Cross-Border Distribution of UCITS

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2011

CHALLENGES & OPPORTUNITIES

Clearstream in February 2009. With the VestimaLINK processing service, distributors benefit from one single access to place their fund orders, using one single communication channel.

FundSettle (Euroclear Bank) 49 Launched in 2000, FundSettle is Euroclear Bank’s dedicated platform for automated offshore, cross-border and domestic fund transaction processing. It is a fully integrated fund transaction platform where order routing, settlement and custody processing are centralised in a single location. FundSettle has proven itself with major funds players around the world and has a dedicated presence in Europe, especially in France and in the United Kingdom. FundSettle cur- rently gives access to over 52,000 offshore, domestic and cross-border funds from 26 legal domiciles and links up to 520 transfer agents. Euroclear France UCITS order routing platform 50 Euroclear France is currently the first European CSD to offer a fully STP solution for the funds channel. This solution can process all Euroclear France eligible domestic and foreign funds, from execution through settlement. Launched in 2006, the UCITS order routing platform has been designed in close collaboration with the main French market players - the French As- sociation of Custodians (AFTI) and the French Association of Asset Managers (AFG) - and is now a market solution that enables users to automate and standardise order execution, set- tlement, reporting & reconciliation, identification of distributors & management of trailer fees. Today around 3,000 funds are eligible for processing on the platform, including about 25% of all French funds. • T he interconnection of various platforms to cover additional markets and services . Thus, in the second half of 2010, Euroclear Bank and EMXCo put in place a structure al- lowing the EMX message system to route orders from UK fund distributors to the Fund- Settle platform, providing seamless access to the most active fund promoters worldwide. As a result, UK fund distributors are now able to provide many new investment opportuni- ties for their clients while continuing to use the existing EMX order routing service. Inter- national fund promoters, in turn, have now an easy and automated channel to reach fund investors in the UK. This new development eases the often complex and costly challenge to process cross-border fund transactions 51 . CURRENT TRENDS Two different market initiatives have been recently observed: • The creation of order routing platforms in new markets such as Hong Kong, South Korea and Taiwan . > Thus, in August 2009 the Hong Kong Monetary Authority launched the CMU fund order routing and settlement service with a view to developing the necessary infrastructure to help standardise and automate often complex and fragmented investment fund proces- sing. Establishing a standardised platform in Hong Kong was also strategically important to attract investment funds from Mainland China. The platform serves as a hub between the players on the buy side of the processing chain (distributors, investment houses, cus-

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49 Source : Euroclear Bank,Services/FundSettle (www.euroclear.com), 2011 50 Source : Euroclear France, Services/UCITS order routing (www.euroclear.com), 2011 51 Source : Euroclear, “Euroclear and EMXCo team on cross-border fund processing”, 17 June 2010

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