. So I think that even that are allowed to be in there. A beneficial “main driver” of securities lending.
though the document itself, for a small owner can take in almost anything.” However, other concerns have been raised
fund like ours, was 30 pages, the meat of it Spinner’s experience in insurance has about cash collateral reinvestment. The
was the protection for the lending agent, meant that she has been “quite shocked” by issue of fiduciary responsibility can be
not for the beneficial owner.” the very large duration mismatches she has affected – pension trustees and other
So have agent lenders being guilty of seen agent lenders allow to arise in their beneficial owners may have no say in who
failing to disclose how cash collateral will reinvestment pool. is appointed to manage the cash.
be reinvested? Sonja Spinner, a Senior “If you work as an insurer and you One investment manager at a pension

18

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 ISJ Investor Services Journal Securities Lending

Mercer’s Spinner says that many

Another one bites the Trust increasingly they want to understand that
people have come to her firm, desperate
Claims against the Chicago custodian and reinvestment decision and not to be just
pushed into a pooled cash fund with 200 to understand the risks involved with
other lenders
or 300 other people. reinvestment. But this new awareness does
September 2008 – University of
“I have been pushing to get more have its own problems, she explains.
Washington, Seattle lawsuit against
specifics on the quality of the collateral “I have told the Bank of England that
Northern Trust
and the haircuts mandated in agreements the problem is that beneficial owners
October 2008 – BP sues Northern Trust;
because if the worst happens and a have so many things on their plate. They
Minnesota Workers’ Compensation
borrower defaults, as long as the agent are trying deal with actuarial reviews,
Reinsurance Association (WCRA),
lender or point of market access has not management selections, asset allocations,
Minnesota Medical Foundation,
missed their schedules, you can at least get strategies to de-risk and 3,000 other things,
Minneapolis Foundation and the Robins,
some redress from them. But just now the and lending is such a small part of what
Kaplan, Miller & Ciresi Foundation for
problem is that lenders have acted within trustee bodies have to think about.
Children sue Wells Fargo
their guidelines but have still caused “So there is a limited amount of time
January 2009 – AFTRA Retirement Fund
beneficial owners pain.” that they do devote to it. But the more
sued J.P. Morgan; Carolinas HealthCare
However, BBH’s Payson believes sophisticated ones have certainly been
System sues Wachovia
that co-mingled funds have their place asking us quite a few questions about their
March 2009 - Joseph L. Diebold Jr,
within the market. “It is inappropriate to lending programmes.”
participant in plan of Exxon Mobile, suits
characterise a commingled pool as better This is a welcome development,
Northern Trust
or worse than a separate pool, or vice according to BBH’s Payson. While the
April 2009 - Imperial County Employees’
Retirement System files suit against
JPMorgan Chase
versa,” he says.
“Larger vehicles may offer the benefits “I do not
November 2009 – Woodmen sues US Bank of stability and performance, and if and
when a participant wanted to change
think the
fund in the north of England told ISJ: “It
is one step removed - are you in control of
their approach to lending, or exit for a
short period of time, they can do so in a
ills of the
it?”
This situation is changing, according
co-mingled product. In a separate account,
beneficial owners control their own destiny
market
to Simon Lee, senior vice president for
EMEA business development at agent
through customised investment guidelines
but forego the benefit of shared liquidity.
would have been
lender eSecLending. “Beneficial owners “I do not think the ills of the market
over the past 18 months would have been
cured by separately
are now more focused on their collateral
management activities and many are cured by separately managed accounts.” managed accounts”
adjusting their strategy, guidelines and Perhaps one of the highest profile funds
structure as a result,” he says. to lose money through cash reinvestment

Mark Payson, BBH

“We are seeing a trend toward clients was the USD207 billion California Public
either bringing collateral management Employees’ Retirement System (CalPERS),
activities in-house or hiring specialist which provides benefits to more than 1.6
cash managers and utilising best-in-breed million people in the US. various lawsuits that have appeared may
providers across custody, securities lending According to CalPERS, its exposure reveal where ultimate responsibility lies in
and collateral management.” to potential losses through reinvestment each individual case, the responsibility of
The SEC meeting also raised the issue of its collateral cash in pools ranges from ensuring securities lending programmes
of comingled cash collateral pools, where USD600 million to USD1 billion – but the are run well is as much the beneficial
lenders would group together beneficial firm stresses that this is an “unrealised loss owner’s duty as the agent lender’s.
owners’ cash collateral in an effort to based on current market value; [there is] “Many agent lenders are now doing
make higher returns. Opinions on these no actual loss until assets are sold at what a better job of being more transparent
structures varied at the roundtable, and could be a higher value”. and sharing more information, but
the issue still seems to be divisive. Indeed, CalPERS does not plan beneficial owners also have a responsibility
Mercer’s Spinner says: “Where people any change in the lending part of its to exercise more active oversight and
suspended lending programmes or where programme, while it has opted to participation in their programmes.”
they have done a risk review, if they have “[develop] new policies to reduce potential There is an argument that suggests cash
got the appetite for cash collateral we risk and losses in [the] programme’s collateral should be used for just that –
have been telling them not to go into co- reinvestment of collateral cash”. collateral. But does avoiding reinvestment
mingled cash funds but to go into their Additionally, despite some high profile reduce the profitability of the programme?
own cash funds.” losses, there is a suspicion that these It depends on the loan, according to
She can also see the use of co-mingled incidents have hidden the overall picture. Spinner.
funds becoming less popular in the future: According to various estimates, 90% of “If you have a portfolio of global
“People will not want to be in co-mingled stock lending programmes in the US use equities and a lot of your income comes
cash pools because they want the ability to cash collateral, but this does not mean from dividend arbitrage trades etc., it
cease lending and do not want to see their nowhere near 90% of the beneficial owners makes very little and there has been times
assets immobilised. have lost money. where I have taken client portfolios out
“If people do want to use cash and So is cash collateral reinvestment still a and asked for revenue estimates and asked
potentially get the additional returns viable option, albeit in perhaps a different for them on a cash reinvestment basis as
that some portfolios might accrue, then form than before? compared with a tender-only basis and the

19

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

Let’s settle this

revenue estimate still stands.
“Not taking the cash in for the
beneficial owner with a portfolio with
a high intrinsic value of loans does not
actually impact them. What probably does Scale or specialism?
impact more is if they have a portfolio
with less intrinsic value where really it That’s one way of
is securities financing as opposed to the
intrinsic value of the loans that is driving assessing the
the revenue stream.
“But it is a very portfolio-by-portfolio
competition of
question.”
Cash reinvestment decisions may be
settlement services for
made for beneficial owners, under added
regulations. Indeed, regulators globally
mutual funds, says
are looking at securities lending and “the
scale to which it became a gearing and cash
Servicing mutual funds has long been Anthony Harrington.
bedevilled by a history of paper-based,
reinvestment play as opposed to a straight manual processing and is behind its This is important, he explains because
play about the intrinsic value of the loan,” cousins in the bond and equities space. although ultimately everyone in the
according to Spinner. However, all that is now changing, industry wants a single standard at some
“It feels to me that they have been according to the upcoming competition point in time, not every fund currently
uncomfortable about that from a financial between post-trade providers such as has the resources to leap to ISO 20022.
stability point of view and it will be Euroclear and newcomer Calastone. “Our system allows them to communicate
interesting to see how that plays out in According to HM Treasury, the with their peers in the industry and thus
terms of regulation. I don’t know where UK mutual funds industry could save to increase their distribution capability as
that will land, but it feels like the world will somewhere between GBP70 million and well as driving down costs,” he says.
change in some form. What’s going to be GBP290 million a year by moving to Recent changes to the UK legal system
interesting will be to see, particularly with transaction-processing automation instead which removed the necessity for “wet
the US, where there is such an advantage of of its paper-based ways of transfer forms, signatures” (actual signatures scrawled
taking in long-cash, whether the barriers confirmations and cheques in the post. with pen on paper) to exchange property
to non-cash collateral in that market will In the red corner titles has also helped to drive demand for
change.” Calastone - more well-known for at least a move towards Straight Through
That said, some regulators have an electronic distribution platform for Processing (STP) in the sector.
loosened their requirements on collateral. mutual funds - is to launch a mutual fund With this hurdle out the way, the
In December 2009, the Securities and settlement system in the first quarter of industry has had its hands untied and
Exchange Board of India removed a this year. can now start to move wholeheartedly
guideline for mutual funds on valuing Calastone was approached by its UK to electronic, automated processing.
collateral, whereby collateral was always clients who required a model that would As Llewellyn puts it: “Once the orders
required to remain higher in value than the facilitate better settlement and reduction become more automated, then post trade
securities on loan. of risk in the UK market. “The model downstream services have the opportunity
For 2010, Payson believes beneficial we are introducing does not involve us to become more automated as well.”
owners will be making sure the collateral holding cash,” says Dan Llewellyn, head of At present a large percentage of the
and the investment of that collateral is standards. “We are not a Central Securities UK fund industry’s business is domestic.
suitable for the asset class of the portfolio Depository (CSD)-type solution.” However, increasingly fund managers want
being lent. The first steps to automation, according exposure to, for example, Luxembourg
“An asset manager with fixed-income to Llewellyn, is to facilitate counterparties’ funds or even Middle East and Asian
assets, US equities, European equities and systems to talk to each other. This, he says, funds. According to Llewellyn, cross border
Asian equities may have four different is best achieved through both subscribing trade is really increasing. “Right now there
collateral programmes, whereas previously to a third party system that handles the is a lot of cross border marketing of UCITS
they may have lumped all into one ‘plumbing’ and is ‘agnostic’ as to the III funds passported across Europe, so
pool. Additionally, each one of those messaging system of choice in the client’s there are lots of initiatives to enhance the
programmes will have a different risk hardware environment. cross border selling of funds to retail and
profile. It means that it is just as effective for institutional investors,” he comments. But
“In 2010, I think you will see beneficial counterparties trading across borders the absence of systems to connect buyers
owners greatly increase their level of or continents as it is for UK companies and sellers in a technologically efficient
active programme oversight (daily trading with a counterparty next door. way has hampered that development
reporting, quarterly reviews, board/ “One of our key selling points is that we though, he argues.
committee oversight), particularly for do not prescribe messaging or connectivity One of the major requirements was the
those programmes that experienced issues standards which the clients have to follow. ability to be able to confirm and match
in the past. They will demand transparency The messaging can use any standard in any trades as a pre-settlement confirmation
and agent lenders will be responsible syntax that is not proprietary,” he says. The exercise. “In our model, on the back of
for providing it to their customers in a system can handle any form of messaging, trade mapping, we can provide a netting
meaningful way.” n ISO 15022 or ISO 20022. service that advises both counterparties of

20

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 ISJ Investor Services Journal Clearing and Settlement

or ISO - which they may already use settlement offering are already Euroclear
the net position that they have with each to process other types of financial UK & Ireland customers. They can
other,” Llewewllyn says. transactions. easily leverage their existing relationship
The alternative is a large number of This is the very point that Calastone with Euroclear UK & Ireland that was
BACs payments as each trade is settled offers as one of its uniques –that it does previously established to process bond
individually. “Clients were adamant that not constrain its clients as far as choice and equity trades. “For funds in particular,
the mutual fund space was not like the of messaging system is concerned. At this fund promoters, distributors and others
equities space 10 to 15 years ago. This point in time, Calastone could argue that will be able to use the data we retain to
is not a market facing huge systemic it offers more communications flexibility automatically reconcile their positions,
risk issues, but it is a market that needs than Euroclear, but it sounds as if that simply by downloading transaction
“updating,” he comments. advantage will be dissipated soon after its summary reports.
The basic premise that Calastone service is launched in 2010. Rudd adds that – when it comes
is working off is that if institutions Rudd admits that Calastone’s offering, to settlement - there is a considerable
can electronically instruct to confirm when launched, will be a direct competitor advantage for clients in settling fund
settlement obligations, then that to the combined Euroclear/EMX offering, transactions on a gross basis.
instruction should trickle right through but he points out that Euroclear/EMX “When reconciling trades, market
the payments process and should tie up had already gone live with the new participants need to see the gross
with reconciliation procedures. system in September. Clients are already transactions that have been processed on
In the blue corner testing and it has the support of the the system. Just getting a netted figure
Euroclear pipped Calastone by Investment Management Association. would make trade details completely
launching a mutual fund settlement system “This is a solution that we created with invisible and impossible to reconcile.
at the end of last year. It settles UK fund the funds industry, through the Funds “In the funds universe, netting creates
transactions with the same FSA-regulated Liaison Group, so there has been industry more complexity than it reduces. I do
service provider that already settles the wide input into the model that we have see value in netting the cash component
client’s bond and equity trades. delivered,” he argues. of a fund transaction, to ensure the
But the fact that the system was in fact Euroclear UK & Ireland and EMXCo client only needs a minimum number of
created for settling equities and bonds is have plans to extend coverage beyond cash transfers between banks. However,
significant, concedes Andy Rudd, mutual UK funds. For settling cross-border deals, for reconciliation purposes, they need
fund project manager at Euroclear UK & Euroclear offers its FundSettle platform, transaction details, particularly to detect
Ireland. which has been serving the fund industry and resolve exceptions. This is why the
Mutual fund transactions are since 2000. Funds Liaison Group recommended that
continuous primary market instruments, The idea was to take the order routing we work on a gross settlement basis, with
whereas bonds and equities trade as capabilities of EMX, the most widely net cash settlement at the end.” n
secondary market securities. used order routing system in the UK, and
The fund manager is constantly connect it directly, on an STP basis, to

MiFID &
creating and removing units as investors Euroclear UK & Ireland,” he comments.
subscribe to and redeem them, and the This means that orders sent through
settlement system has to address this EMX will automatically flow through for
fundamental difference. settlement at the UK’s central securities

post trade
Euroclear’s offering was developed on depository (CSD). Given the focus on risk
the back of the creation of its Fund Liaison management in the market today, and the
Group in 2008, which comprised the major proven track record of CSDs during the
fund distributors, managers, platforms recent financial crisis, Euroclear UK &
and registrars in the UK to discuss fund Ireland is the natural place to settle fund
transactions as well. The concept of ‘best execution’ in the
services. “There was unanimity on the 2007 Markets in Financial Instruments
fact that the industry needed a solution Rudd says that Euroclear plans to
connect the EMX message system to its Directive (MiFID) and the new multi-
that would automate and standardise lateral trading facilities (MTF) that sprung
the settlement and asset servicing of UK FundSettle system in 2010. This will allow
UK fund investors to route their orders via from it have changed the post-trade
funds,” Rudd says. landscape. Some, such as Eamonn Ryan,
“The aim was to provide the sector EMX to settle foreign fund transactions on
FundSettle and help foreign investors in product manager for Euroclear Bank’s
with a reliable settlement system, with EquityReach service in Brussels, believe
proven processing expertise, that would UK funds reach the relevant infrastructure
in the UK more easily and cost-effectively ‘best execution’ did not consider the post-
reduce the costs, risks and settlement trade element nearly enough.
cycle to T+4 instead of as much as T+10 than at present.
It will certainly facilitate more cross- Best execution includes elements
for UK fund transactions. Euroclear UK such as optimal cost and likelihood of
& Ireland also designed its new service to border traffic in UK funds. “Right now we
have funds from 21 markets settling on settlement, according to MiFID Article 21.
automate and centralise fund transaction New trading venues have vastly
reconciliation between all relevant parties. FundSettle and that number is growing all
the time,” he says. These 21 markets are all increased trading competition and driven
Market participants can avail of the service down transaction charges.
via the same interface they already use the major markets and as such constitute
the markets with the greatest appeal to When traders route an order to any
to reconcile other security transactions trading venue, they are also choosing their
they settle with Euroclear UK & Ireland. professional fund investors.
For Rudd, the critical factor is that the clearing and settlement infrastructure.
We will also provide clients with a choice It has turned post-trade into a
of message standard - that is, proprietary bulk of potential users of its mutual funds
continued page 22

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 Clearing and Settlement ISJ Investor Services Journal
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40

Analyse This: Middle

competitive element, where venues such as
Chi-X offer a new clearing system. At the
Global Custody Forum 2009 in London,
Ryan compared this with Ryanair, the Irish
airline, which produced not just planes

Office Technology
and cheap flights but new airports too.
New CCPs from EuroCCP and EMCF
and established exchanges such as Nasdaq
OMX and LSE IOB have also launched.
If a CCP allows clearance for a trader
using multiple venues, then CCP netting
How important been cleared or communicated with the
report. Without that assurance, a newer
reduces a trader’s on-exchange settlement
cost reduces to a fixed charge per CCP.
is real-time version of such a report, processed in
real-time, might be sent later (again in
However, while competition between reporting? Thorsten real time) and show different results,
calling into question the report’s
CCPs in offering clearing services for
the same exchange will drive through Heissel, SunGard credibility and even the credibility of the
data processing organisation.
efficiencies and cost reductions, There So, if real time is not a one-size-fits-all
have also been tentative steps towards CCP As the role of the middle office grows solution, what else is there?
interoperability, in line with the one of in significance, now may be a good time to We may be better served by a right-in-
the pillars of the European Commission’s question the potential broader impact of time approach rather than real-time for
Code of Conduct. Indeed, one of the some commonly accepted best practices in at least some of the middle office’s new
pillars of the European Commission’s middle office reporting. tasks. Right-in-time means processing the
Code of Conduct is for CCPs to become Highlights from two recent research data as soon as it is available and relevant
interoperable. reports put this question in context. to a specific recipient of the data.
The London Stock Exchange, for First, Beacon Consulting Group A right-in-time approach recognises
example, has an agreements with LCH. reported last year that institutional that the value of data changes over time;
respondents cited the importance of that data is most effective when it arrives
Clearnet and SIX x-clear. Marco Strimer,
real-time reporting as their number-two at the point where it is required for a
CEO of SIS x-clear, told ISJ at the Sibos technology concern, right after lack of
conference that “interoperability is not a specific action. To be fully valued in this
automation at number one. context, data is dependent on the quality
swear word”. Second, Aite Group recently predicted
But the risk of contagion inherent in of the action being performed with it.
that global revenue for investment Right-in-time would facilitate the
CCP interoperability has been exercising operations outsourcing will surge from
the regulators, who recently called a use of process management technology
USD2.8 billion in 2009 to USD4.5 billion in these more sophisticated areas,
temporary halt to LCH.Clearnet’s plan for in 2013. At least some of this growth will
interoperability with EMCF, as CCP for allowing you to define your processes
be driven by demand for newer middle first and then determine the steps to take
BATS and Chi-x in Europe. office services such as investment analytics, around the data to make it valuable and
The prime risk factor of interoperability OTC and corporate action processing, actionable for the recipient. It will lead
is the way the risk management dynamics collateral management and reconciliation. to not only more accurate data but full
shift, according to Ryan. For a stand-alone I believe the value of real-time transparency as to the value-added tasks
CCP, it is a very “do-able” exercise to look reporting in these new, sophisticated provided by the middle office.
at the extent of the CCP’s operations, middle offices can now be questioned. As Data processed this way can then
capital base and risk management the core mission of the middle office is to be used to better manage middle office
practices. With multiple, interconnected identify, report and resolve operational activity, while, in an outsourced situation,
CCPs that exercise becomes massively irregularities, it will likely require new providing an asset manager with another
more complex, due to risk-related and different methodologies as it grows in
importance. valuable oversight function. n
interdependence and the process of Thorsten Heissel is senior vice president,
While real-time is certainly appropriate
distangling trades if a major broker fails. strategy and marketing, institutional asset
for simple data activities such as
“There are issues relating to risk aggregation or position reporting, will it be management at SunGard
management that are unresolved at the
moment. What, for example, if you choose
as effective for more sophisticated activities
such as investment analytics? Investment
Studies... and a diary date
a CCP and it chooses to interoperate with analytics involves multi-factor modeling Technology announcements abounded
a second CCP that you have deliberately for risk assessment across geographies, in the new year, including from Sterling
excluded from your choice of CCP? That is sectors, investment styles and economies. Commerce, which found that 72%
an exposure that you will have not factored When evaluating results from such of 300 senior IT managers in France,
into your risk equation,” Ryan comments. complex data activities, you don’t want to Germany and the UK,plan to invest in
If a chain is only as great as its weakest link, wonder if the underlying data is correct or a cloud-based B2B integration strategy.
there are some thorny regulatory problems not. You want to be sure that the data has Buy-side firms should keep a diary
to be resolved here. been reconciled and that the appropriate date for Europe’s biggest buyside event,
At the moment, the lack of exception detection procedures - or other TSAM 2010, in London: 10 streams,
interoperability among CCPs places real quality measures - have been executed. You 450+ attendees, 40 providers and 60+
limits on the fulfilment of best execution. n need assurance that all exceptions have
speakers.n
22

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22-23 ISJ45.indd 23 22/01/2010 14:04
 ISJ Directory of Ser-
ISJ Investor Services Journal To be listed,
Investor Directory of Asset Servicing Vendors contact:
Services [email protected]
Journal

Consultancy/Legal

Clifford Chance 10 Upper Bank Street, London, E14 5JJ, UK T: 020 7006 1000

Hassans 57-63 Line WISJ/GSL Road PO Box 199, Gibraltar T: +350 79000 238

Dillon Eustace 33 Sir John Rogerson’s Quay Dublin 2 Ireland T:+ 353 1 6670022

Rule Financial 101 Moorgate, London EC2M 6SL, UK T: +44 (0)20 7826 4444

SMA Financial Limited 65-71 Bermondsey Street, London SE1 3XF T: +44 (0)20 7940 4200

Custody & Clearing

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

Deutsche Bank Theodor-Heuss-Allee 70, 60486 Frankfurt, Germany T:+49 69 910-00

DnB NOR is the leading provider of Custody, Clearing and Remote

Member Service in Norway. DnB NOR offers a full range of securities
settlement, Corporate Action and cash management services for
both foreign and domestic institutional clients. The bank has a strong
commitment to the Custody business in Norway and the staff is highly T: +47 22 94 92 95
knowledgeable and experienced. In addition, DnB NOR provides F: +47 22 48 28 46
a wide range of value-added services for foreign clients such as Contact: Bente I. Hoem, Head of
Securities Lending, Income Collection, Proxy Voting, Tax Reclaim, and Global Relations & Network
MIS reporting. E: [email protected]
As the largest commercial bank in Norway, DnB NOR offers clients W:www.dnbnor.com
full services in securities trading, registration, foreign exchange and
Money Market.

Banking Securities Services provides award winning local and regional

custody services for investment professionals. We are proud to be the
largest custodian provider in terms of assets and number of foreign
clients in Central & Eastern Europe. ING has been providing Securities For further information please
Services in CEE since 1994 and we will continue our ongoing pursuit of contact
excellence through new technology. Innovation and client focus are the Lilla Juranyi, Global Head
key drivers to service our clients the best way. Custody
Other activities of ING Wholesale Banking Securities Services are at + 31 20 7979 435
Paying Agency Services and web-based management of employee or contact her by email:
stock option & share plans. [email protected]
ING is your local partner in: Belgium, Bulgaria, Czech Republic,
Hungary, Poland, Romania, Russia, Slovak Republic and Ukraine.

Directory ISJ45.indd 2 22/01/2010 15:07

 ISJ Investor Services Journal Directory of Services

Intesa Sanpaolo’s 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

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 Contact:
dealing with Nordic and Baltic securities. Due to the unique history of Nina Groth
being formed from four established banks, Nordea is the only Nordic Head of Sub-custody and
custody provider with strong local presence and expertise in all four Clearing
markets. Nordea combines Nordic competence with local expertise, Tel: +45 3333 6124
and has proven ability to deliver high quality services that meet E-mail: [email protected]
both clients’ and each local market’s requirements. Leading Nordic
custodian: Critical mass and resources available; deep local experience
and active involvement in each Nordic market; Complete operational
capabilities and best-fit systems developed in each Nordic market;
Proven ability to deliver high-quality service in all Nordic markets;
Excellent connection with key players in all Nordic Markets; Extensive
product and service offering; Your single point of entry to the whole
Nordic region.

Northern Trust 50 South La Salle Street, Chicago, IL 60603 T: +1 312-630-6000

RBC Dexia Investor Services 71 Queen Victoria Street, London, EC4V 4DE, UK T : +44 (0) 20 7653 4096

Santander is Spain’s 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
Santander’s 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 560 bn EUR and T: +46 8 763 53 04
provide services in more that 75 markets, 10 of them under the SEB F: +46 8 763 69 30
name (Sweden, Norway, Finland, Denmark, Luxembourg, Germany, C: Goran Fors, Global Head
Estonia, Latvia, Lithuania and Ukraine). of Custody Services
We offer a full range of securities services including corporate E: [email protected]
action and information services, securities lending and services to W: www.seb.se
remote members of the Nordic and Baltic stock exchanges. We
continuously develop new products in connection with clients and
partners to ensure we deliver the high-quality products our clients
demand. We always strive to make the processes more efficient. With
a history of over 150 years in the securities industry; we know the
market and our clients well.

Société Générale Securities Services offers institutional investors, Sébastien Danloy

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

Directory ISJ45.indd 3 22/01/2010 15:07

 Directory of Services ISJ Investor Services Journal

Standard Bank 25 Sauer Street , 2nd Floor, Entrance 3 Johannesburg 2001, SA T: +2711 636 6615

State Street 225 Franklin St, Boston, MA, United States T: +1 (617) 482-3709‎

With an extensive network that spans over 70 countries, well-positioned in the

emerging trade and investment corridors across Asia, Africa and the Middle East,
Standard Chartered’s Wholesale Banking business combines global capabilities
with local expertise to develop innovative products and services to meet the
diverse needs of our corporate and institutional clients in some of the world’s 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: [email protected]
solutions, reflecting our continued commitment to power our clients’ ambitions. W: www.standardchartered.com
As one of Asia’s leading custodians, Standard Chartered serves global, regional
and local custodians and broker-dealers, as well as local and regional fund
managers. The Bank plays a key role in promoting the development of these
markets and keeping the international investor community informed of industry
developments across the region.

Swedbank Stockholm SE 105 34 Sweden T: +46 8 5859 1800

Data Services

Avox/Deutsche Bourse Group Redwither Tower, Redwither Business Park, Wrexham, LL13 9XT , UK T: +44 (1978) 661 813

GoldenSource 22 Cortlandt Street 22nd Floor, New York, NY 10007 USA T: +1 212 798 7255

International Financial Data Service IFDS House St Nicholas Lane, Basildon, Essex, SS15 5FS, UK T: +44 (0)1268 443 248

Interactive Data Fitzroy House, 13-17 Epworth Street, London EC2A 4DL UK T: 020 7825 7800

Orc Software 420 Lexington Avenue Suite 2007, New York, NY 10170, USA T: +1 46 8 506 477 00

SmartCo 37 rue de Liège, 75008 Paris, France T: + 33 1 58 22 29 60

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 [email protected]
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 area’s unique regulatory environment.

IMFC Rivierstaete Building, Amsteldijk 166, 1079 LH Amsterdam, Netherlands T : +31.20.644.4558

Phoenix Fund Services Springfield Lodge, Colchester Road, Chelsmford, Essex, CM2 5PW T : +44 (0)1245 398 950

Schroders plc 31 Gresham Street, London, EC2V 7QA, UK T : +44 (0)20 7658 6000.

SEI Investments Global Fund Services 1 Freedom VISJ/GSLey Drive Oaks, PA 19456 USA T : +1 6106763185

Trinity Fund Administration Oyster Point Temple Road, Blackrock T : +353 1 279 96 60

Directory ISJ45.indd 4 22/01/2010 15:07

 ISJ Investor Services Journal Directory of Services

Intesa Sanpaolo’s 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

Société Générale Securities Services offers institutional investors, asset

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

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

Directory ISJ45.indd 5 22/01/2010 15:07

 Directory of Services ISJ Investor Services Journal

SS&C Fund Services 80 Lamberton Road, Windsor, CT, 06095 T+1-800-234-0556

UBS Global Asset Management -

Fund Services (Cayman) UBS House, 227 Elgin Avenue, PO Box 852 GT, Grand Cayman, KYI-1103 T: +1-345-914 1060

International Finance Centres

British Virgin Islands Haycraft Building, 1 Pasea Estate, Road Town, Tortola, British Virgin Islands T: +1 284 494 1509

Jersey Finance 4th Floor Sir Walter Raleigh House 48-50 Esplanade, St. Helier, Jersey, UK, JE2 3QB T: +44 (0)1534 836000

Guernsey Finance PO Box 655, St Peter Port, Guernsey, GY1 3PN, UK T: +44 (0)1481 720071

Payments & Settlements

Equens Eendrachtlaan 315, 3526 LB Utrecht, PO Box 30500, 3503 AH Utrecht T: +31 (0)30 283 51 11

Vocalink Drake House, Homestead Road, Rickmansworth, Hertfordshire, WD3 1FX T: +44(0)870 1650019

Prime Brokerage

Barclays Capital 5 The North Colonnade, Canary Wharf London E14 4BB, United Kingdom T: +44 (0)20 7623 2323

Citigroup Global Prime Brokerage Services/Prime Finance Canada Square Canary Wharf,London, E14 5LB, UK T: + 44-20-7986-0675

Credit Suisse 20 Columbus Courtyard London E14 4DA T: (020) 7888 8888.

Deutsche Bank 1 Great Winchester Street T: +44 20 754 58000

Goldman Sachs International 133 Fleet St London, EC4 T: 020 77741000

Hermes Administration Services Peterborough Court 133 Fleet Street, London EC4A 2BB, United Kingdom T: 020 7774 1000

Morgan Stanley 25 Cabot Square, London, E14 4QA T: 020 7425 8000

Newedge 10 Bishops Square, London, E1 6EG, England T +44 20 7676 8536

Scotia Capital 40 King Street West 63rd Floor Toronto Ontario M5W 2X6 Canada T: 001 416 863-7411

Securities Lending

Data Explorers (www.dataexplorers.com), based in New York and

London, is the world’s most complete resource for data, analysis UK: 2 Seething Lane, London, EC3N 4AT
and insight into securities lending and short selling. The company’s T +44 (0) 20 7264 7600,
proprietary data gives an unrivalled, comprehensive view on share F +44 (0)20 7392 4004
lending and short-selling activity. With data sourced directly from US: 75 Rockefeller Plaza, 19th Floor
securities lending desks of over 100 of the top lending firms and New York, 10019, USA
representing most of the global securities lending market, Data T +1 212 710 2210 F + 1 212 710 2212
Explorers has built a reputation with leading financial institutions as Julian Pittam T +44 (0) 207 264 7616
the source for short intelligence that informs their decision-making E:[email protected]
and their coverage of market sectors and companies. Please visit our New York: Ken Read T +212 710 2210
Blog: dataexplorers.com/news, Twitter, twitter.com/dataexplorers, E: [email protected]
Video dataexplorers.com/daily-briefing and LinkedIn linkedin.com/ www.dataexplorers.com
companies/data-explorers sites.

Directory ISJ45.indd 6 22/01/2010 15:07

 ISJ Investor Services Journal Directory of Services

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 EquiLend’s complete end-to-end services, including pre- C: Michelle Lindenberger
and post-trade, reduces the risk of potential errors. The platform E: michelle.lindenberger@equilend.
eliminates the need to maintain costly point-to-point connections com
while allowing firms to drive down unit costs, allowing firms to expand A: 17 State Street, 9th Floor
business, move into different markets, increase trading volumes, all New York, NY, 10004
without additional spend. This makes the EquiLend platform a cost- T: US- +1 212 901 2224
efficient choice for all institutions, regardless of size. C: Michelle Lindenberger
E: michelle.lindenberger@equilend.
com W: www.equilend.com

eSecLending is a leading global securities lending agent servicing Contact:

sophisticated institutional investors worldwide. The company’s Christopher Jaynes, Co-CEO
approach has introduced investment management practices to the
securities lending industry, offering beneficial owners an alternative to Tel: US +1 617 204 4500
the custodial lending model. Their philosophy is focused on providing
clients with complete program customization, optimal intrinsic returns, Address: 175 Federal Street
high touch client service and comprehensive risk management. Their 11th Floor
process is to begin each client’s program with a competitive auction Boston, MA 02110, USA
to determine the optimal route to market for their portfolios or asset
classes whether it is via agency exclusives or traditional agency lending. Tel: UK +44 (0) 20 7469 6000
This differentiated approach achieves best execution while delivering Address: 1st Floor, 10 King William
their clients with greater transparency and control, allowing them to Street, London, EC4N 7TW, UK
more effectively monitor and mitigate risks. Additional information about Email: [email protected]
eSecLending is available on the company’s website, Web: www.eseclending.com
www.eseclending.com.

Eurex Selnaustrasse, 30, 8021 Zurich, Switzerland T: +41 58 854 2066

Euroclear Euroclear Belgium, Avenue de Schiphol 6, 1140 Brussels T: +32 (0)2 337 5111

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

Fortis Bank Nederlands Prins Bernhardplein 200, 1097 JB Amsterdam, Nederland T: +31 (12) 34 567 89

JP Morgan 60, Victoria Embankment, London EC4Y OJP London: T: 44 207 742 0256

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@
Santander’s 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.

SecFinex 60 Cannon Street London EC4N 6NPX T: +44 (0)20 7002 1003

Around the world, securities financing is managed on SunGard’s

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

Directory ISJ45.indd 7 22/01/2010 15:08

 Directory of Services ISJ Investor Services Journal

Technology

Aquin Components GmbH Moosmatthalde 4, Meggen, CH-6045, Switzerland T: +41 44 455 62 44

Accuity Market House 124 Middleessex Street Bishopsgate London E1 7HY UK T: +44 20 7014 3454

Advent Software 1 Bedford Avenue, London, WC1B 3AU, UK T: 0207 631 9240

BI-SAM 1 Cornhill, London EC3V 3ND T: +44 (0)20 3008 5834

Bravura Solutions Austin Friars House 2-6 Austin Friars London EC2N 2HD, UK T: 020 7997 3000
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.
Calypso Technology 17 Dominion Street, London, EC2M 2EF, UK T: 020 7826 2500

DST International DST House, St Mark’s Hill, Surbiton, Surrey, KT6 4QD T: +44 (0)20 8390 5000

Eagle Investment Systems LLC is a global provider of financial
services technology serving the world’s leading financial institutions. Eagle Investment Systems LLC
Eagle provides enterprise-wide, leading-edge technology and The Bank of New York Mellon
professional services for data management, investment accounting Financial Centre
and performance measurement. Eagle’s Web-based solutions 160 Queen Victoria Street,
support the complex requirements of firms of any size including London
institutional investment managers, mutual funds, hedge funds, UNITED KINGDOM
brokers, public funds, plan sponsors and insurance companies. EC4V 4LA
Eagle’s product suite is offered as an installed application or can be Phone Number: 44 (0)20 7163
hosted via Eagle ACCESSSM, Eagle’s ASP offering. Eagle Investment 5700
Systems LLC is a subsidiary of The Bank of New York Mellon E-mail: [email protected]
Corporation. To learn more about Eagle’s solutions, contact sales@ Website: http://www.eagleinvsys.
eagleinvsys.com or visit www.eagleinvsys.com. 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 F: +44 (0)20 7495 4858
services professionals and skilled Microsoft Certified programmers. C: Graham Bright
The company has developed a suite of applications that integrate E: [email protected]
and Straight Through Process (STP) real-time trading, back office A: 31 Dover Street
administration, accounting and compliance. Ultra.net®, S-Messenger® London W1S 4ND UK
and H-Fund® arwe the company’s 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 C: Gil Isenstein
the world’s financial industry leaders. Through our two products, Senior Manager
ActionService and ActionCompare, we provide multi-sourced, Fidelity Investments
cleansed data and complementary event information which is
validated, enhanced and enriched by a team of in-house analysts. A: 82 Devonshire Street, W4A
By leveraging more than 10 years of analytical expertise, technology Boston, MA 02109
and service, we offer solutions that source, enhance, compare and E: [email protected]
validate corporate action announcements, turning even the most T: 617-563-6764
complex data into valuable intelligence. Our strategic value allows
clients to reduce costs, mitigate risk, gain efficiencies and enhance
transparency giving them the highest degree of control over their
global event information.

Directory ISJ45.indd 8 22/01/2010 15:08

 ISJ Investor Services Journal Directory of Services

GlobeOp 1-3 Strand, Trafalgar Square, London WC2N 5HR, UK Tel: +44 (0) 20 7190 6600

HCL Technologies The Leela GISJ/GSLeria Commercial Block No 23 6th Floor Airport Road Bangalore Karnataka 560008, IndiaT: +44 (0)20 7621 5800

IGEFI Group Rue des Primeurs, L-2361 Strassen T: +352 26 44 211

Infonic Freigutstrasse 40, 8001 Zurich, Switzerland Phone +41 43 388 31 00

For more information on

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

Isis Financial Systems provides mission critical investment

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

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 www.misys.com
funds handle the latest complex products, streamline processes, [email protected]
reduce costs and improve STP. Misys Summit is our award winning,
multi-asset class solution that boasts 18 years OTC derivatives
market expertise. With extensive OTC buyside coverage and the
market leading structured products module, Misys Summit delivers
the solution you need for handling the end to end process for OTC.
We also provide a customisable ASP service for fast implementation
and lower costs.

Building on over twenty years of experience in capital markets

and cross-asset software solutions, Murex introduces Mx Asset
Manager - a unique cross currency, cross asset fund management
solution capable of handling the full range of products, from plain C: Hélène 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 E: [email protected]
(prime brokers, administrators, asset servicing providers) and direct W: www.murex.com
clients (portfolio managers for mutual, pension or hedge funds,
insurance companies). With so many new challenges presented to
buy-side managers when integrating increasingly-complex derivatives
into their portfolios and funds, Mx Asset Manager represents a strong
and reliable ally for dynamic position keeping and multi-dimensional
risk management in a thriving market.

Neonet Minster House, 42 Mincing Lane, London EC3R 7AE, UK Tel. +44 207 645 8610

Netik For more information please visit: www.netik.com or email: [email protected]

Odyssey Martin House, 5 Martin Lane, London EC4R 0DP UK T: +44 (0)20 7621 5800

Directory ISJ45.indd 9 22/01/2010 15:08

 Directory of Services ISJ Investor Services Journal

peterevans New Broad Street House, 35 New Broad Street, London EC2M 1NH T: +44 (0) 29 20 402200

Pirum provides a full suite of automated reconciliation and straight

through processing (STP) services supporting Operations within the
global securities finance industry. The company’s on-line SBLREX 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: [email protected]
Subscribers to Pirum’s services significantly increase their A: Pirum Systems Limited
operational efficiency and reduce their risk by using Pirum’s solutions, 37-39 Lime Street
as staff are able to focus on fixing the exceptions instead of using London, EC3M 7AY
their time to check and process routine business. These automated W: www.pirum.com
processes are more scalable and risk controlled too, allowing
significantly higher volumes to be managed without corresponding
increases in operations headcount.

Princeton Financial Systems 600 College Road East, Princeton, NJ 08540, USA T: +1 609-987-2400

Redi2 Technologies, Inc. 1771 Broadway St., Oakland, CA 94612 T: +1 (510) 834-7334

SmartStream Technologies 1690 Park Avenue Aztec West Almondsbury Bristol BS32 4RA UK T: +44 (0)20 8390 5000

SimCorp Dimension is a powerful, comprehensive and truly seamless

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

SunGard is one of the world’s leading software and IT services

companies. SunGard serves more than 25,000 customers in more SunGard Global Trading
than 70 countries, including the world’s 25 largest financial services 25 Canada Square, London E14
companies. Dedicated to post trade securities operations, GL RIMS 5LQ
is your comprehensive real time securities post execution processing Tel +44 (0)20 8081 2000
solution, covering middle office, settlement and accounting Fax +44 (0)20 8081 3399
requirements. Its wide use of automation enables global capital www.sungard.com/globaltrading
markets organisation to achieve maximum STP. It is a flexible, highly Email: info.globaltrading@sungard.
scalable and easy to install platform with a new Service Oriented com
Architecture feature that allows smooth and efficient connections with
other third parties within a company.

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,
Goal’s 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: [email protected] or
and beneficiaries and that over USD12 billion is lost because rightful [email protected] or
beneficiaries are not participating in class actions, bankruptcies and [email protected]
disgorgements. W: www.goalgroup.com

10

Directory ISJ45.indd 10 22/01/2010 15:08

 Buy-side: significant discounts of up to
100% off for group bookings

Technology Solutions for Asset Management

TSAM
EUROPE’S BIGGEST BUY-SIDE TECHNOLOGY AND OPERATIONS EVENT
2010
9th March 2010, The Brewery, London www.tsam.net @TSAM2010

Your superb faculty of more than 65 speakers includes:

Martyn Cuff, Managing Director, Todd Juillerat, Managing
Allianz Global Investors Europe Director, Head of Performance
Dennis Leeks, Head of IT, Royal Measurement, State Street
London Asset Management Global Advisors
Mark Holt, Head of Technology, Guy Usher, Head of Derivatives &
Systematic Trading, Structured Finance, Field Fisher
Bluecrest Capital Waterhouse LLP
Derek Ramage, Deputy Head Bill Hodgson, Director, Sapient
of Network Management, Fortis Process Solutions
Investments Jamess Wallin
Jame Wallin, Seni
Senior
or Vice
Vice Martyny Cuff,, Dennis Leeks,, Mark Prior,, Philip
p Keeler,, Waldi
Mark Prior, Head of IT, President, AllianceBernstein Managing Director, Head of IT, Head of IT, Head of Schoonraad,
Threadneedle Marilyn Ramplin, Executive Allianz Global Royal London Threadneedle Operations IT, UK Head of IT,
Geoff Garner, Head of IT, Aegon Director, JPMorgan
Paul Maxwell, Head of Front Robin Strong, Director, Market Investors Europe Asset Hermes Investment Investec Asset
Office Technology, Investec Asset Strategy, Fidessa LatentZero Management Management Ltd. Management
Management Sean Sprackling, Partner,
Niel Siekerka, Director of Investment Solutions
Enterprise Data Management, Consultants LLP
Russell Investments Paul Miller, Director, Knadel
Waldi Schoonraad, UK Head of Hugo Everts, Head of
IT, Investec Asset Management Performance Measurement,
Mehmet Cemal, Barclays Capital ING Investment Management
Marc De Leeuw, Head Process Europe
& Application Management, KBC Christopher Beesley, Head of
Asset Management N.V. Performance Measurement, F & C Michael Simmonds, Todd Juillerat, Hugo Everts, Head Paul Maxwell, Frederic Lalande,
Peter van Kleef, President & Asset Management Head of Liquid Managing Director, of Performance Head of Front Director of Performance
Chief Executive Officer, Lakeview Corné Reniers, Head of FSC
Capital Market Services Performance Measurement & Data Markets’ Analytics, Head of Performance Measurement, Office Technology, Analysis & Reporting,
Ian Searle, Head of Investment Management, Robeco Asset Nomura International Measurement, State ING Investment Investec Asset Europe Middle East
Statistics, Fidelity Management Street Global Advisors Management Management & Africa, Russell
Senior Representative, e Christopher Nimmick, Global
BlackRock Head of Performance, Baring Europe Investments
Gregg Dalley, Associate Director Asset Management
Equity Trading, Schroders Neil Mackay, Head of
Investment Management Performance Measurement,
Alex Suesserott, Member of FPL Standard Life Investments
EMEA Governance Board, FIX Des Gallacher, Global Head of
Protocol Performance Solution, DST Global
Toby Bayliss, European Head Solutions
of Portfolio & Electronic Trading, Jim Trotter, Senior Vice President,
Sanford C. Bernstein Global Head of Investment Risk &
John Wilson, Global Lead OTC Analytical Services, The Northern David Ayres, Chris Parmigiani, Vice Michael Dowling, Head Martin Miles, Mark Holt,
Client Clearing, RBS Global Trust Company Head of UK Client President of Marketing of Client Reporting, Director, Head of Technology,
Banking & Markets Nick Rogers, Senior Technical
Alun Cutler, Senior Business Specialist, Bank of New York Reporting Presentation Center, T. UBS Global Asset Independent Systematic Trading,
Consultant, Charles River Mellon Asset Servicing Axa Investment Rowe Price Management Trustee Services Bluecrest Capital
Development Anthony Howland, Independent Managers Ltd.
Anthony Kirby, Director, Consultant
Regullatory andd RRiiskk Management, Mi haell Harriiman, Head
Mich H d off
Ernst & Young LLP
Michael Simmonds, Head of
Liquid Markets’ Analytics, Nomura
International
Wilshire Analytics, Wilshire
Associates
Phil Davies, CTO, Milestone
Group
10 fantastic streams to choose from:
Bob Giffords, Independent Philippe Gregoire, Head of
Morning

Consultant Product Development, Orfival SA.

Sarah Bagnall, Data Services Chris Parmigiani, Vice President Data Performance OTC Derivatives
Trading IT & Operational
Manager - EMEA, Russell of Marketing Presentation Center, Measurement
Investments T. Rowe Price Technologies I Strategy I Management I Operations
Dan Farmer, Technical Jem Tugwell, Director, Jem & Attribution I
Infrastructure Manager, Royal Tugwell Associates Ltd.
London Asset Management Michael Dowling, Head of Client
Afternoon

Hans Lux, Enterprise Data Reporting, UBS Global Asset Performance

Architect, UBS Global Asset Management Trading IT & Operational Data Client Reporting
Management Jetinder Landa, Head of Measurement
Corné Reniers, Head of FSC Governance and Client Reporting, Technologies II Strategy II Management II & Servicing
Performance Measurement & Data Legal & General Investment & Attribution II
Management, Robeco Asset Management
Management Martin Miles, Director,
Ronan Brennan, Chief Technology Independent Trustee Services Silver Sponsors: Bronze Sponsors: Endorsed by: Official Associations:
Officer, Money Mate Ltd.
Howard Mannion, Chief Executive Peter Bambrough, Managing
Officer, Europe, Citisoft Consultant, Citisoft
Mike Atkin, Managing Director, Kai Saathoff, Vice President, Knowledge
EDM Council Head of Client Relationship
Shannon Walker, IT Architect, Service, DB Advisors, Deutsche Partners:
Deutsche Bank Asset Management
PJ Di Giammarino, Chief Senior representative, Eagle Marketing Partner:
Executive Officer, JWG Investment Systems LLP
Stewart Room, Partner, Field Colin Close, President, Netik
Fisher Waterhouse

Book online at www.tsam.net, contact [email protected] or call +44 (0) 20 7336 4600 (please quote reference 990ISA).

Front
TSAM10Cover Section
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 INDUSTRY CUTTING
RELEVANT EDGE MARKET
EXPERT LEADING
TUITION

TARGETED SPECIALIST
TRAINING STAY AHEAD KNOWLEDGE

For more information visit:

Selected Courses 2010
Hedge Funds
www.fintuition.com Understanding Hedge Funds post Madoff Era 18 Feb - 19 Feb
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Due Diligence on Hedge Funds 16 Mar
Book your place online Managing Hedge Fund Risk 23 Mar - 24 Mar
Credit Derivatives and Hedge Funds 17 May
or call us today on: Prime Brokerage 7 Jul - 8 Jul
Performance Measurement of Hedge Funds 1 Sep - 2 Sep

+44 (0)8452 30 30 65 Securities Finance

International Securities Lending 20 Jan - 21 Jan
Equity Finance & Structured Products 25 Feb - 26 Feb
FinTuition is an international training Bond Financing (Repo) 15 Apr - 16 Apr
company based in London specialising
Securities Services
in the securities finance business: Understanding Basel II 16 Feb - 17 Feb
securities lending, equity finance, Securities Operations Clearing & Settlement 30 Mar - 31 Mar
hedge funds, prime brokerage, repo Global Collateral Management 27 Apr - 28 Apr
and collateral management.

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fundamental understanding of this business.

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