Cross-Border Distribution of UCITS

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2011

FUND DISTRIBUTION MODELS & PLAYERS

Nevertheless, as the fund industry is moving toward a global distribution model, in addition to the traditional services, the transfer agent is required to provide other added-value services such as maintaining investor holdings data across complex distribution networks and trailer fee calculation based on consolidated holdings (see global TA model).

Today, despite harmonisation initiatives, the cross-border funds landscape is suffering from a high level of fragmentation at both trading and post-trading levels. In the transaction value chain, fund processing by EU Member States has evolved in a manner that best serves the needs of the domestic markets. As a result, there are significant national differences in fund processing procedures across the EU, and two competitive models have emerged: the CSD model and the TA model. A third model, called global TA model, is increasingly used for cross-border fund distribution. It notably enables French funds to be successfully distributed abroad and remedy to the absence of register in the French CSD model. Some of the differences between the various models create barriers to efficient cross- border order routing, settlement and custody to the extent that they generate additional risks and costs for investors operating in more than one market. Furthermore, the diversity of national regulations within Europe adds another layer of complexity to the process of cross- border fund distribution despite an on-going harmonisation.

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