Cross-Border Distribution of UCITS

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2011

CHALLENGES & OPPORTUNITIES

Progress is required in automation and standardisation of cross-border fund processing to face up to the increasing volumes of the market.

Major initiatives have emerged to overcome the numerous difficulties faced in a crossborder fund distribution environment. These initiatives have already resulted in a broader harmonisation of fund regulation at the EU level, the suppression of tax discrimination against foreign funds at an EU level, simplified access to fund information and last but not least, higher levels of STP in the fund industry. Although progress is being made, the level of automation and standardisation of cross- border fund processing needs to be optimised to improve efficiency, scalability and risk management with rising volumes. Optimisation should cover all processing activities: Order execution, settlement of transactions and also commissions handling. Despite the fact that the theoretical full-STP model is widely-known in the industry, the principal obstacle to uptake lies in the difficulty and cost of implementation. Asset managers must do all they can to persuade distributors, in particular small and medium sized ones, to automate processes. However, progress is likely to be slow, especially in Asia.

In the future, industry players will have to continue working closely together to develop and implement the right industry standards and best practices.

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