Cross-Border Distribution of UCITS

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2011

FUND DISTRIBUTION MODELS & PLAYERS

an issuer account, managed by the issuer account keeper also known as the “gestionnaire du passif”, is held in Euroclear France and reflects the total number of shares in the market. The French CSD model, as opposed to the TA model, does not allow distributors/investors to be easily identified, which makes distributor activity monitoring and trailer fee management processes more complex for the management companies. Most orders are placed by a financial intermediary which must be a member of Euroclear Fran- ce, and which represents the distributor/investor in France as a custodian. This can be the same entity as the fund’s custodian. Once an order is executed and/or confirmed by the centralising agent, both the centralising agent and the financial intermediary instruct Euroclear France to clear and settle on their respective accounts held with Euroclear France through a DVP (delivery versus payment) process, while the financial intermediary updates the custody accounts of the entity for whom they have dealt. Note that whilst this process is representative of the vast majority of fund order processing in France, it is nevertheless possible to keep registers for a fund (i.e. no Euroclear France account). However, with the exception of the settlement process, the overall principles remain the same.

2.1.2

The TA model: The Luxembourg example

Graph 19 displays the generic model of players involved in Luxembourg’s fund distribution industry and the investment fund distribution process .

Graph 19a: The Luxembourg TA model

Investors

Fund supermarket

Custodian/ Broker

Bank

Distributor

Transfer Agent

Transfer Agent

Transfer Agent

Transfer Agent

Fund

Fund

Fund

Fund

Fund

Fund

Fund

Fund

Source: CACEIS, 2011

Graph 19b: The investment fund distribution process

5. Statement of holdings & reconciliation

2. Order placement

1. Account opening

Investor

Distributor

TA

FUND

3. Order confirmation

4. Cash instruction

4. Cash instruction

CC Bank

CC Bank

page 34 | Cross-border distribution of UCITS

Source: CACEIS, 2011