Cross-Border Distribution of UCITS

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2011

CHALLENGES & OPPORTUNITIES

SWIFT XML ISO 20022 standard is also increasingly adopted by larger players in Asia, which will drive standardisation among the smaller players, facilitating interoperability and interfac- ing. SWIFT is also looking, via the SWIFT’s hedge funds HARmonisation Project (SHARP), to extend its influence into the hedge fund sector with the introduction of a new set of messages based on ISO 20022 standards for automating communications in the transaction chain between cus- todian banks, administrators and transfer agents. SWIFT ALLIANCE LITE Aware that low volume fund players were reluctant to implement the SWIFT Funds solution due to the initial and recurring SWIFT infrastructure costs, implementation complexity and project resources requirements – and that fax servers remained consequently their favourite com- munication tool in spite of high costs and risks generated -, SWIFT launched its Alliance LITE solution for funds in April 2010, in close collaboration with transfer agents and clearing houses, in order to make automation attractive to small players. SWIFT Alliance LITE targets institutions that exchange less than 200 messages per day and that need quick and easy connectivity to SWIFT. This is an internet-based service that provides direct, secure and low cost access to SWIFT since users can access Alliance LITE using a standard internet connection with a SWIFT-issued security token. In the past years, the quest for automation drove numerous players to implement automated fund platforms providing front-end and/or back-end services, often organised by geographical areas such as AllFunds Bank, Prime TA®, MFEX, FundSettle, Vestima+, etc. It is not possible to quote and review in detail all of them but we wish to highlight their existence and current im- portance on the fund market as these platforms have become key players in the fund distribu- tion process and enjoy international connections with asset managers, promoters, distributors, investors, transfer agents, etc. Besides, some service providers such as Fund Channel and Axeltis started to position them- selves as “intermediaries” between distributors and management companies. They now of- fer a panel of services allowing the open architecture players to develop their activities in a simplified operational and legal context, while taking advantage of the commercial agreements negotiated by these service providers. Fund platforms can be split in three categories: • Negotiation platforms , specialised in the negotiation and management of dealers agreements and trailer fee management; Fund platforms

3.4.2.3

In the past years, the quest for automation

drove numerous players to implement automated fund platforms providing front-end and/or back-end services.

• Execution platforms , specialised in order routing and settlement; • Global platforms , which cover both negotiation and execution.

The chart below provides a non-exhaustive overview of these commercial and market initia- tives.

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