ISJ034

THE GLOBAL SECURITIES SERVICES INDUSTRY MAGAZINE
Fair value? Volume 5 No. 34 - 2008

CEO Profile - GBP 25 - UK, ROW
Donal Smith
USD 45 - America
of Data Explorers
EUR 35 - EMEA
Panel -
Securities Lending www.ISJ.tv
Analyse This - ISJ goes monthly
Caribbean Fund Services
Custody - Benelux
Fair
value?
Mark-to-market
in a volatile world
Payments - Asia
Fund Administration - Japan
In Focus - Collateral Thinking
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ISJ | Investor Services Journal Editor’s Letter
P.14 CEO Profile P.25 Benelux Custody P.32 Panel Debate P.42 Japan
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News
BNP Paribas’ assets under 7%
custody in Benelux in 9% The last month of updates in
June 2008 by country custody, clearing and settlement,
percentage. securities lending, legal and
Source: BNP Paribas 84% compliance and technology.
Ben Roberts - Editor Catherine Kemp - Reporter Giles Turner - Group Editor
Belgium 9% | Luxembourg 84% | Netherlands 7 [email protected]
[email protected] [email protected]
Contributors:
Joe Corcos
Editor’s letter been their familiarity with
Brian Bollen
Anthony Harrington
The billions spent on the territory and long-
financial restructure in many standing customers. The
Associate publisher:
Justin Lawson currencies around the world, Benelux region is a notable
E: [email protected]
Publishing manager: coupled with widespread example of this: despite
Monique Labuschagne
interest rate cuts among an array of opinions from
Account managers: national banks and the industry experts concerning
Craig McCartney
E: [email protected] ECB, have provided more the service benefits of the
Tarik Rekiouak
questions than answers as global-versus-local custodian,
David Valenzise to the outlook, attitude and ISJ encountered a greater
culture of the companies that sway towards a shrinking
Operations manager:
Sue Whittle have apparently benefited. circle of large players (see
Designer:
The future for structured this month’s feature on the
David Copsey products, bi-party trading region, page 25). The reasons meets the respective CEO
[email protected]
agreements, rating agencies for this forecast included the and chairman. On the other
Commercial director:
Jon Hewson
and trader monitoring are all bigger banks’ sophistication side of the world, Japan’s
[email protected] under the microscope, with in servicing esoteric assets traditionally insulated funds
CEO: the regulators and the world and their ability to provide industry has allowed a few
Mark Latham
[email protected] media turning the lens to get the full suite of services. global banks to develop local
Investor Intelligence
the situation in focus. But if the oligarchy of roots as its pension funds
16-17 Little Portland Street, As a result, securities global custodians offering diversifies – turn to page 42.
London W1W 8BP
T: +44 (0) 20 7299 7700 services across the board a similar breadth of service Japan is a key element
F: +44 (0) 20 7636 6044
W: www.ISJ.tv
are at the cusp of a new era. becomes the norm, the in our other Asian focus,
Bank consolidations – seen question becomes: what as Anthony Harrington
© 2008 Investor Intelligence
All rights reserved. recently in many countries, will be the new value-added explores the possibility of a
No part of this publication may
be reproduced, in whole or in both amicable and hostile - services? pan-regional payment and
part, without prior written
permission from the publishers.
can create new combinations Mergers, challenges settlement system. Can the
of expertise in the rebranded and innovation are also countries come to a decision;
ISSN 1744-151X.
Printed in the UK by Pensord Press. conglomerates, and highlighted this issue in is Asia’s uneven financial
occasionally monopolies. fund administration. Equity landscape a hindrance?
In custody, global players Trust, an opportunistic buyer Find out inside. ■
are strengthening their historically, recently sealed
position in small markets to a deal with Custom House Ben Roberts
challenge the local players to create a USD50 billion
whose key selling point had enterprise. Giles Turner
1-18 ISJ34.indd 1 10/11/08 17:30:56

Contents ISJ | Investor Services Journal
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56
Contents
News Custody
04 Letters to the editor 25 Benelux in flux - profile

Ben Roberts explores the diverse
custody lanscape across Belgium,
06 News and mandates Netherlands and Luxembourg.
The last month of updates in Tim Lind, Omgeo, page 41
custody, clearing and settlement,
securities lending, legal and
31 Global Custody Forum
compliance and technology. - Conference vendor
profiles
08 Foresight Reform the rating
agencies before it’s too late,
Securities Lending
argues Giles Turner.
32 ISJ Panel Debate -
10 News analysis - Securities lending
Leading companies talk over
The importance of issues for a changing industry.
being Erste
Plus, analysis of the DTCC-LCH.
Clearnet link-up and Mohamed El- 38 Collateral thinking -
Erian’s award-winning book. Counterparty analysis
Brian Bollen investigates how
CEOPeople
Profile today’s markets have altered Administering a nation Japanese
14 CEO profile - Donal the perception and content of fund administration, page 42
Smith of Data Explorers collateral in transactions.
The chief executive talks to
Giles Turner. Fund Administration
30 Custom made - Merger
Regulation profile Dermot Butler of
16 Fair value? - Valuation Custom House and Hugo Van
Vredenbuch of Equity Trust
and trading discuss their firms’ merger.
Joe Corcos examines the IASB’s
call for US-style opt-out on fair
value reporting.
42 Administering a nation
- Japan Catherine Kemp
Fair value? discovers a gradual opening in
valuation and trading 20 MiFID - one year on
the insulated world of Japanese
- GL Trade on the regulation’s
implications for the back office fund administration.
Asian Payments
Payments
Regulation 46 Analyse This - A fragmented market? page 21
21 Asia’s payment Caribbean Fund

MEMBER - periodical dilemma - Asian Services Insight from fund
publishers association
payments administrators and one of the
Anthony Harrington considers worlds leading domiciles
whether a pan-Asian payments
and settlement system will ever
Total Net Circulation 12,133
Analysis for the Audit Issue Vol 4, be realised. 48 Directory of services
No 22 distributed June 2007. The company listing.
Source: AUDIT BUREAU OF CIRCULATIONS,
www.abc.org.uk
To RENEw youR SuBSCRiPTioN

PLEASE TELEPhoNE: Mark Faulkner
+44 (0)20 7299 7700
oR viSiT... www.iSJ.Tv
Panel Member, page 32
1-18 ISJ34.indd 2 10/11/08 17:32:40 Caceis

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1-18 ISJ34.indd 3 11/11/08 19:31:04

Caceis adv climb EN 203x267H.indd 1 8/04/08 14:20:01
Letters ISJ | Investor Services Journal
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Dear ISJ
Planning for the next six

Letters
the business portfolio of the than others, specialist
Dear ISJ
The successful managing down

months used to be considered bank. Some are more exposed knowledge in certain sectors of the risks of market default has
short-term thinking. to external market forces than is much harder to locate and been a huge vote of confidence
However, the rules of the others. Technology can help safeguard. for the effectiveness of a CCP
game have now changed. As to run a business efficiently ‘Tacit knowledge’ is the model in mitigating the risk of
recent weeks have shown, and transparently, however knowledge that people carry OTC trades.
nothing can be taken it cannot make boardroom in their minds. By default In a recent speech Charlie
for granted. decisions. If your highly it is normally difficult McCreevy, the European Union
It is essential for survival that profitable core activities to access and typically internal markets commissioner,
businesses leaders consider suddenly become highly provides a reference or made it clear that there is a
every possible obstacle and unprofitable, technology context to particular events pressing need for a central
eventuality. It’s now difficult alone is not going to come to or situations. Companies clearing counterparty (CCP) in
to look ahead more than an the rescue. that fail to safeguard this the Europe – illustrated with the
hour or two. Businesses should be valuable ‘knowledge area’ recent merger talks between US
Technology has developed reconsidering the quality of are not treating it with the and European clearing houses.
to respond to this need for the data processed through respect it deserves, and in The bespoke nature of
agility. M&A activity has these applications, and turn are creating unnecessary derivatives contracts arises
taken a new direction, and reconsidering the adequacy risk. Others who tackle the concerns that if a significant
in this fiercely competitive of their strategic risk- problem head-on can not party fails to honour its
climate companies and monitoring across products, only reduce their exposure, obligations, there can be serious
banks are quick to swallow- across lines of business, but also their single points knock on effects.
up the struggling small fry across markets and across of failure and impact to the The opaqueness of OTC
in order to stay afloat in global locations. Many business when an individual means regulators have little sight
stormy waters. Technology surviving mega-banks already chooses to leave a company. of potential liabilities building
exists that enables fast-build do this. For others that do One way that some up for institutions. Moving
operational integration and not, investment (or perhaps companies are managing them increasin gly towards
consolidation of enterprises engagement of an outsourced ‘tacit knowledge’ retention, exchange-clearing will provide a
and communities that are service) is critical. Inevitably is to outsource it. By aligning much clearer view of where the
radically reshaped following this measure will be too late key areas of concern, with real risks in these instruments
mergers, acquisitions and to survive in the current best-of-breed outsourcers, lie. The migration will increase
nationalisations. The re- turmoil, but these events are companies are able to their exposure to electronic
shaping process is not yet inevitably cyclical and will gain access to the scale of trading strategies.
finished, and banks must periodically recur. resources that they can never Institutions will increasingly
urgently apply resource and achieve alone. They are also have to look to service providers
effort to the deployment Richard Spong able to buy into a more that can offer low latency
of strategic solutions that Managing director, commercialised approach to solutions that provide access to
validate business data Sterling Commerce n ‘tacit knowledge,’ achieved for market data, trade execution,
accurately and consolidate example through formalised and trade cycle applications
risk reporting comprehensive cross training. and services. If plans for a CCP
– and they must deploy Dear ISJ As financial companies model progress across Europe,
solutions that have the grow more confident in institutions must also address
bandwidth to scale, as further Valuing knowledge is partnering with outside connectivity to ensure fast and
enterprises are acquired, or paramount to the success of specialists, I believe the secure access to trading partners
non-core lines of business any organisation, particularly case for outsourcing ‘tacit and exchanges.
are sold.Strategic, enterprise- financial institutions in knowledge’ will grow with it.
wide deployment of volatile markets as we Kevin Covington
consistent risk management witness ever increasing staff David White Head of Product &
and market-modelling turnover rates. Although Executive director Propositions, BT Global
technology may have some financial services staff MFT n Financial Services n
helped, but it depends on are more easily replaced
4 To express your views, write to [email protected] or write a blog at www.ISJ.tv
1-18 ISJ34.indd 4 10/11/08 17:34:50

ISJ_SEB
Nordic/Baltic Excellence
SEB is the leading provider of custody and clearing services in the
Nordic/Baltic region.
Business is built on long standing partnerships with our clients.
Our commitments are efficiency, reliability and providing the highest
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For further information please contact: Global Head of Custody Services: Göran Fors,
[email protected]. Head of Sub-Custody Client Relations: Ulf Norén, [email protected].
ISJ_SEB_Eye_Map_203x267.indd 1 07-07-13 07.58.43

KOGER
News and Mandates ISJ | Investor Services Journal

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Custody Legal and compliance measurement solution to assist LONDON - Barclays Capital has
its fund managers with their signed a contract to purchase
investment administration Caplin Trader - a web based
GERMANY - It is understood that LONDON – Standard & Poor’s, application platform, to be
BHF Bank – the private bank the financial market intelligence Eagle, a financial services used in Barclays’ Fixed Income
owned by Sal. Oppenheim – is provider, launched its Fixed technology and The Bank of eCommerce offering.
looking to spin off its custody Income Risk Management New York Mellon subsidiary, will
and Depotbank service offering Services (FIRMS) business. allow Axial to quickly and easily LONDON - Alberta Investment
into a separate entity. calculate returns in different Management Corporation
FIRMS’ capabilities include: formats and can consolidate (AIMCo), the Canadian
LONDON - The National market research and data from multiple sources to investment manager, has
Association of Pension Funds commentary on cross-market create different views of data chosen SimCorp Dimension an
(NAPF) has launched the final and cross-asset class valuations across its business. integrated, enterprise-level
version of its 16 Best Practice and relationships in complex tool that provides front, middle,
Principles on investment structured products; credit LONDON - BT now provides and back office solutions for the
advice to pension funds. The ratings information and data resilient connectivity to NYSE investment managers.
Principles - endorsed by 12 major distribution and insight through Euronext through the new
consultancies - are a key part of RatingsDirect; real-time Secured Financial Transaction Vantage Reporting, the provider
the NAPF’s Assessing Investment coverage of the leveraged loan Infrastructure® (SFTI®) to private investment firms,
Consultants Performance toolkit primary and secondary markets; network’s hubs in London and changed its name to Vantage
designed to help pension fund company cross-tagging of global Paris. This gives customers Software, reflecting the
trustees evaluate and compare identifiers, reference data, access to the new Universal company’s focus on delivering
investment consultancies on a counterparties and securities; Trading Platform that will out-of-the-box products
more consistent basis. credit risk models and solutions, support Euronext Cash Equities, implemented with or without
and independent securities Liffe Market Data and Trading customisation. David Sayles has
NEW YORK - The Bank of New evaluations for cash fixed through the Radianz Shared joined Vantage as director of
York Mellon was selected by the income and structured finance Market Infrastructure that sales and client service.
U.S. Department of the Treasury instruments offering, through connects users to the global
to support the government’s Standard & Poor’s Securities community of trading-related
Clearing
Troubled Asset Relief Program Evaluations, independent price partners, financial applications
authorised under the Emergency evaluations of almost three and services. Brussels and London –
Economic Stabilization Act. million hard-to-price fixed- Euroclear Bank’s FundSettle
income and structured securities LOS ANGELES - Vhayu platform has launched an
BNY Mellon is providing daily, and extensive fixed income Technologies has combined its automated link to EMXCo’s
accounting for the portfolio, reference data. tick bar data processing system, EMX Message System. This will
holding all cash and assets in Vhayu Velocity, with Alphacet further automate cross-border
the portfolio, pricing and asset Technology Explorer, a “codeless advanced flows in UK funds, providing an
valuation services and assisting historical backtesting engine” integrated, electronic means
with other related services. It will LONDON and BOSTON - Axial to create a tick database and for order input through to
also serve as auction manager Investment Management has alpha generation product. settlement and asset servicing. n
and conduct reverse auctions for selected Eagle Investment
the troubled assets. Systems LLC’s performance
Latest mandates
Month Winner Client Location Assignment Mandate size
October BNY Mellon Farglory Life Taiwan Admin/custody n/a
October BNY Mellon Eureko B.V London Global custody EUR38 billion
October BNY Mellon Troubled Asset RP Washington Custody USD700 billion
October Pac Inv. Man Co. Fed Res’s comm. paper Washington Management n/a
September Northern Trust Maryland State Ret’mnt London Custody USD40 million
September Citi OCBC Singapore Custody n/a
1-18 ISJ34.indd 6 12/11/08 15:59:52

KOGER 11/10/05 12:04 pm Page 1
1-18 ISJ34.indd 7 11/11/08 18:23:01

News and Mandates ISJ | Investor Services Journal
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56
An agency reform needed, at any rate

Giles Turner, group editor at ISJ’s publisher 2i Business Media, argues for the
reform of the rating agencies
Some say rating agencies are partly to some of company solvency. Statpro, a data profit-seeking companies, then failure to
blame for the current crisis. Crippled by management company, has developed a produce the goods should result in either
conflicts of interest, these agencies let “dynamic” credit risk model integrating new companies rising to take their place
their paymasters (the very people they credit risk and market risk; the StatPro or a review of the system.
were supposed to rate), dictate ratings of VaR. This lets you know the current level Capitalism relies on trust. Companies
structured products, including mortgage of CDS spreads traded in the OTC mar- trust in their suppliers will deliver on
backed securities. If the rating agencies ket. Dario Cintioli, head of risk, StatPro, time, that fixed income payments will be
did their job, investors might have been advises that “One approach to isolating made, and that you have some forewarn-
better informed of these products’ falli- credit situations and spot potential prob- ing from the analysts you pay to examine
bility. lems in time, is to compare the evolution the market that one of the largest invest-
This may be letting investors off the of the StatPro VaR (or of CDS spreads) ment banks in the world is about to
hook, but by definition rating agencies of one issuer against its peers. Significant go bankrupt. Ratings are essential to any
have to examine the fundamentals behind deviations from the sector average may product or bond. But as soon as the rating
products and companies and give a risk provide strong signals relating to the start agencies realised that inordinate amounts
assessment. This involves an element of of credit problems”. of money could be made through posi-
soothe-saying and opinion making, but tive ratings and client relations, any hope
this clairvoyance involves sophisticated
A listed rating agency is a of independence evaporated. The rating
quantative analysis – one hopes. contradiction agencies became one with the financial
The quantative approach may ex- system.
plain Moody’s rational rating approach CDS spreads are an effective method The President’s Working Group docu-
of General Motors, reflecting its steady of analysing market risk in the short term, ment proposes to “reform the credit rat-
27-year decline from AAA to CCC. Leh- but do not offer an effective method for ing agencies processes for and practices
man Brothers, however, went from AAA long term analysis. Before a solution can regarding rating structured credit prod-
to junk in a single weekend. No amount be found, there are many dogmas that ucts to ensure integrity and transparen-
of hand-wringing and modelling can ex- need to be discarded. The first is the as- cy”. This reform must include the propo-
plain why Lehman Brothers continued to sumption that the free-market can find sition that the rating agencies cannot be
have high ratings across the board. the solution. A listed rating agency is a financed directly by the companies they
In the Policy Statement on Financial contradiction, and increased competition rate.
Market Developments by the President’s among listed rating agencies does not An alternative would be an investment
Working Group to George W Bush, improve rating quality. A paper entitled tax for all financial companies that go to-
signed by US Treasury Secretary Henry Reputation and Competition: Evidence wards a totally independent rating agen-
Paulson, the situation was reported as from the Credit Rating Industry (Bo Beck- cy. This tax will be a flat rate, required by
follows: “Faulty assumptions underly- er and Todd Milbourn, Harvard Univer- law, on every listed company and invest-
ing rating methodologies and the subse- sity and Washington University, St Louis), ment vehicle. The regulator within the
quent re-evaluations by the credit rating highlighted that the more credit rating country where the bond or company is
agencies led to a significant number of agencies competed with one another, the issued or listed would be in charge of is-
downgrades of subprime RMBS, even of greater likelihood they will issue higher suing and receiving the tax. The revenues
recently issued securities… The number ratings. Focusing on the ‘before and after’ would not only fund an efficient rating
and severity of negative ratings actions of the introduction of Fitch Ratings dur- agency, paying salaries at near the market
caused investors to lose confidence in the ing the mid-1990s, and its effect on the rate, but also any excess revenue would be
accuracy of the ratings of a wide range of Standard and Poor’s-Moody’s duopoly, funnelled into improving regulators, and
structured credit products.” the paper found that not only did ratings perhaps financing a ‘fund of last resort’,
To much, too late, perhaps, but what become friendlier with increase competi- for when, not if, the next liquidity crisis
are the alternatives? Some have put for- tion, but that bond yields and ratings be- occurs.
ward the notion that a more objective came less correlated. Rating accuracy must lead to profit.
method in analysing credit risk would The basket of services offered by the Over the past few decades, the rating agen-
be through the over-the-counter credit rating agencies failed to deliver satis- cies have made profits lead to accuracy. A
default swap (CDS) market – a gauge for factory results. If they wish to be listed, mild reform may not be enough. n
1-18 ISJ34.indd 8 10/11/08 12:28:19

Early 2009 will see the full launch of an exciting portfolio of
innovative new dotTV websites by 2i Business Media.
Online dotTV brand extensions of two of our leading

magazines; Investor Services Journal and Alternatives, are
already running successful test-beta sites; www.ISJ.tv and
www.alternatives.tv
These new interactive video streaming sites will move out of

beta mode early in 2009 and will a offer host of exciting new
digital media opportunities.
For more information contact Group Editor Giles Turner

Tel: +44 (0)20 7299 7718
Email: [email protected]
Reporter Ben Roberts can be reached on:

Tel: +44 (0)20 7299 7717
Reporter Catherine Kemp can be reached on:

Tel: +44 (0)20 7299 7714
ISJ.TV Advert.indd 1 13/11/08 16:13:49

News Analysis ISJ | Investor Services Journal
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56
The importance
of being Erste
A beleagured CEE region has a champion in the Austrian bank, writes Ben Roberts
Austrian bank Erste, one of the most believe that current negative sentiments a slowdown at the end of 2007, gross
prominent custodians in Central and surrounding Central and Eastern domestic product growth accelerated to
Eastern Europe, has reported strong Europe in general and Hungary in 8.2% year on year. “Overall, we see the
growth in the region despite many of the particular do not reflect the tremendous GDP growth rate for the financial year
countries seeking financial help from the opportunities and underlying potential for 2008 at slightly above 7%, pointing
International Monetary Fund. of this region. We have made a long term to a stable and strong performance of
In the first nine months of 2008, strategic investment in Hungary and are the economy in terms of GDP growth.
many of the company’s regional determined to continue to support the In the mid run, we see stable economic
subsidiaries performed well. Net interest Hungarian economy and specifically to performance prospects,” said Alen
margin at 4.5% remained at a high level, meet our clients’ needs.” Kovac, macro analyst at Erste Group.
while operating result advanced by 52% The parliamentary elections
to EUR1.36 billion. In the mid-run, we organised in May were concluded, after
Though its total investment intense negotiations, with the pro-
in securities and other financial see stable economic European forces managing to assemble a
investments dropped in September of
this year to EUR44,066 million from
performance DS-led coalition and a new government
headed by DS candidate Mirko
EUR53,554 million in Sept 2007, its risk prospects Cvetkovic. Such a resolution alleviated
weighted assets grew to EUR105,342 a significant proportion of the political
million, up from EUR93,814 million in Alen Kovac, Erste risks to macroeconomic stability and
September 2007. was in line with our expectations,
Other liabilities, including minority according to Erste. “With political risks
interests, were stated at EUR15,537 considerably diminished, we see lower
million in September compared with The outpost in Serbia looks like a canny volatility on the FX market although
EUR20,293 million in the same month move by the bank, which in recent years towards the year-end there might still be
of the previous year. The return on has even outpaced its German rivals some room for mild depreciation”, an
equity has risen, up to 34.2% in Sept in establishing a CEE network. After Erste Group analyst commented. n
2008 from 12.9% 12 months before.
10%
Erste, which has operations in Hard times to great expectations: GDP 2-year forecasts 2008 2009 2010
Ukraine, Croatia, Hungary, Czech for year on year growth (source: Erste bank)
Republic, Slovakia, Romania and in 8%
September announced the opening of its
office in Serbia, has remained positive on
6%
the region despite the need for IMF help.
On 29th October it was announced that
Hungary was to receive EUR20 billion in 4%
a rescue package agreed by the European

Union, the World Bank and the IMF to 2%
bolster the nations finances following

the depreciation of the currency, the
forint. 0%
Czech Rep Romania Slovakia Hungary Croatia Serbia Ukraine
Andreas Treichl, Erste Group’s CEO, Despite an overall slump in GDP forecast for next year, Hungary is set to make the biggest gain in 2010.
came out in strong defence: “We firmly Only Ukraine is forecast for a prolonged decrease over the next two years.
10
1-18 ISJ34.indd 10 10/11/08 12:28:28

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News Analysis ISJ | Investor Services Journal
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56
Clear El-Erian plots

sailing? collision course
The DTCC and LCH.Clearnet have When Markets Collide, Mohamed El- diversifying their investment wider than
agreed to merge in a deal that will create Erian’s exploration of the changes in the initially cautious investment into US
the world’s largest clearing house. The the global investment landscape, and government bonds. He picks up on, and
merge – announced 22nd October – recent winner of the Financial Times and defies, the Western suspicion of SWFs in
will for the first time give a common Goldman Sachs Book of the Year, is an a neat moment of rhetorical flourish.
infrastructure to post-trade activities ambitious study that just about finds the By page 110, the most effective
between the US and Europe. mid-ground between the insider investor metaphor surfaces: “The global economy
Donald F. Donahue, chairman and and the ‘educated’ layman. Like any good has been likened to a plane flying on one
chief executive officer of DTCC and storyteller, we are “on a journey” to engine – fed by the vibrant activities of
A. Chris Tupker, chairman of LCH. a “secular destination”. US consumers. Well, now that engine is
Clearnet, gave the usual official response The book charts the spluttering. But the plane
as to the combined efficiencies and world up to January will be able to maintain
complementary expertise and the 2008 – time enough to altitude because a number of
intended cost savings to users. take the credit crunch smaller engines are coming
But is everything as neat as that? into his analysis of risk onstream… this transition
Marco Strimer, CEO of SIX x-clear, has management, asset liabilities includes bumps, but, despite
reservations. “A merger only works when and credit ratings without that, it has potential to
you can reduce costs and create benefits yet seeing a month like prevent a hard landing.”
to clients. So I think the success of this September. In sum, the But emerging
merger will depend on whether they can credit crunch did not cause economies have their own
reduce costs to the extent they want to.” specific long-term changes - problems. Perhaps the
He adds that he was underwhelmed as it instead quickened trends most lucid exploration in
to the 7-8% operational efficiency gains that were already happening. the book is the challenges
the companies are aiming for in a letter In Western markets, this is defined by facing emerging markets. As he repeats
from Donohoe. the sophistication of new trading ideas - the adage, managing success can be as
Strimer adds there needs to be a mortgage-backed securities is an obvious difficult as managing a crisis. Sudden
correlation between different products example - operating within traditional inflows of cash can distort a country’s
when they are combined. “Is there a frameworks that are too inflexible normal investment policies - policies
positive correlation between repo swap to accommodate them. In terms of that may be difficult to alter if out-of-
transactions from a margin point of oversight, he collates neatly the market kilter with the country’s wider economic
view with an equity transaction?” doubt as to the relevance of the IMF. uncertainties. Sustainability is “a decades
Clearing houses are not banks, and so Disruptions in the market, the “signals” long process,” a useful point to make as
need a degree of steadiness before they among the “market noise”, are the result China’s growth slips below double digits
launch new deals or innovative products of this discrepancy, made up of statistical for the first time.
on the market is necessary, he believes. anomalies. Heed these anomalies or When Markets Collide is an impressive
“This must be the number one goal, to suffer, is his main point. read in its scope. El-Erian’s accreditation
not disturb the market.” In emerging markets, El-Erian charts of others’ general points is a modest
He says he has seen more transactions how the transformation of countries such acknowledgement that he is standing on
in the last few months, but the amount as China and India from debtor nations to the shoulders of giants. A book that was
of individual trades has decreased. “As creditor nations has been integral to a new published in January is not dated. A crisp
fees go down, traders are trading at a importance. Further, the simultaneous assessment of alternative asset classes
lower value because they don’t need growth of many Asian countries has that may unlock future returns, risk
the same return any more. With fewer solidified key trading relationships with management and policy consideration
market participants and a reduction in each other, with the rise of derivatives shows that age-old investment wisdom
credit lines for proprietary trading, fewer dissolving barriers to the markets. He can always keep up with the times. n
transactions will happen.” n explores how sovereign wealth funds are
12
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1-18 ISJ34.indd 13 11/11/08 18:40:26
CEO Profile ISJ | Investor Services Journal
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Head of the explorers

Donal Smith, CEO of Data Explorers, talks to Giles Turner
Size matters. In March this year Donal that Data Explorers is a data – and not
Smith moved from Thomson Reuters, a media - company, there is an element
with a workforce of 10,000 people, to of new-media to the firm given the
Data Explorers, of around 80 people. board mainly comprises of ex-Thomson
Although this may have come as a Reuters employees. Smith himself started
shock to most, Smith quickly found that his impressive career as a publisher with
ideas in a smaller company can find Pearson, running their FT.com offering.
their way off the board room table and “There is always going to be a part
into reality in a matter of days. Data of it where we try and interpret what’s
Explorer’s Stock Lending Index (DESLI) going on, and have a view of the bigger
is a good example of this. DESLI shows picture,” Smith explains. “I think it is
the variations in the amounts of stock very easy for people in securities lending
borrowed and amounts available to just to get down into their particular
borrow in all regions and sectors around niche and not have the ability to take a
the world. view over the top. You don’t get that in
“We decided we had to paint the the equity and bond market because the
macro picture of what is going on in mainstream media covers the respective
stock lending to help people understand industries heavily. Our industry is not
what the big picture trends are,” explains covered by the mainstream media -
Smith. “We had that conversation on the what we are trying to do is to bring a
Wednesday, and by Friday we had the bit more clarity to that. We are a data
first cut of that index available on the management company, and there is a
website.” It would be easy to hypothesise that media element to it, but no more than
Securities financing, stock lending downturns often favour IT companies, that.”
and short selling have been at the centre especially data management companies, Smith joins many industry figures
of the credit crunch storm for the past where getting the most reliable and cost by stating that securities finance needs
six months at least. As a result, the need effective data becomes a major issues. someone who can speak up when
for the press, politicians and regulators However, Smith sees some negatives the media, politicians and regulators
to understand the industry has never for the industry during the present are misinformed. At the RMA/ISLA
been more important. Data Explorer downturn. “People always need data, Securities Lending conference in Texas
has often been at the forefront of the people know that data can mitigate in mid October, the possibility of a
drive to keep people informed about the risk, show them opportunity and prospective industry spokesperson
industry, from regular appearances on increase their companies performance,” was discussed. Brian Lamb, CEO of
CNBC and Bloomberg to front page of he says. “With the bigger companies EquiLend, and Mark Faulkner of Data
the Financial Times. Smith has also seen their revenue is increasingly tied to the Explorers advocated the need for a
a concerted effort from his customers number of clients, and I suspect there more concerted PR effort on the part
for Data Explorers to get in contact with will continue to be job losses both in of the industry. “I think we can help
the regulators and provide information Wall Street and the City. This could by providing irrefutable data, but we
to help them understand the intricacies well have an impact on some of the are not policy makers. For the hedge
behind securities lending. companies in the data business.” fund industry in the US, the Fund
Data Explorers seems better placed Management Association have hired
“I think we can than most to avoid this downturn. Not some heavy weight people for the policy
only is the firm hiring, with additions role, but in the securities lending world
help by providing to its London and Boston sales and there isn’t anyone who is doing that,”
irrefutable data, but client services teams and its Edinburgh
data centre over the summer, but it
says Smith.
You may be hard pressed to find
we are not policy also has its very own YouTube channel, industry insiders better qualified than
which has to be a first for securities those at Data Explorers. Mark Faulkner
makers” lending. Although Smith is adamant and Bill Cuthbert, the company’s
14
1-18 ISJ34.indd 14 10/11/08 15:01:03

ISJ | Investor Services Journal CEO Profile
founders, originated from the securities by lowering of values, has fallen 10%. and transferring data efficiently and
finance industry, and have been working It shows that during good times or bad effectively has yet to match other
closely as consultants and advisors securities financing is an important asset areas. However data companies
with all of the major participants in the central part of liquidity proposition can only go so far; it is yet to be seen
market for a long time. The demand for the capital markets. Once you have if managers make the most of the
for data has also been growing for some accepted this, it is a bit like looking back information available. n
time. “The primary fuel for growth has 40 years in time to the bond market or
been the appetite from participants the currency market, and realising that Biography
in the market to have more data there wasn’t a lot of data at first about Prior to joining Data Explorers, Donal
transparency and also the ability to those markets as they developed. The Smith was President and COO, EMEA and
correlate their data with third party data amount of data grew, the interest in the Asia of Thomson Financial. He joined
sources, all of which help them make data grew, and the necessity and value the company at the end of 2001 and was
responsible for driving the growth of
more profitable decisions,” says Smith. grew. I can see this industry definitely Thomson Financial’s international busi-
Data quality is often defined by your taking that track.” nesses.
ability to apply and analyse it. Smith At present, the job of the fund
highlights an interesting phenomena manager is multi asset, and multi- He also worked with the European Com-
mission to gain regulatory clearance
coming out of the recent disruption in geography. If anything, the majority for Thomson’s proposed acquisition of
the securities lending markets. “Over of the financial industry suffers from Reuters. Previously, he worked for the
the last month one might’ve suspected information overload. The most Financial Times Group, firstly as Manag-
the short selling bans to cause liquidity important factor today is finding the ing Director of Business Information at
FT Information and then as Director of
problems, yet we’ve seen quite an uptake right piece of information, at the right Electronic Publishing for the FT Group,
on the activity of lending. Stock-on-loan time, for those in the front office. This and as a member of the group’s manage-
was up 15%, according to our index, is the motivating factor for Smith, ment board. During this period he was
even though inventory, partly driven working in an area where collating responsible for the launch of FT.com.
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1-18 ISJ34.indd 15 10/11/08 15:01:04

Regulation ISJ | Investor Services Journal
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Fair value?
As investors scramble to unwind deals and calculate positions,
regulation surrounding fair value has shifted, writes Joe Corcos.
The world’s governments have tinkered
with the financial system on a massive
scale in a desperate attempt to stave
off the worst of what started as the
subprime crisis, developed into the
credit crunch, and has since turned into
a full blown financial meltdown.
The developed world’s financial
sector, the very chalice of capitalism, has
taken a beating and changes to some of
the fundamentals of the system have had
to be made to fix it. And while bending
the rules may help avert another Great
Depression, nobody knows what the
long-term repercussions will be. Case
in point – the concept of fair value and
the recent relaxing of the rules that have
been built to enforce it.
Prior to the financial crisis the
concept of fair value was little known
or referenced outside the accountancy
universe. But in the last month or so a A debate over fair says: “In the normal market you don’t
have distressed sellers and people
debate over fair value and the role it has
played in the current crisis has hit the
value has hit the desperate to raise capital so they have to
sell no matter what the price.
mainstream media. mainstream media “That causes distortion, you’ve now
The concept of fair value, or mark
to market, is the practice of assigning with a vengeance got a disorderly market. Adoption of
fair value in a disorderly market is not
certain assets the price that the market an accurate reflection of the value of the
deems them worth. Since the early assets.”
1990s both Europe and the US, which pricing those assets far below what Banks forced into massive write-
use different accounting standards, they may actually be worth. So those downs have complained that having to
have instituted rules around fair value. who have assets that have no market price their assets in an illiquid market
Usually these rules and the concept of appetite anymore – ie, mortgage-backed is exacerbating the damage, and that
fair value in general are an important, securities – are being forced to price they are having to price assets that are
sensible part of the valuation process them at Lehman’s fire-sale prices, when not on the market in the same way as
that lends clarity and transparency to they may be worth more in the near those that are, making them seem to be
the market, especially where hard to future. worth much less than they believe they
price derivatives and other complicated This is the situation that banks and are in reality. Richard Fuld, the disgraced
instruments are concerned. Usually. other financial institutions are faced Lehman Brothers CEO told Congress
However fair value only works with today, one that they claim has made recently that fair value accounting rules
when there is an orderly market where their billions of write-downs even worse. had played a major part in the bank’s
voluntary transactions are taking place. And it is this situation that has resulted collapse.
But what if there is no market? Or a in furious debate over fair value. Thus the besieged financial services
market where an entity like Lehman Neil Beckley, UK manager for sector is begging for a suspension of the
Brothers or Bear Stearns is forced to Fernbach, a company specialising in risk fair practice rules, at least temporarily.
sell off assets on the cheap, therefore management and accounting solutions, On the other side of the fence are the
16
1-18 ISJ34.indd 16 10/11/08 12:29:14

ISJ | Investor Services Journal Regulation
accountants, investors and regulators future cash flows and so forth to value are those that have the distressed sales,
who believe that scrapping fair value an asset. The statement went on to say so that gets you back to zero.
would essentially allow institutions that ‘disorderly’ transactions are not “We need a clear definition of what
to internally value their own assets, determinative when pricing and that fair value is in an illiquid market. And
leading to opacity, possible abuse, and an general transactions that take place in we need it very quickly.”
unknown consequences. an inactive market “may be inputs when Meanwhile, the SEC has been
When it comes to the rules governing measuring fair value, but would likely charged by Congress to conduct a study
accounting practices, most of Western not be determinative”. examining the influence of fair value
Europe and the rest of the developed In essence this allows banks to apply accounting rules on firms’ balance sheets
world fall under the auspices of the fair value as they see fit. and whether other accounting methods
International Accounting Standards However, when the FASB itself are more feasible.
Board (IASB). However, the US uses its issued a further clarifying statement Perhaps most importantly, included
own Generally Accepted Accounting on 10th October, it only succeeded in in the US Emergency Economic
Principles (GAAP). The idea is to muddying the already cloudy waters. Stabilization Act, more commonly called
eventually bring the US under the IASB In its statement the FASB says liquidity the ‘bail-out’, is a clause which allows the
umbrella. However, this is unlikely to risk has to be included in the cash flow SEC to completely suspend the fair value
happen in the next few years. Therefore calculation, which could result in values rules at the push of a button.
Europe is forced to stay aware of US being calculated to distressed sale levels. Whether this will happen or not is
actions when it comes to accounting in American Bankers Association (ABA) unknowable, but in the meantime it is
order to ensure its companies remain was among those unimpressed with the impossible for the SEC to go through
competitive. FASB statement. Donna Fischer, head every single financial instrument in
Deciding action was needed on of tax and accounting at the ABA, says: existence and determine whether fair
the fair value issue, the SEC released a “We don’t think the FASB position was value should apply to it. This is why so
statement on 30th September ‘clarifying’ useful. It was not helpful. It had some far it has resorted to giving guidance and
Financial Accounting Standards good points in it but it’s circular; it tells essentially letting the banks decide for
Board’s (FASB) statement 157, the you all of these things that do clarify themselves. This is a move that may be
statement which addresses fair value what fair value is, but at the end it says frustrating for the banks but is extremely
measurements. The clarification notice you must use liquidation risk that a disquieting for others.
essentially said that management can current market participant would use, Denise Valentine, an analyst at Aite
use internal estimates such as expected and the only current market participants Group says of the situation: “So now
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&INANCIALSOFTWARESOLUTIONS
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WWWBRAVURASOLUTIONSCOM
)3*
!USTRALIA\.EW:EALAND$ONG+ONG\4HAILAND$NDIA\,UXEMBOURG\5NITED+INGDOM\3OUTH!FRICA
1-18 ISJ34.indd 17 10/11/08 12:29:19

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you’re going to have judgement calls to exert pressure on the IASB to review holding these assets to maturity and am
being made. Now it becomes a question IAS 39. At the insistence of the EU, not really bothered if there is a market
of what doesn’t get valued. Now you’re currently chaired by France, the IASB out there or not. This is not something
getting all these judgement calls about duly relaxed the IAS 39, and allowed that’s new, it hasn’t just been created
what needs to have fair value applied to companies to value some assets on the with mortgage-backed securities. We’ve
it and what doesn’t. assumption that they would be held had for 30 years private placement,
“What happens with the SEC on to until they matured, rather than there’s no market price for a private
typically is they don’t give you a list of using the fair value price dictated by the placement, it’s always been priced on a
instruments, they give you interpretive market. model basis and nobody got excited.”
guidance. That’s the scary part. So until For a time many were worried that By relaxing IAS 39 and FAS 157
these companies and banks get audited the EU Commission would insist on a the regulators have saved many firms
or are heading south, or for some of billions of dollars in write-downs
them if they’re going to now be owned ahead of their third-quarter reporting.
by US citizens and get examined, you Relaxing the fair However, it is possible that the relaxing
don’t know. Until those reviews and of the fair value rules could have severe
audits occur you don’t necessarily know value rules could repercussions in the future.
if things are being done appropriately “Relaxing the fair value rules could
and in good faith.” significantly delay significantly delay realisation of losses
With the onus being on the and could result in the financial crisis
institutions to classify their own assets, the realisation of lasting longer”, says Andrea Cicione, a
the investor is left relying on the senior credit strategist at BNP Paribas.
individual companies to fully disclose losses Cicione goes on to give the example
how they are doing this. The need for of Japan in the 1990s as an example of
more instruction from the regulators is a full carve out of the rule which would what can happen without fair value rules
common theme across the industry. have allowed banks a free hand to in place. This is when Japanese banks
Paul zur Nieden, the vice president transfer assets out of trading books, and refused to admit the extent of bad assets
for product management and investment some thought that the EU may even they had on their books, which severely
accounting at SunGard, says: “I think create its own accountancy standards prolonged the country’s financial woes.
that there could be more regulatory body. However, when the Commission Then on 29th October, in a
guidance but it also comes down to the met on 21st October it decided political controversial decision, Japan’s finance
individual investment company how intervention was unnecessary and that minister said the country will join
they interpret that guidance. the IASB would be left to the decision- Europe and the US in easing its fair
“Where able to they should continue making regarding fair value. We are still value rules, as recommended by the
their fair value practices. Where there’s likely to see the IASB consider other Accounting Standards Board of Japan.
an excessive burden adhering to the fair changes in the future, such as letting In this time of massive flux in the
value rule they should say so and call firms have more leeway in classifying markets, regulators and governments
that out in the reporting.” assets which include derivatives as are quickly taking measures to ensure
Meanwhile, Europe has been keeping amortised, rather than fair value, which that swathes of important firms do not
close eye on America, and has been would leave them unaffected by further fail. Easing fair value accounting rules
making its own moves to ensure that market turbulence. is one of these measures. However,
European-based entities are given the Assets that are re-classified to be held no one, least of all the politicians,
same breaks. to maturity will then be classified by can fully understand the effects that
The French have long opposed fair the company using the mark to model these measures will have in the future,
value rules, which in Europe and much technique. This incorporates cash flows, especially concerning the financial crisis
of the rest of the world take the form of risk of default, market interest rates, and how long the recessions which swirl
the International Accounting Standards non-market risk, and other factors. in its wake will last.
(IAS) 39. Thus when the banks and Beckley says: “It is the fundamentals On whether fair value should be
others started clamoring for a relaxation that are the way every asset is priced, if relaxed or not, Valentine says: “What’s
or reinterpretation of the rules, and the ignored the liquidity, ie, the free flow of the lesser of two evils? Would you
SEC responded, the French President willing counterparties to buy and sell, rather be going about your business
Nicholas Sarkozy took the opportunity which basically means I’m an investor undervalued or overvalued?” n
18
1-18 ISJ34.indd 18 10/11/08 12:29:21

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19-29 ISJ34 3.indd 19 10/11/08 12:10:06

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MiFID: Anniversary
Alex Walker, global head of GL TRADE’s post-trade for securities
business line, looks at challenges and rewards that MiFID - now a year
old - can bring to the back office.
Given the generation of revenue in the the success Chi-X is having with its pan-
front end it is not surprising that most of European clearing solution. Ironically
the attention of the impact of the Markets though, sources say Chi-X approached
in Financial Instruments Directive (Mi- some of the existing established CCPs
FID) has focused there. However, as the for clearing purposes, but none of them
effects of the directive start to be felt, post was able or willing to deliver what the
trade processes are starting to be regarded MTF needed. Chi-X eventually imple-
as equally important. mented a novel solution using Fortis’
The efficiency of back office operations European Multilateral Clearing Facility
post-MiFID is important because the frag- (EMCF).
mentation of markets, particularly in eq- This pan-European CCP is provid-
uities, means that clearing and settlement ing competition at the clearing level,
functions are inevitably due to become which most institutions will embrace;
more complex. however, this implementation has in-
As well as all the regulatory require- troduced more complexity in the post-
ments around client classification, best trade arena. The purpose of new trad-
execution and transaction reporting, mar- ing venues is to provide access to better
ket participants also have to cope with the pricing and a wide range of markets. It is
technological complexities of connecting; very possible that Europe will eventually
not only to a greater range of trading ven- follow the American model with a pan-
ues, but also to multiple central counter- European clearer. Certainly Euroclear
parties (CCPs), which act as intermediary Single Settlement Engine is taking us in
between security market participants. the right direction. Until we get there
In addition, we see today the emergence though, without appropriate back office
of the new multilateral trading facilities systems, any gains achieved in the front
(MTFs), such as Chi-X, Equiduct and Proj- office could be soaked up in increased
ect Turquoise, as well as numerous dark clearing and settlement costs, with the
pools, creates competition right through risk of becoming uncompetitive.
the deal chain. Settlement instructions and their
For years, a debate has raged about the routing remain the ‘crown jewels’ of the
merits of vertical and horizontal exchange back office world. Middle and back of-
clearing models. Until the introduction of fice systems need to be able to handle
MiFID, these were mainly academic. How- complexity in this area catering for cus-
ever, horizontal and vertical models have todians and clearers preferences, and
at times allowed the incumbent exchanges perform netting. Users must have a flex-
to display a degree of monopolistic behav- ible interface allowing them in real time
iour. The control of clearing has allowed to see the status of their trades, coun-
them, to a large extent, to dictate where terparty exposures, stock and cash posi-
trading takes place. tions all at their fingertips. After all, why
Now MiFID is changing this and the stay with a system that will stop your
concept of ‘inter-operability’ between front office from taking advantage of the
various CCPs is starting to become a new business opportunities
reality. Industry watchers will have seen now available? n
20
19-29 ISJ34 3.indd 20 10/11/08 12:10:11

ISJ | Investor Services Journal Payments
You can find this article and others on ISJ.TV.
Asia’s payment dilemma

Can a pan-Asian payments and settlement system be created?
Anthony Harrington assesses the task.
As the central bankers of Europe and few years. He argues that the position area. The Asian bond market initiative
the US both know all too well, putting in in Asia is probably at least five years began in 2003, under the direction of
place pan-regional all singing, all danc- behind Europe’s efforts. However, as the ASEAN + 3 finance ministers, and
ing payments and settlements systems he says, “There are many initiatives in 2008, after much initial exploratory
is a tough act to pull off. Europe has ongoing and there is a great deal of talk, a taskforce on infrastructure was
additional challenges of mediating be- political and industry recognition that created.
tween multiple languages and customs, something needs to be done.” This had its first meeting in April
thought these are just two issues facing Despite the great variation between 2008 and at that meeting the task force
the creation of a pan-Asian payments the countries, he says that from a decided to create the Group of Experts
and settlement system. technical and legal perspective, there (GoE). “The Task Force has a two-year
One notable difference between are numerous similarities between the mandate. We are at the start of this
Europe and Asia is the way markets in continents. “We firmly believe that project in terms creating a forum with
the countries of the region span the there are lessons that the Asian project wide stakeholder input and onward
whole spectrum from very undeveloped initiators can learn from the European communication to the decision makers,”
(such as Vietnam), to developing (such experience,” he says. Cohen says.
as Malaysia), to very developed markets In fact, Euroclear is part of the The Task Force is left with a chicken
(Singapore, Hong Kong and, of course, Group of Experts convened earlier this and egg scenario. At present, cross
Japan). year as part of the ASEAN + 3 Asian border bond flows inside Asia are
Eli Cohen, General Counsel Asia, Bond Markets Initiative to put together insignificant and certainly do not
at Euroclear, based in Hong Kong, has a pan Asian settlements infrastructure warrant an infrastructure spend in
followed the various initiatives towards for the Asian bond markets. This is one the many tens of millions of dollars.
pan-Asian systems closely over the last of the most significant projects in the However, Cohen argues that, “like
21
19-29 ISJ34 3.indd 21 10/11/08 12:10:15

Payments ISJ | Investor Services Journal
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in Europe, the Asian markets will habit of periodically slamming the door damage to their economies if there is a
be increasingly defined by their on any foreign currency inflows and/ run on their currency or if it becomes
infrastructures”. or outflows whenever the economic overvalued against other key currencies.
“At present, there is no easy way for climate gets a little perturbed. This Another problem in getting a pan-
Korean investors to invest in Japanese is an understandable policy tool and regional infrastructure off the ground
government securities, and vice-versa. there are still plenty of currency trading is the relative size gap between Japan
Both sides would have to convert local restrictions in place, and not just in and the rest, in market terms. “Japan
currency into dollars first and then to China. Whether they exempt this utility dwarfs everyone, and then there is a
the denomination currency to invest is a significant question. second tier, with China growing in
in the other party’s sovereign debt,” he “If you are in Korea with an FX significance. There is a growing volume
comments. This means that if Korean of licence there is no problem. You can of FX trading domestically in China and
Japanese investors wanted to invest in trade the won aggressively. But if you are we recently added the Bank of China as
sovereign debt, it is just far simpler for outside Korea there is no way to trade a shareholder in CLS.”
both sides to buy US Treasury bills. In a keynote speech on 18th October,
But with Japan and Korea already If you are outside Akinari Horii, assistant governor of the
massively overweight in US debt, Bank of Japan, presenting to the Global
finance ministers and central bankers Korea there is no Operations Managers’ Conference
in those countries want to see much
more cross-border investment. The
way to trade the in Tokyo, said that the Bank was
seeing strong growth in the number
Asia bonds settlement system would Korean currency of Japanese retail investors with a
be a huge enabler for Asian countries real appetite for Asian currencies and
to invest in each other’s debt and, it is and there is often “commodity” currencies. He argued
hoped, will cause a lot more of Asia’s
money to be retained in Asia for the
virtually no external too that the emergence of new entrants,
such as hedge funds and public sector
good of the region. visibility of the investors, has also added to trading
“We believe that the work we are volumes in what he termed “emerging
doing within the Group of Eight will trades taking place currencies”.
be very significant in helping to build Settlement issues continue to be very
the infrastructure Asia needs. It will the Korean currency and there is often important, he says, particularly in the
probably take ten to 15 years to achieve. virtually no external visibility of the current unsettled conditions, and there
But at the same time, there are several trades taking place in Korea, even for is necessity to work towards a reduction
private and national payment and a parent bank with a subsidiary inside in the settlement risk of FX transactions.
settlement initiatives on going. Some Korea. They sometimes seem astonished A pan-Asian payment and settlements
will assist the capital markets in the by the amount of FX business their system would be massive in this regard,
region as these markets move towards subsidiaries do in Korea!” but it is still a long way off. Toshiro
a standardised and common processing Butterfield says CLS has a good Muto, then deputy governor of the Bank
infrastructure,” Cohen says. relationship with the Korean Central of Japan, pointed out in a speech that
Jonathan Butterfield, executive Bank and firmly believes that it Japan’s payment systems have come a
vice president, Marketing and will continue to push for further long way in just two decades. Before
Communication at CLS Bank, the deregulation. But across the region the Bank of Japan Financial Network
global clearing and settlement system the tendency or instinct to shut up System, the BOJ-NET, which links the
for FX, argues that while a pan Asian, shop if it looks like external pressure Bank and Japanese financial institutions,
multi-currency payments infrastructure on the currency could damage the began working in 1988, payment
for bonds and securities is a very local economy, remains very strong. instructions for settlement using current
legitimate aspiration, it will be a tough “It happened in Malaysia and happens account deposits at BoJ, were delivered
act to pull off. There are several issues periodically in Thailand ,” he says. as cheques by clerks on bicycles.
around standards, legal commonality, A good many Asian economies are The payments system enabled the
operational cycling etc. but one of understandably nervous of, or adverse Bank to deal efficiently with the huge
the real issues, he points out, is that to, the free floating currency model growth in transaction volumes, but just
a number of Asian economies have a because they are only too aware of the as importantly, it enabled it to manage
22
19-29 ISJ34 3.indd 22 10/11/08 12:10:16

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19-29 ISJ34 3.indd 23 10/11/08 12:10:16

Payments
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56
and reduce settlement risk – which rises and credit transfers and is all about
sharply as transaction volumes rise. providing a low cost payment and
In 2004 BOJ-NET settled transactions clearing service for high volume
totalling some YEN78 trillion, while the transactions.
Foreign Exchange Yen Clearing System The thrust of present initiatives in
(FXYCS) settled around YEN19 trillion. China are all concerned with scrambling
BOJ-NET moved to a RTGS approach in to help China’s fast developing banking
January 2001. and securities industries keep abreast
Japan moved to CLS when it was of change, while at the same time
launched in September 2002 and was finding ways of extending the payments
one of the seven founding currencies. infrastructure to provide access to
Today, via CLS foreign exchange, financial services in rural areas. Pan-
trillions of transactions are settled on a Asia these systems are not and building
payment-versus-payment basis among a pan Asian payments infrastructure
settlement members. BoJ moved earlier, promises to be hard work.
in 1994, to a delivery-versus-payment At present, the major driving force
system for securities transactions. pushing for a regional payments
China, with an economy that is on infrastructure, as Euroclear’s Cohen
course to become the largest in the notes, comes from the various finance
world, is already quite far along in ministries and central banks in the
the development of its own payment region. However, as is always the case
systems. The People’s Bank of China where national interests are concerned,
(PBOC) oversees the country’s payment the fact that there are multiple central
systems while also acting as a service banks is also itself part of the dilemma,
provider in the inter-bank clearing since there are multiple ambitions to
and settlement services arena. It works be fulfilled and political aspirations to
together with the China Banking be catered for. Japan, China, Korea and
Regulatory Commission (CBRC) which Singapore all aspire to have elements of
supervises individual banks and has such a pan-Asian infrastructure located
the twin responsibilities of promoting in their cities and arguments about who
financial stability and facilitating gets to run what could be a big diversion
financial innovation. A key part of of energy away from any pan-regional
the country’s financial system is China infrastructure project.
National Advanced Payment System Beyond this, as CLS’s Butterfield
(CNAPS). This provides clearing notes, there is also the fact that intra-
services for banks and the financial Asian flows are not of themselves
market and it consists of two separate sufficient to justify a huge spend. There
applications, the High Value Payment are real analogies here with the euro, he
System (HVPS) and the Bulk Electronic argues. “The aspiration to have a “scale
Payment System (BEPS). The former currency” was one of the drivers behind
began operating in June 2005 and settles the creation of the euro. It has clearly
large value payments on a trade by become the second reserve currency,
trade basis at gross value in real time. but one wonders whether, ex Japan , for
According to a study by the Federal the time being, whether the other Asian
Bank of San Francisco, the HVPS countries government bonds form a
system processed 170 million payments large enough pool for foreign investors
and clearing transactions in 2007 with to sustain the proposed infrastructure.
a total RMB value of 530 trillion, or “The argument that the East Asian
USD76 trillion. In effect it provides bonds settlement project will enable a
PBOC with a system for real-time fund brisk trade between Asian countries in
settlements of its securities trades. each other’s sovereign debt has yet to be
BEPS handles low-value debit payments bottomed out.” n
24
19-29 ISJ34 3.indd 24 10/11/08 12:10:19

ISJ | Investor Services Journal Custody
Benelux in flux
How have the three countries developed such a varied
custody landscape? Ben Roberts considers major market trends.
Mergers
Acquisitions
Alternatives
Value added
The takeover and part-nationalisation its own asset management arm that it fiduciary manager will hire and fire the
of Fortis at the turn of September-Octo- is looking to commoditise as a service: asset managers, sculpt the tactical asset
ber demonstrated the accord by which a corporate fund that is itself becoming allocation and help the trustees – who
three governments can tackle the res- something of a corporation. Belgium, by have ultimate responsibility for the fund
cue of a major financial institution. The contrast, is dominated by private pen- – define a strategy. They will also hire
bank’s arms met different fates – BNP sion plans. the custodian, which can give an inde-
Paribas swooped for the Belgian and However, according to Renaud Van- pendent view while providing core and
Luxembourg banking outlets while the denplas, head of location in Belgium for ancilliary custodial services.
Netherlands operation was nationalised BNP Paribas, new infrastructure is ex- How pension funds are valued, and
– but in a period of difficult takeovers it panding the market to the extent that cus- the frequency of valuation, has been
can be perceived as straightforward. The todians are offering value-added services one of the most significant events in the
Benelux alliance – the mutual parlia- such as securities lending. Luxembourg, Dutch market in what has been called
ment of Belgium, Netherlands and Lux- one of the world’s foremost investment the New Financial Framework. Asset/
embourg – appeared a steady region. fund domiciles, presents its own chal- liability ratios before were calculated as
Looking under the bonnet, the Ben- lenges to custodians in the proliferation if the interest rate was fixed at 4%. Now,
elux custody landscape is greatly varied. of specialised investment funds (SIFs) the Dutch National Bank demands that
Legislation in each market has spurred and SICAF (Société d’investissement à asset/liability calculation is based on the
new innovation, and as a result the three capital fixe) funds that demand the full real interest rates, with a pension fund
countries’ divisions are marked. The suite of services. In all, even the biggest altering its exposures in accordance.
Netherlands is well known as one of the custodians must be nimble and adapt as “There was a pure concentration on
most sophisticated pension fund mar- the space unfolds. the asset side of the balance sheet and
kets, with sizeable assets under manage- A Dutch pension fund is overseen not on the liability side,” explains Erwin
ment to match its ambition to diversify. by a tripartite of a board of trustees, a Reyes, head of location for Netherlands
APG – perhaps the biggest fund – has fiduciary manager, and a custodian. A at BNP Paribas. “This was changed be-
25
19-29 ISJ34 3.indd 25 10/11/08 12:10:23

Custody ISJ | Investor Services Journal
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cause of the drop in interest rates. There pension funds, particularly those smaller mitigation improves, and the fee bills
wasn’t an interest in looking at the liabil- funds that may lack the sophistication to come down.
ities on the longer terms because it was deal with, for example, derivatives. However, this can pose problems for
fixed. But two years ago the New Finan- Adjusting the calculation of asset/lia- client reporting. “At an FvGR aggregate
cial Framework dictated that pension bilities is particularly pertinent given the level then it is simply reporting. But
funds need to calculate their liabilities recent debate over ‘fair value’ accounting. some of our clients need reports on the
against a market rate - if the interest rate In October, the International Accountan- underliers at a sub-fund level. In an ideal
goes down, it increases your liabilities. cy Standards Board announced a united world you would pool all assets through
The regulator requires a coverage ratio, front with the US’s Financial Account- one vehicle supported by one custodian,
if a pension fund falls under 105% today ing Standards Boards that portfolios of but in reality you need to work together
[every EUR100 worth of assets needs to financial institutions would be mark- with other custodians,” says Pouwels.
be offset by 105% liabilities] you have to to-market, despite the billions in losses Danloy also sees downsides. “You will
work on a recovery plan.” this could incur. This came in defiance of always have the issues surrounding the
More frequent adjustments to port- many banks and insurers that demanded taxation of the plan,” he says. “You pay a
folio calculation have shortened the premium to the plan but you don’t have
investment outlook for many pension Traditionally, the same tax process in the every coun-
funds. “The implementation of the new try.”
framework has definitely called for more Belgian pension The Belgian market, Danloy concedes,
focus on the short term,” says Eric Pou-
wels, head of location in the Netherlands
funds have been is everything and nothing in comparison
– as a Belgian himself he can admit this.
for Northern Trust. Reyes at BNP Paribas more cautious Of the three ‘pillars’ of pension types that
suggests that pension funds might be less retirees will fund themselves – namely,
weighted in equities and more in bonds the state plan, the corporate plan and the
to maintain balance as volatile markets private plan – the country is dominated
encourage the constant revision of inter- by the first and third pillars. A govern-
est rates. a parallel system of valuation between as- ment pension plan is more generous in
This bolsters the allocation into de- sets that are likely to be traded, and assets Belgium, Danloy explains, and there are
rivatives, already a popular asset class in that will remain on a bank’s books until tax advantages to creating your own.
the Netherlands, and this plays into the maturity. Sebastien Danloy, global head In this way, Belgian corporate pension
hands of custodians that have experience of sales and relationship management at funds, the second pillar, are playing catch
with such tools. “You need to hedge your Société Générale, had followed the devel- up on the international stage.
portfolio, how can you do that? Through opments of this debate, and comments “Traditionally Belgian pension funds
investment in swaps, for instance,” says simply: “We are in a global economy, so have been more cautious and still have a
Reyes, “but swaps need to be adminis- it only makes sense to have similar rules.” lot of money in equities and bonds,” says
tered and reported and that is a service Van Houwelingen is also in favour of an Renaud Vandenplas, head of location,
we provide.” Reinoud Van Den Broek, assured harmony of accountancy. Belgium at BNP Paribas. Derivatives
head of institutional sales and account The other key development in the are less popular, although he adds that
management for Benelux at Robeco, also Dutch market is the adoption of the the market from a custodial viewpoint
identifies this hedging technique, and Fonds voor Gemene Rekening (FvGR) has developed to the extent that certain
says socially responsible investing has in- pooling vehicle. This system, also preva- value-added services are on offer. “Secu-
creased in the Netherlands. lent in Luxembourg and Ireland, effec- rities lending is a good example because
Leonique van Houwelingen, head of tively brings together the strands of a BNP Paribas has just started a lending
relationship management, Continental large pension fund that has investments programme [in Belgium]. These extra
Europe at BNY Mellon Asset Servicing, in different countries using different services are requested more and more by
notes that the growing complexity of in- providers under a single custodian. Eric the biggest pension funds.”
vestment products and investment strat- Pouwels at Northern Trust explains that Luxembourg is a different market
egies, coupled with more onerous regula- this can have tax advantages for the pen- entirely. It has established an expertise
tory requirements, is putting a strain on sion fund overall, governance and risk for domiciling funds, although much
26
19-29 ISJ34 3.indd 26 10/11/08 12:10:27

06:00 07:00 12:00 13:00 19:00
CHICAGO CURACAO DUBLIN LUXEMBOURG SINGAPORE
GUERNSEY AMSTERDAM MALTA
06:00 07:00 12:00 13:00 19:00
CHICAGO CURACAO DUBLIN LUXEMBOURG SINGAPORE
GUERNSEY AMSTERDAM MALTA
Custom
Custom House Offers
House Off ers 24/5
24/5Service
Service
Custom House Global Fund Services Limited now offers its clients a full “round the world”
andCustom
“round House Global
the clock” Fund
hedge Services
fund Limited now
administration offers through
service its clientsits
a full “roundofthe
network offiworld”
ces which,
following the merger with Equity Trust’s fund services business, includes Amsterdam, ces
and “round the clock” hedge fund administration service through its network of offi which, Curacao,
Chicago,
following the merger with Equity Trust’s fund services business, includes Amsterdam, Chicago, Curacao,
Dublin, Guernsey, Luxembourg, Malta and Singapore.
Dublin, Guernsey, Luxembourg, Malta and Singapore.
Custom House’s Dublin office, which is authorised by the Irish Financial Regulator under Section 10
Custom House’s Dublin office, which is authorised by the Irish Financial Regulator under Section 10
of of
thethe
Investment
InvestmentIntermediaries
Intermediaries Act 1995, achieved
Act 1995, achievedananexception-free
exception-free SAS70
SAS70 Type
Type II and
II and
was the fi rst hedge fund administrator to be awarded a Moody’s Management Quality
was the first hedge fund administrator to be awarded a Moody’s Management Quality Rating. Rating.
Custom House has in assets under administration US$50 billion acting
Custom House has in assets under administration US$50 billion acting for for
approximately
approximately210
210managers
managers trading throughmore
trading through morethan
than610
610funds
funds and
and sub-funds.
sub-funds.
For
Formore
moreinformation
information on Custom
CustomHouse,
House,please
pleasereview
review our
our website:
website:
www.customhousegroup.com
www.customhousegroup.com
or
or contact
contact
DermotButler
Dermot Butler ([email protected])
([email protected])
CH_Advert_266mmx201mm.indd 1 23/09/2008 17:28:40
CH_Advert_266mmx201mm.indd 1 23/09/2008 17:28:40

Custody ISJ | Investor Services Journal
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56
of the money managed and promoted its Luxembourg-based platform. Along

elsewhere. It has been two years since with its servicing the Axa ETF, BNP
the legal draft for specialised investment Paribas is the biggest ETF provider in the
funds (SIFs) that replaced the undertak- country. But despite more ETF launches,
ings for collective investment legislation he says, there are two constraints: “One
from 1991. Now, SIFs – with their looser constraint is for the asset manager be-
regulatory structure and attractive tax cause they need to replicate the index the
regime - are part of the driving force of index and cannot take to much in man-
the country’s sales pitch as a domicile. agement fees because the service provid-
“Pioneer migrated its entire Luxembourg er needs low fees for the net asset value to
fund range to SGSS earlier this year,” says reflect the index. So there are constraints
Danloy. “There are a lot of fund manag- on the asset manager revenues and those
ers who structure their funds in Luxem- of the and service provider.”
bourg because it’s easy afterwards to dis- Consolidation has swept the custody
tribute their product in Europe.” terrain across the three countries. BNP
The appetite for alternative assets ar- Paribas’s acquisition of Fortis leaves it in
guably outstrips the Netherlands. Olivier a strong position to call itself the biggest
The new framework Scherrer, sales manager in Luxembourg custodian in Europe. Olivier Scherrer
has definitely
for BNP Paribas, identifies three major believes that in Luxembourg, the biggest
trends. “Domiciled funds as well as in- asset managers will be looking at a “top
called for more surance and reinsurance funds putting
their assets in Luxembourg custody ac-
five” players to provide the stability and
value-added services. Erwin Reyes in the
focus on the short counts. These investors are looking for Netherlands is a little more generous to
term
alternative assets. The lightly regulated the niche provider, arguing that players
SIFs allow qualified investors a wide in- such as KAS bank are closer to the local
vestment policy. culture and long-standing relationships
“Secondly, the regulator introduced instead of a global reach. He adds: “I do
Eric Pouwels, a new circular widening the scope of know some Dutch pension funds that
head of location,
lending; you can now lend 100% of your refuse to work with Anglo Saxon firms;
portfolio, up from 50%. You have new they are much more comfortable work-
Netherlands, assets eligible as collateral, like corporate
bonds or money market instruments,
ing with a local provider that speaks
their language and understands the new
Northern Trust with no limitation of time in which to rules imposed upon them.”
recall the assets. Sebastien Danloy believes local pro-
“Thirdly, we see an increasing trend viders will be challenged in the face of
from asset managers that have assets bank takeovers and nationalisations and
with us to invest in hedge funds. What sees implications that go beyond securi-
we’ve seen with the SIFs is a trend to ties services. “For niche providers, what
fund of hedge funds, private equity and is becoming more important is to have
to an extent real estate.” specific players dedicated to securities
Danloy verifies this continued popu- services, but universal banks have prob-
larity for private equity funds, and spots ably a stronger business model because
two more new developments. “The first is clients not only want securities services
for life settlement funds: funds that buy but also want the bank to look at financ-
insurance policies from people who no ing, or if there are pension funds to be
longer wish to pay the premium and can- administered, it is the relationship you
not stop paying them. The other trend is have.
for art funds.” “Today a number of institutions are
Scherrer adds that there has been an reducing the number of their counter-
increased frequency in the launching parts so being a niche provider – niche
of exchange traded funds (ETFs). BNP in terms of exclusively in asset manage-
Paribas recently won a mandate from ment – that might play against you
Commerz bank that decided to launch going forward.” n
28
19-29 ISJ34 3.indd 28 10/11/08 12:10:47

19-29 ISJ34 3.indd 29 10/11/08 12:10:59
Merger profile ISJ | Investor Services Journal
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56
Merger profile: Custom made fit

Hugo Van Vredenbuch, CEO of Equity Trust and Dermot Butler, chairman of Custom House, talk to Giles Turner.
Urge to merge: Equity Trust’s 38-year expansion

1970: Equity Trust Co NV
formed in the Netherlands
1972: The Netherlands

Antilles office opens
1991/2: BVI, Belgium and Labuan

office opens
1994: Hong Kong, Jersey and

Luxembourg offices open
1995: Formation of holding

company to consolidate
trust companies
1998: Guernsey
office opens
1999: Singapore
office opens
2000: Buys
Matheson
Trust
2006: Buys Ernst and Young’s domiciliation business
Luxembourg; Cyprus, Malta and Sweden offices open
2008: Buys Custom House Fund Services; Germany

of ABN AMRO Bank NV; Argentina, Aruba, Brazil,
2005: Buys global trust and fiduciary business
Cayman Islands, New York, Liechtenstein, and
and related corporate secretarial services in

Chartered Bank plc’s trust operation
Shanghai and Uruguay offices open

2002: New Zealand office opens
2001: Mauritius, Malaysia
2007: Panama office opens

2003: Geneva office opens
2001:Mauritius, Malaysia
and Taiwan offices open

and Taiwan offices open
2004: Buys Standard
office opens
While Rio Tinto and GM stumble not always been the case in the wider probably on the low side,” wrote Ftfm,
over potential mergers in their market. During the Banking Era of the Oct 20th 2008), Van Vredenbuch has a
respective fields, one corporate link-up past decade, many investment banks huge amount of faith that the alternative
went forward without a hitch. In the flush with profits followed the acquire- space will not only continue but also
beginning of September 2008, Custom then-fire method when bolting on thrive and eventually cease to be the
House, the fund administrator, and fund administrators to their business alternative space, but rather the norm.
Equity Trust Fund Services Business, portfolio. While this may be unfair to “Twenty years ago all pension funds had
announced that the partnership between banks - as any other method would have some real estate investment as some core
the two companies had received them classed under that dreaded term investment. Now it is considered as an
regulatory approval. The combined ‘uncompetitive’ - it is undeniable that alternative,” says Butler. “Why, I have no
business totals assets of USD50 billion, the deal suits both parties at a time when idea. Nothing has changed. Real estate is
acting for approximately 210 managers the banking industry is under the cosh. still bricks, mortar and yield.”
through around 610 funds. Van Vredenbuch also states that fund Both agree that in the future, we
Equity Trust has grown considerably administration has moved away from will be talking not of the alternative
through acquisition over the years. amateur hour some time ago; a time industry as one colossal monolith, but
In 2000, it acquired Matheson Trust; when you could get away with running as a number of different strategies.
in 2004, Standard Chartered’s trust your business off an excel spreadsheet. That these strategies may sprout their
operation; in 2005, the global trust and “There was next to no interaction own individual service industry is not
fiduciary business of ABN AMRO Bank between all our different offices in our anathema - if anything this is a return to
NV; and in 2006, it captured Ernst and different jurisdictions, plus our different the golden days of bonds, equities and
Young’s domiciliation business and offices were often using different property, where asset classes and their
related corporate secretarial services in platforms,” he explains. “Once we had services were siloed together.
Luxembourg. However, as Hugo Van decided that the fund administration Post merger, the combined businesses
Vredenbuch (pictured right, above) , business interacted with many of our have total assets under administration
CEO Equity Trust, explains: “Along with other business sections, we needed to of USD50 billion. “That puts us within a
these newly acquired portfolios came a grow it. However, gaining critical mass, comfort zone for institutional investors,”
number of legacy accounts within hedge an integrated global network, and says Butler. “[This is] perhaps more
fund administration, an area untouched integrated economies of scale is very important for institutional managers
by Equity Trust. Here we had to decide hard to do on your own. Custom House because the manager is concerned that
whether or not to cast out a number of had what we needed.” the administrator is acceptable. Perhaps
new customers we had acquired, decide While the average hedge fund has because we are not part of a big bank
to build a new fund administration lost 13% in the last nine months, and that makes us more of an attractive
business in house, or acquire someone amid a number of alarmist articles in the counterparty.” It is a promising start
who knows what to do in the first place.” press stating that half of the hedge funds in a time when comfort zones and safe
It looks to be a stable, amicable were going to evaporate (“estimates counterparties become anomalies. n
merge for the long term, which has that 30% of funds will disappear are
30
30-45 ISJ34 4.indd 30 10/11/08 17:41:25

ISJ | Investor Services Journal Conference profile: GCF 2008
2nd-3rd December 2008

strategy for global expansion good of Southern Africa’s
enhances Investor Services’ financial community. Strate is
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was recently rated a ‘Top Rated’ custody in excess of 5.0 trillion
The Standard Bank Group is custodian in the Major Markets Strate is the authorised Central (ZAR).
the largest African banking Survey conducted by Global Securities Depository (CSD) for
group ranked by assets and Custodian Magazine. the electronic settlement of all Physical Address:
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18 African countries and 20 contact: mitigate risk, bring efficiencies Illovo Boulevard
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and Investment Banking, is Services Currently Strate handles the
a leading provider of custody +44 207815 5518 settlement of equities, warrants Postal Address:
services and investment related Mark.kerns@standardbank. and bonds for the JSE Ltd and PO Box 78608
products and services across co.za the Bond Exchange of South Sandton
twelve Sub-Saharan African Fiona Green Africa. In the future Strate 2196
markets to both local and foreign Head of Client Relationship will also settle money market South Africa
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• New issues distribution

• Collection of income and
redemption proceeds
• Allocation of ISINs to domestic
securities and other financial
instruments
SEB is the leading provider We continuously develop new Not-for-Profit Partnership “The • Proxy voting procedures
of securities services in the products in connection with National Depository Center” is • Tax reclamation
Nordic and Baltic area. We are clients and partners to ensure we the largest settlement depository • Client reporting
committed to custody and deliver the high-quality products in Russia, servicing the full range • Corporate actions
clearing processes for the our clients demand. of debt and equity securities of For more information, please,
wholesale market. We provide Russian issuers. The internation- contact:
services in more than 80 We always strive to make the al rating agency Thomas Murray Maria Ivanova, Director for
markets, 11 of them under the processes more efficient. With a has assigned NDC an AA- rating Development
SEB name (Sweden, Norway, history of over 150 years in the as a central depository. NDC is Tel: +7 495 232 0364
Finland, Denmark, Luxembourg, securities industry; we know the Russia’s national numbering Email: [email protected]
Germany, Estonia, Latvia, market and our clients well. agency, and the substituting Olga Rink, Public Affairs Director
Lithuania, Russia and Ukraine). numbering agency for the CIS, Tel: +7 495 232 0910
Contact: authorized to assign the interna- Email: [email protected]
We offer a full range of securities T: +46 8 763 53 04 tional ISIN and CFI codes.
services including corporate F: +46 8 763 69 30 Svetlana Kireeva, Head of Client
action and information services, C: Goran Fors, Global Head of NDC offers a full package of Services Division
securities lending and services Custody Services custody and related services, Tel: +7 495 232 0513
to remote members of the Nordic E: [email protected] including: Email: [email protected]
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31
30-45 ISJ34 4.indd 31 13/11/08 13:20:35

Panel debate ISJ | Investor Services Journal
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Panel: Securities lending
Mark C Faulkner is managing Guy d’Albrand is a global head of Mark Payson is the managing director Francisco Gonzalez is head of Eurex
director of Spitalfields Advisors and liquidity management at Societe generale of Trading & Asset Liability Management SecLend, reponsible for the market
Data Explorers. He has worked at L.M. Securities Services. He began as a futures for Securities Lending at Brown Brothers management regarding business and
(Moneybrokers) Ltd., Goldman Sachs broker in Japan in 1988. . He joined Harriman & Co. He joined the firm in product development of the electrnic
and Lehman Brothers. In 1995 he co- Fimat in 1997 to run the Tokyo office, 1999 as the Head of Securities Lending market place for international securities
founded Securities Finance International before becoming exective vice-president Trading and in July 2003 was appointed lending and borrowing at Eurex. Before
and Spitalfields Advisors in 2004. and special dviser to the CEO for Societe Co-Manager of Global Securities Lending. joining Eurex in 2001, he was head of
(NB, Question 3 will be answered by Generale, Japan. After further deputy Systems Development, in charge of the
David Carruthers, head of quantitative CEO and CEO roles he returned to Paris systems design for the electronic stock
analytics, Data Explorers.) in 2002. market at SWX Swiss Exchange.
1. What are your views regarding the to actually isolate the impact of any taken by each country varied in terms of undermine confidence in
international bans on short selling? short selling ban. In the RMA/ISLA timeframe, severity and practicability, financial markets.
Securities Lending Conference in Texas which is indeed detrimental to smooth
Faulkner: I think it’s been fairly inef- a gentleman at a round table said after operations and requires 2. Would you perceive a change in
fective and there’s work to be done the SEC brought in new legislation the specific monitoring. relationship with the regulators given
to analyse exactly how ineffective. I industry responded within 24 hours the recent kneejerk legislation?
think some of the bans were politically with 27 questions, with two answers. So Payson: Given the severity of the global
expedient and owed very much to the the practitioners in the epicentre of the credit crisis and the recent extreme Faulkner: I think the relationship with
school of ‘being seen to be doing some- lending and borrowing business don’t volatility in equity markets worldwide, it regulators on a global basis has been
thing’ rather than reflecting joined-up know the answers, so it’s no surprise to is not surprising that regulators around collegiate and communicative and
thinking. I think it’s clear when the me that the institutional suppliers don’t the globe have felt compelled to take these are extraordinary times. I think
FSA continually says it realises short know either. any action they feel may stem declin- it’s a bit odd to look at sec lending in
selling has a fundamental role to play in ing equity valuations. What remains isolation, but the regulators on a glob-
the efficient functioning of the capital D’Albrand: I believe that the bans were uncertain, however, is the actual impact al basis were as surprised as anyone
markets, and it’s just at this extraor- viewed as necessary to reassure the such actions have had upon capital else by what’s going on. The emergency
dinary time and it is clear to separate markets. Short selling was making markets. Our primary view is that the powers they’ve cited to allow them to
short selling from naked short selling. headlines in the newspapers so regula- various bans on short selling have been do things at pace are less soft touch
So that’s been quite constructive. But tors had to show that they were taking a relatively blunt instrument to address has been a shock to everyone, includ-
there’s a tremendous amount of uncer- active measures to protect market challenging and complex financial ing themselves. I think regulators will
tainty around certain authorities and I levels. However academic studies have stresses. There remains little evidence look and feel very difficult. Hector
know that ISLA is doing its very best to never shown that Securities Lending to support a causal link between short Sants of the FSA has said the body
seek clarity for the institutions. leads to lower share prices. Despite selling and declining equity market needs more focus, clarity, experience
The bans have not really stemmed the measures that have been taken it valuations. The practice of naked short and intellectual firepower in what is
the decline of markets. The period of is obvious that financial institutions’ selling had already been illegal in many effectively a much more serious game
extreme volatility that the market is stocks are decreasing faster than the countries while the announced ban on than they thought it was. Light touch
enduring has not been assisted by these declining market. This would indicate all short selling penalized legitimate may be replace by a heavier touch.
bans. The bans are also quite different, that Securities Lending is not a cause of investment practices. People will expect more regulation, and
it’s difficult to collectively deal with high volatility. The Securities Lending We are hopeful that global regulators strategies that have been blown out of
them. They haven’t necessarily achieved industry is paramount in providing will revisit the imposed rules while con- the water by the stroke of a regulator’s
the objective of the more balanced, liquidity in the market. Liquidity exists sidering all perspectives surrounding pen will be very difficult for people to
less volatile markets. The motivation because people borrow and lend. It is short-selling and ancillary transactions, embrace going forward. So there may
and justification I would question not banning the lending and borrowing including securities lending. We are be sections of the hedge fund market
as being political, not economic. So of securities that makes the market likewise in support of thoughtful and that may never recover from this.
many other moving parts have been more stable. well-planned regulation and enforce- Convertible bonds were having a chal-
applied to the markets – government Furthermore, countries did not agree ment actions designed to combat illegal lenging time, broadly speaking, a flat
interventions, bailouts – so it’s difficult upon a common rule. The measures naked short selling which works to year, and some of the largest players
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Panel Debate Securities Lending ISJ | Investor Services Journal
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are nursing losses so large they may well the volume on loan has increased upgraded the quality of their collateral, treated each transaction on an ad hoc
be out of the business. The bottom line dramatically. How do you account for such as only accepting cash, with cer- basis to provide alternative solutions
is they were terribly shocked, and ‘once this discrepancy? tain counterparts. with counterparts who appeared on
bitten, twice shy’ is the people will look our watchlist.
at this going forward and in it will factor Carruthers of Data Explorers: Data 4. Have increased margins affected
into the contracts that are written, the Explorers has an index put together lending activity? Payson: As it relates to increased mar-
business done, the strategies pursued recently based around 300 stocks, gin, we assume this is in reference to
and the risk appetite of all people en- looking at quantities, not values. It is Faulkner: I think this is a very hot the prime broker’s decision to increase
gaged in all aspects of capital markets split between UK, US, Europe and Asia. topic. When one asks for margin on a the margin requirement for positions
that the game, rules and pitch can be For each region there are two indices: collateralised business, they are looking held by hedge funds. Although not a
changed by external factors. the amount of stock made available by for security and safety. It’s extremely direct impact to lenders it can be as-
beneficial owners, and how much of easy to ask for more margin; whether sumed that this has contributed to the
D’Albrand: Regulators were extremely that is on loan. Since 1st September or not you can get it is another thing. deleveraging phenomenon and, in turn,
proactive in changing rules but also very the amount available has dropped fairly Historically the industry has settled has caused balances at agent lenders
concerned with the industry’s opinion steadily, but particularly since Lehman at three levels: zero, 2% or 5%, and to decrease. As they sell long positions
of the markets. Many meetings between Brothers’ collapse it is now down 10- the industry has got comfortable with they will also be forced to cover shorts
the financial industry and regulators 12%. That’s partly from people doing that. Those numbers are shown to be and return shares to lenders.
took place in the post-Lehman period less lending. The quantity on loan has insufficient in many cases; so there is
that has certainly increased the regula- been moving a lot depending on the a broad but disparate effort on certain 5. How necessary is the current review
tors’ recognition of the importance of region. A lot of stock got caught in the parties to get those margins to change. of the Global Master Securities Lend-
the Securities Lending business. Regu- system, including repo, so a lot of the That means the margins – typically – ing Agreement for the industry?
lators were eager to listen and to ensure agent lenders made good to the owners go up. The capital that the borrowers
that the new rules were fully understood whose stock was temporarily missing by have to put up for raising margins is Faulkner: One thing that’s always neces-
by market participants. Although some borrowing. So there was a big increase extremely expensive and they’re very sary in any industry is the constant
traders complained about the restric- in loans that wasn’t necessarily to do reticent to do this; so put your margins review of the legal, tax, regulatory and
tions, most measures were implemented with short selling. Following various up too high and you will lose business. compliance environment. The GMSLA
as financial institutions’ management short selling restrictions, people went Some people have to put their margins has stood up reasonably well. The
were worried about a fall in their share looking for anything they could short, up to retain cash collateral. There’s this problem is most organisations don’t
price and were eager to see regulators so there was a big increase in loans - bilateral ‘one-to-many’ or ‘one-to-one’ use it and they have their own language
talk and take an active stance to protect and probably shorting - in Asia, where discussion and maybe there needs to that might cover some areas as critical
the market. there were fewer restrictions. Now the be a broader discussion of maybe the as indemnification and what happens in
Asian positions have come back down, adoptions of standards that people the case of default. I think it’s shown it-
Payson: While the recent extreme mar- but in the US it has bounced around can understand that factor in a whole self to be broadly robust, but everything
ket conditions have certainly demanded a lot. This has been partly down to range of different important variables: always needs updating. And again, the
a regulatory response, the effectiveness Lehman’s collapse, where people seek what are the asset classes - cash nor bilateral element – where people say
of this response cannot yet be fully to cover specific names, but also some non-cash – you’re taking as collateral ‘it’s a good idea that there’s a global
assessed. However, one benefit of the genuine build up in short positions in and lending; what is the credit quality, master, but here’s our idea of the global
recent changes has been an increase some very large stocks. not just the rating but maybe the CDS master’ - means it isn’t the real Agree-
in the dialogue between industry Amid hedge funds deleverage you brand, counterpart quality, what is the ment but a different version.
associations such as the RMA or SIFMA would expect to see a decline in short- foreign exchange volatility – which is I’m not sure how much of the business
and local regulators. The challenge for ing; shorting declined in UK stock quite absolutely huge at the moment. This done under the terms of the GMSLA
the industry will now be to foster these dramatically between September and business is broadly viewed through the without amendments, but it’s a good
relationships to increase communica- now; it’s beginning to stabilise. In eyes of someone mainly in US dollars. international framework for doing
tion and understanding, ensuring Europe it has bounced around but is The markets are off maybe 40% globally business. I think the challenges as-
future policy can be developed in a way pretty much where it was. In Asia it saw recently, and the dollar has appreci- sociated with the seizing of assets by
that maximises benefits to industry par- a huge increase followed by a decrease. ated about 20% against a basket of the administrators associated with
ticipants while minimising unintended In the US, the volume is bouncing currencies. That’s 60% that the market the Lehman Brothers prime brokerage
adverse impacts. As the awareness of around but growing. In general, people can’t control! That’s way beyond a 5% business will taint UK law and there will
securities lending increases, the role are shorting US stocks more, despite margin. It’s in nobody’s best interest to be potentially rigorous clarity required
it plays in support of efficient financial the deleveraging. have this constant operation expense. regarding this. I think if you don’t have
markets and the enablement of viable People want it to be capital and op- confidence and don’t have trust in your
investment strategies will become more D’Albrand: While I have seen a sharp erationally efficient. There’s a need for counterparts you shouldn’t be doing
clear. The level of dialogue between the decrease in lendable assets in the mar- the industry to sit down when the dust business with them, and you do need
securities lending industry and local ket, I have not witnessed any increase in settles to work through these issues and that confidence and trust reinforced by
regulators is likely to increase. the volumes on loans neither for bonds set more appropriate standards that can a valid and dependable legal contract.
nor for equities. What we have seen is a ratched up or down depending on I don’t think this contract is in anyway
Gonzalez: Our relation with regulators sharp increase in lending conditions of the marketplace. flawed; it needs revising, these thing as
remains very close and fruitful. We don’t those fixed income products that were always do, but it’s not a top-of-agenda
see any change in that as a result of the eligible for the central bank auctions. D’Albrand: Increasing margins in vola- item: the industry has bigger issues.
recent market turmoil. Due to the lack of market liquidity it has tile and risky markets is a normal course
certainly been difficult to recall loans of action. The most natural move was to D’Albrand: The current GMSLA works.
3. According to the latest research, and many lenders who had balances get cash collateral to eliminate market Nonetheless it is important for lenders
the available stock for lending globally with borrowers kept their balances but risk on collateral value. However, as and borrowers to review the legal
has decreased in the last month but increased dramatically the haircut or liquidity on the market was tight we coverage of default situations, such as a
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InvestorServiJournal_68x267.ai 27.5.2008 10:45:4
The Creative Factory

post-mortem analysis of how the GMSLA mean it can’t be a profitable activity:
agreement worked during recent events. one of the outcomes of this scaling back
Moreover, issues regarding collateral is that prices become more realistic
status should be further defined in GMS- and you actually pay the right price for
LA. I am confident that David Rule, ISLA what’s going on rather than a blurred,
Chief Executive, will help take additional cross-subsidised bundled price, there
measures which will prove beneficial to might be more precise price-discovery
the whole financial industry. in the securities financing and lending
business. I think we’re at a crossroads
Payson: The review is necessary in all and there are some significant initia-
environments, but especially so in the tives with regard electronic trading,
wake of recent market events. As with central clearing and exchanges. There’s
any crisis, it will cause beneficial own- never been a more relevant time to
ers, borrowers, and agents to review discuss this; my only reservation as
operational processes, risk management to whether things will happen is that
practices, and protections afforded there’s so much going on, people are
through their service agreements. It stretched to the limit and I don’t know
is probable that many lenders and if people have the capacity to deal with
borrowers have had to re-familiarise these things. They may need to
themselves with the provisions of their be forced to.
lending and borrowing agreements. If you look at some of these elec-
Further, many of these documents may tronic exchanges and the volumes going
be aged and may not completely reflect through – much of this is anecdotal – is
the nuances of today’s business prac- when things really got difficult people
tices. The Lehman Brothers bankruptcy picked up the phone and started to deal
Our
solutions ,
and subsequent default proceedings with each other in a more intense man-
have likely put an additional spotlight ner because it was a much more high
on the need to review standard and touch business. Far from it being more
customised agreements. automated and low touch and higher
volumes, the market went the music to your ears
Gonzalez: For years, many financial other way!
markets worked on the basis of trust
– the dictum ‘my word is my bond’ D’Albrand: If the current pace had con-
Securities Lending and Cash
is well known. However, there must tinued, the world would have become a Reinvestment Solutions.
be a legal basis to transactions, and large trading platform with no cows and Benefit from highly customised services
the securities lending and borrowing no forests in a few years. within the Global Customer Service Unit
market (SLB) is no exception. Markets If platforms are able to cater for so- and from tailored securities lending
evolve, so it is natural that existing phisticated risks’ related requirements programmes across different asset
legal arrangements, such as the Global I am convinced that they will become classes and markets. Take advantage
Master Securities Lending Agreement, more prominent very quickly. Nonethe- of our integrated cash reinvestment
are revised and updated. The ongoing less what we have seen over the past solutions and dedicated securities lending
market turmoil has probably accelerated few weeks is that OTC agreements are middle-office insourcing services. Use
the need for what would otherwise have flexible to get in and out of compared to our guaranteed market independence to
been a regular review. electronic platforms such as the triparty exploit every available opportunity.
platforms. Flexibility is of the utmost www.sg-securities-services.com
6. Can the industry continue to grow importance when time is of the essence.
at this pace in its historical, over- A nimble market does not necessarily For more details, please contact:
the-counter, status or will the use of need electronic platforms, especially if Denis Tréboit
electronic platforms become more they do not have the status of a clearing (+33) (0) 1 53 21 68 21
prominent? house for securities lending trades and [email protected]
do not become the central counter- James Wolff
Faulkner:The business will not continue party. (+33) (0) 1 53 21 68 22
[email protected]
to grow at this pace. We will be faced Wider.
with a smaller business Payson: Technology will and has already Closer.
in terms of counterparties involved, played and important role in the Simpler.
lenders, intermediaries and borrowers. maturation of securities lending as a
It will also be smaller in terms of the critical component of efficient capital
number of markets in which people are markets. Greater price transparency
willing and able to take responsibility has become available through enhanced
and act upon, and smaller in the abso- reporting and information, along Société Générale Securities Services, operating through
lute value in transactions taking place with the development of independent Société Générale and/or subsidiary companies, provides
services to market professionals and financial institutions.
because the worlds can’t deleverage and benchmarking services. The debate on These services are not available to private or retail investors.
not impact the volume of securities that whether securities lending will remain This promotion should not be construed as an offer or
are financed and borrowed. This doesn’t an OTC vs. an exchange-based trading solicitation to buy or sell any investment product.
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Panel Debate Securities Lending ISJ | Investor Services Journal
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product will likely gain momentum in insurance company or a mutual fund, securities lending program. institution, sign up to be part of a se-
the coming years as participants look to you’re an expert in what you do, and With sound leadership and prudent curities lending program, I want to buy
further enhance price transparency and this is a very important but peripheral management, securities lending will just that; I don’t want to be manoeuvred
manage counterparty risk. activity - you don’t want it to be more continue to be the lubricant to financial into an aggressive, leveraged securities
complicated that it needs to be. The markets allowing superior liquidity, financing business. If I chose to take
Gonzalez: SLB has a long history of op- industry needs a clear and single voice increased price transparency, and cash collateral, I want to make sure my
erating as an over-the-counter market. and think about how they communicate enhanced transaction settlement. risk appetite is clearly understood, and
However, the days when markets worked with clients, regulators and the press, Education and collaboration between the asset management process taken in
in splendid isolation are gone. If there so they can give central coherence an- associations and local regulators - as my name by my provider is appropriate.
is something introduced in one market swer to simple questions they struggle described in my response to the second-
which brings about efficiency, it will with. The challenge is how to communi- question - are key. D’Albrand: The high quality of securities
inevitably cross over into other assets. cate the benefits of participation in this received as collateral, diversification
The difficulty is that sometimes change business and put them into context. Gonzalez: There is a need to update of securities received and a sufficient
is resisted. This is understandable to the SLB market – to make it more haircut to cover for market volatility of
an extent. One of the biggest fears D’Albrand: Transforming securities standardised. It has played a key role in those securities received as collateral
surrounding greater use of electronic liquidity into cash liquidity is one of the liquidity provision over the past years, are all factors that mitigate the risks of
markets is that they erode margins. main functions of securities lending. but unfortunately SLB is relatively lending cash. The golden rule though is
However, history has shown that this is However, in the absence of liquidity backward when compared to many that as responsible bankers we should
more than compensated by an increase going into cash/money markets, the other markets. not do a trade because we think the
in volumes and counterparties, because upsurge in issuer risks and the risk The European repo market has seen quality of collateral is sufficient but be-
more particpants are willing to trade if & compliance constraints on cash the impact of standardisation over the cause the credit quality of the borrower
they know something’s value. So easier reinvestment, receiving cash liquidity past year. Clearly defined and easily ac- is solid. Customers’ asset protection
price discovery – or transparency – is as collateral has proved to be difficult. cessible baskets of securities are a must. dictates to remain simple. Subsequent-
something which is in the longer term Securities lending can play the role of a The standardisation is a pre-requisite ly, dynamic counterparty analysis is the
beneficial. There is no reason why this lock between the securities market and for technological development. The first step in entering into any trade in
won’t be the case in SLB. the money market provided that there is SLB market has been quite slow to the current market environment.
Electronic trading will make it easier liquidity in the two pools. This liquidity implement electronic trading and this
to integrate SLB activities into the is only there if confidence among partic- has made it harder for institutions to Gonzalez: The repo market does provide
general funding operations of financial ipants exists. The market is conservative integrate their systems with those they lessons about how SLB could develop.
institutions. If there was ever any doubt at the moment. For most institutions, use elsewhere. This hinders their ability Many people have been surprised that
of the importance of having an overall the current focus is primarily internal to get an accurate, real-time appraisal volumes generally in the Euro-Zone
view of an institution’s liquidity posi- as they need to provide liquidity to their of their funding position and, if they have declined since the start of the sub-
tion, there isn’t now. Electronic trading clients and not to the market. are client facing, their overall exposure prime crisis – credit fears have proved
also facilitates other efficiencies, such to their customers. Looking ahead, and too great for the bilateral market to
as straight-through-processing and Payson: The securities lending industry making a small prediction, it is clear function. The notable exception to this
genuine real-time risk management has enjoyed steady growth over the past that institutions will need to make their has been Eurex Repo, which provides a
and allows for a greater distribution 30 years in response to rising financial work as efficient as possible. To do this fully electronic collateralised funding
of product to a wider base of potential markets and increased participation by requires an efficient mechanism across marketplace, supported by a central
counterparties. There are many posi- beneficial owners. That confidence has the entire value chain –this will drive counterparty, which virtually removes
tives. been shaken recently due to a several the uptake of electronic trading and counterparty risk. In particular, its
high-profile negative events. This has standardisation in SLB. Eurex Repo’s GC Pooling segment has
7. Securities lending is often cited as a resulted in increased scrutiny from shown its true worth over the last
vital provider of liquidity. What more beneficial owners, regulators, and the 8. To what degree is lending cash – year. GC Pooling is an automated and
needs to happen for the industry to media. It is important for the industry with securities as collateral – a risk, standardised funding market, made up
gain even more prominence and fulfil to clarify that all securities lending and how do you mitigate that risk? of baskets of European Central Bank-
its promise/potential? programs are not structured in the eligible securities. It has become an
same way and that securities lending Faulkner: Not very well by some, much extremely important way of securing
Faulkner: I think the industry would can be managed in a way that avoids better by others. One of the things that central bank liquidity. In Switzerland,
probably be keen to have a lower profile. unnecessary risks to investors. Actions we’ve always advocated was the identi- the Swiss National Bank conducts its
The industry needs to regroup and that must be undertaken to confirm the fication that there were many routes for monetary policy almost totally via Eurex
come across to prospective customers continued viability of securities lending a lender to participate in the lending Repo. If you want central bank funding,
and regulators and press with a clear include: providing increased transpar- market. You could be exclusive, be in- it has to be done on a collateralised
message of the benefits of this activity. ency to participants, allowing them to dependent, go through an agent, go to basis. n
It struck me at the RMA Annual Confer- fully understand the risks and benefits a third party. But perhaps to the extent
ence on Securities Lending in Texas that of lending; adopt a “back to basics” that cash reinvestment and programs
when asked a question, most people mentality that avoids overly complex could be more bespoke at the style
can’t really articulate why the business transactions and transactions that do and experience to execute could differ
is a good one and how it contributes not provide a compelling return for provider to provider was overlooked.
to the efficient workings of the capital the risk assumed, and undertaking an Plain vanilla securities lending doesn’t
markets in words of one syllable. It initiative to unite the industry with the exist, nor cash investment – there are
becomes too complicated too quickly. goal of reinforcing the benefits provided so many ways to do it. What is required
If you’re a pension fund manager, an to capital markets by a robust and active is a ‘back-to-basics’ approach. If I, as an
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30-45 ISJ34 4.indd 37 10/11/08 12:59:47
Securities Lending ISJ | Investor Services Journal
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Collateral thinking
Collateral in tri-party repo has shown itself to
be the answer when mitigating counterparty
risk, but it needs to be approached with
a degree of flexiblity in volatile markets, finds
Brian Bollen
period, comments Staffan Ahlner, man- organised through pooled group struc-
aging director, Global Collateral Man- tures, afforded some stellar returns with
agement, at The Bank of New York an overriding focus on revenue genera-
Mellon. “Tri-party repo had never been tion, not risk. But a number of recent
tested in the market until September 15; factors, not least the high profile collapse
no-one had ever gone into default on of Lehman Brothers, created market vol-
such a major scale, the default showed atility that forced certain lending agents
that tri-party worked. Some major in- to unwind cash investments in order to
stitutions had their collateral back by free up cash collateral as the correspond-
Monday 15th September, tri-party did ing loans were terminated. In some cases,
enable them to take very quick action to the unwinding of such investments can
protect themselves. The subsequent scale potentially lead to significant losses for
of selling of collateral might have driven engaged market participants – triggering
down the prices fetched, but that was is fresh client concern and creating poten-
market issue, not a tri-party repo issue.” tial reputation issues for banks running
Attitudes have changed too, he adds. cash-reliant lending programmes.
“Previously, institutions were preparing Susan Pike, global head of market
for an event that they thought would products and services at RBC Dexia In-
The international financial services sys- never happen. Now that it has hap- vestor Services, says: “The cash-based
tem has been stress-tested almost to pened, they are taking a more practical approach to col-
destruction over recent months, and approach to the subject. How do I manage it? How do I get lateral manage-
few parts of it have emerged with much my assets? The market has had a crash course on insolvency ment has not
credit. The importance of collateral procedures and the knowledge of how to manage assets in been without its
management, however, has been recog- an insolvency has grown greatly. Collateral needs to be ring- problems in the
nised more than ever, and its reputation fenced and maintained.” In this more wary environment, the current market.
enhanced, if one agrees with industry transaction sizes being collateralised are significantly smaller, When providers
observations. every exposure is collateralised not only repo and stock loan took cash collat-
“I believe the recent market turmoil transactions. “Collateral management is eral they were, in
has given hard evidence for the need to collateralise exposures, being redefined,” he adds. “Where in the many cases, plac-
as well as to have risk-controlled procedures in place to mo- past we might have seen collateralised ing this in money
bilise and monitor collateral obligations,” says Cedric Gillerot, transactions of around USD200 million, market funds or
director, Collateral Services, Euroclear. “Recent events have today we are seeing collateral required pooled funds – in-
put the spotlight on those firms that have and have not fol- for USD10-USD20 million.” vested as a group.
lowed good business practices in this regard. The key lessons A number of custodian banks have This strategy was
learned are to know your counterparty and take the necessary traditionally provided collateral man- all about getting
precautions to protect your firm and your clients’ business in agement programmes heavily based a better return on
the event there are more casualties from the liquidity and credit on cash reinvested in money market investment. But
crisis.” instruments to generate high returns. the problem with
The landscape has changed completely in a relatively short Until recently these instruments, often money market
38
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Securities Lending ISJ | Investor Services Journal
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funds is that if, as agreements that support them. Going forward, the amount of volumes picked up as the trend towards
has happened in reporting clients are going to be asking for and the amount of secured financing developed. Today we
the recent mar- due diligence they are going to want to do on collateral mix and regularly register monthly outstanding
ket, you get a large counterparties involved will increase significantly. The param- volumes above € 400 billion when we
number of clients eterisation of how collateral is managed and the diversification only crossed the EUR300 billion thresh-
pulling out of away from cash into multiple types of instruments can only old a year ago. Growth is even more
them at the same grow.” significant when you look at the longer
time, then, depending on where those For Brian Staunton, Citi’s head term. Volumes grew 30% in 2007 over
investments are, you can actually realise of securities finance for EMEA, Global 2006 and are growing even more in 2008
losses on them. This has happened re- Transaction Services, the most signifi- compared to 2007. In 2005, monthly out-
cently – with a significant reduction in cant change in the market in recent times standing volumes were EUR183 billion,
the value of some money market funds.” is the sheer scale and complexity of col- in 2007 EUR327 billion and so far in
The issues surrounding cash-based collateral management. “Our business has 2008 EUR395 billion. The overall qual-
lateral management programmes are increased significantly over that period, ity of the collateral has also significantly
now encouraging some securities lend- partly because of the move by investors improved as eligibility criteria requested
ing clients to seriously consider other away from investing in the unsecured by all participants have been amended
programme options that reduce risk. markets and towards investing in the along the line.”
Collateral flexibility includes accessing secured markets like repo’s. This raises Wilkin believes secured lending is
more types of sovereign debt, allowing some questions. Can your systems han- “here to stay”, with many players look-
for a prudent mix of equities as collateral dle the volume, and the growth in the ing at all types of assets on the balance
and a better understanding of how a dif- volume? If it isn’t scaleable, you have a sheet and trying to turn them as much
ferent mix can affect risk. This entails an major problem.” as possible into some form of collateral
educative process for beneficial owners. Moreover, he adds, smaller players value. “Right now the issue for us is to
But the better the communication and will struggle to offer a global integrated cope with the demand from new cus-
strategic partnerships between provid- collateral management service. “If you tomers wanting to join our programme.
ers and underlying clients, the better the want to use Asian assets, for instance, for We see customers knocking on our door
recipe for creating additional value and repo collateralise in the US, you need a who we had never been able to attract
understanding what is driving that re- physical geographic presence in the US; before. And this includes new type of
turn. you need global capacity to meet local clients, such as corporates, or insurance
Although the current market has re- needs on a global scale, and not many in- companies when we see large corpora-
duced demand for some key securities stitutions can call themselves truly global tions asking for collateral from banks.”
lending demand drivers – such as short players.” As a result of the recent liquidity and
credit crisis, firms are monitoring their
The recent market turmoil has given hard risks, exposures and collateral positions
evidence for the need to collateralise much more tightly, says Cedric Gillerot.
“It is common knowledge that the inter-
exposure Cedric Guillerot, Euroclear bank money market has declined sub-
stantially over the past couple of months,”
he says. “Therefore, it should come as no
selling and hedge fund-related activity Jean Robert Wilkin, head of global se- surprise that when firms now trade with
– Pike believes demand will return over curities financing product management, each other, they are taking measures to
time, albeit with much greater scrutiny Clearstream, also has something to say collateralise their exposures vis-à-vis
of lending and collateral management on the question of volumes. “When the their counterparties across a broad range
arrangements. “In the months and years subprime crisis started a year ago we first of transactions. They are also seeking
ahead we expect collateral management saw a decline in the volumes of our glob- to make the collateralisation process as
to become one of the key focuses,” she al securities financings products which risk-controlled and efficient as possible.
says. “With everything that has happened encompass securities lending, tri-party We expect this trend will continue into
in the market in the last 12 months there repo, derivatives, collateralisation of cen- the foreseeable future as an appropriate
has been a big change in attitudes related tral banks and many other applications business practice and, in time, possibly
to the significance, risk and importance for collateral management,” he says. as a result of more stringent regulatory
of collateral management and the legal “Then after just a couple of months, the pressures.”
40
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ISJ | Investor Services Journal Securities Lending
“We are now seeing a broader mix of offer is our statistics: In 2005, the aver- The pressure placed on the industry’s in-
firms that are collateralising exposures age daily collateral provision outstand- frastructure by recent credit events has
across a wider spectrum of transactions, ing within the Euroclear group was the had a direct impact on how a company
ie, repo, securities lending, secured loan equivalent of EUR480 billion, which has like Omgeo, the post-trade, pre-settle-
and derivatives transactions, as well as grown to nearly EUR600 billion per day.” ment management firm, is changing to
for central counterparty margin manage- Revel Wood, Northern Trust’s global reflect the evolving situation. “It height-
ment purposes. In addition, as a result of product manager for derivatives, reports ened our awareness of the extent of the
the recent increased intermediation by increasing demand for what he calls strin- challenge we face in servicing the indus-
central banks in order to ease the pres- gent and robust collateral management. try,” says Tim Lind, managing director,
sures within the inter-bank money mar- “The events of the past 12 to 15 months strategic planning, Omgeo. “Modern in-
kets, we have seen increased focus on the have highlighted the risks involved in vestment styles create ongoing credit and
collateralisation of central bank credit conducting transactions on an uncollat- counterparty exposure whether through
facilities. We have also seen a gentle tight- eralised basis; there is a whole lot more derivatives, repo or securities lending,
ening of the collateral eligibility profiles emphasis today on monitoring your col- and a new need for valuation services
in 2007 and a more sharply defined trend lateral at the individual risk and exposure when marking to market. Most opera-
in 2008. Collateral takers are now more level and knowing where it is at any one tions and settlement infrastructure is
thoroughly reviewing the basket of col- time. All the traditional players have seen designed to settle a security and hold it
lateral they are willing to accept. When a flight to safety in terms of where their in an account, but securities don’t sit in
going further, and comparing today with collateral is held. A huge number of cli- an account any more. They are pledged as
three to five years ago, today there is a ents who previously left collateral with collateral and change every day. We need
distinct trend of ever-increasing use of a counterparty now want it left with a a more effective way to monitor exposure
collateral to manage exposures and risks global custodian. A number of lessons intraday, and to adjust as necessary.”
associated with a growing list of trans- have been driven home by the collapse of The need for such adjustments ex-
action types. The best evidence we can a cornerstone of the banking world.” plain Omgeo’s recent purchase of Allus-
tra, the London-based provider of collat-
eral management solutions, which claims
to offer a suite of products that provide
customers the ability to consolidate trade
positions across asset classes, including
OTC derivatives, while mitigating the as-
sociated counterparty risk. “We looked
at how Omgeo could enter the market,
which is very adjacent to our traditional
markets. Given the speed at which we
think it will unfold, we didn’t have time
to design and build our own solution. We
had to acquire, and Allustra stood out.”
But how long will this new conser-
vatism last? Medical practitioners gen-
erally estimate that when they scare a
heavy drinker into giving up alcohol,
the subsequent dry period will only
last approximately six months. His-
tory suggests the financial markets be-
have in a similar way. “How long is col-
lective corporate memory?” asks BNY
Modern investment styles create ongoing Mellon’s Staffan Ahlner. “We have seen
credit and counterparty exposure similar things happen in the past.”

Over time, people will go back to their
Tim Lind, Omgeo old ways, is the clear suggestion. ■
41
30-45 ISJ34 4.indd 41 10/11/08 17:44:14

Fund Administration ISJ | Investor Services Journal
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Administering a nation
Catherine Kemp discovers a gradual opening in the insulated world of
Japanese fund administration
Japan is very much a scale business. The
three major Japanese ‘trustee’ banks for
fund administration - Master Trust Bank
of Japan (MTBJ), Japan Trustee Services
Bank (JTSB) and Trust & Custody Ser-
vices Bank (TCSB) - were created specifi-
cally to provide trustee and back office
fund administrative services for Japanese
mutual funds, institutional pension funds
and government pension funds and pro-
vide Japanese accounting at competitive
rates.
Major domestic banks have a vested
interest in these institutions. Mitsubishi
owns a 46.5% stake in MTBJ, Sumitomo
Trust and Mitsui Trust each hold 33%
stakes in JTSB, and Mizuho Financial
Group owns a 54% stake in JTSB.
The only two global banks with a sig-
nificant presence in the onshore retail
and institutional market are State Street
and Citi. State Street has 400 members of
staff and provides Japanese trust services
for pension funds and insurance compa-
nies. It also provides traditional middle
office and investment manager report-
ing services to global funds. Citi merged
with Nikko bank in 1999, and the result-
ing Nikko Citigroup provides trustee
and fiduciary services to retail and mu-
tual funds and also acts as an outsourcing
agent to fund managers - a pricing agent,
as they cal it in Japan – providing net as-
set value calculations for mutual funds.
The main driver of the Japanese funds
industry has traditionally been high net
worth individuals. The character and
shape of the mutual funds industry is
very much influenced by these investors.
The structure is similar to the US model,
except that in the US the fund manager is
the distributor; in Japan, the distributor
is an independent brokerage house. The
distributor will have retail clients, often
high net worth individuals, who will ap-
proach the fund managers and ask them
to develop specific products based on
42
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ISJ | Investor Services Journal Fund Administration
market trends. The managers build the the one hand are the trustee banks that
products and the distributor offers it on focus on the retail and long only space. Japanese fund allocation
their platform. The distributor then ap- Then there are global banks like BNY
points the trustee bank, the global custo- Mellon with relationship managers that
dian, and anyone else that supports the offer investors access to the banks off-
portfolio. In a mutual fund sense, there- shore domiciled and administrated hedge
fore, the distributors instruct the fund funds.
manager as to what they need on their “There are a large volume of both tra-
platform. ditional and alternative investment strat-
Despite a tradition of long-only strategy offshore funds that are invested into
egies and mainstream asset classes, there by investors in Japan, some institutional
is an increasing drive into the alternative and some retail money, and the admin-
funds space. Matt Brown, regional head istrators for that part of the business are
of fund services at Citi, says: “The alter- not limited to the three large Japanese
The domicile of the fund drives the location

of the administration, and most funds are
domiciled overseas for tax purposes
Matt Brown, Citi
native space has always been very strong trustee banks,” says Andrew Gordon,
here because hedge funds have been head of alternative investment services
widely used by the high net worth sector business in Asia at The Bank of New York
for years. It is probably one of the most Mellon.
Japanese pension funds make up one of the
established markets in Asia. There has “That is where other big international worlds biggest asset pools at USD 1,068 bil-
been a very strong industrial base here banks involved in that type of activity in lion, according to Greenwich Research, based
for a long time and, as a result, an unusu- other parts of the world provide services, on interviews with professionals at 361 of
ally large number of high net worth indi- including BNY Mellon. The actual work Japan’s largest corporate pension funds, public
pension funds and financial institutions.
viduals.” for offshore funds is not done in Japan.
However, few hedge funds are ad- We would provide relationship managers Across all Japanese pension funds, average
ministrated or managed in Japan. Most and technology support, but we wouldn’t hedge fund allocations increased to 1.9 per
are domiciled overseas, with Cayman do the onshore NAV calculation in Ja- cent in 2007 from 0.4% in 2003.
Islands, Dublin, Luxembourg a few such pan.” The biggest are Japanese corporate pension
destinations. Brown says: “There are a In the mutual funds space, however, funds, which hold an estimated YEN 30,000bn
small number of Japanese domiciled this division is being challenged. Histori- (USD250bn) in deposits, and who according to
hedge funds which have to be adminis- cally global fund managers have tended Greenwich research have increased allocation
to hedge funds from 63% in 2006, to just under
tered onshore, with the local trustee. But to focus on Separately Managed Accounts 70% in 2007.
to the best of my knowledge this is a very (SMA) and similar products. Now, global
small amount. The domicile of the fund fund managers are playing a more active According to Daiwa Institute of Research, 70%
drives the location of the administration role in the mutual funds space. One of of corporate pensions have hedge fund
and most funds are domiciled overseas the reasons for this is that Japan’s tradi- holdings in 2008, compared with 4.5% in 2001.
for tax purposes. And this won’t, or is tional ‘saving culture’ that prefers to put
very unlikely to change.” money into bank accounts rather than
The market is thus divided into two. On invest in stock products. But in the last
43
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Fund Administration ISJ | Investor Services Journal
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few years, this has changed, and Citi and see how they can apply the newer invest- for investors.
State Street are preparing for this change. ment strategies in the best possible way, The recent acquisition of Lehman
State Street plans to reinforce its team and while the offshore business is a stable Brothers’ staff and technology by prime
in order to offer pricing services to this business and will continue to grow, you broker Nomura, and Mitsubishi’s acqui-
market, something Citi already provides. are going to see more organisations look sition of 20% of Morgan Stanley, has also
Andrew Erickson of State Street’s In- to do that onshore. I believe that onshore altered the banking industry in Japan.
vestor Services team explains: “This new complexity will continue to grow and These acquisitions signal the a greater
investment culture has been expanding both will increase overtime accordingly.” crossover between Japanese banks and
steadily for the past three years,” he says. While it may be time for change in the global financial system.
“We think it will definitely continue to Japan, with the breakdown of this rather However, the recent economic down-
grow and that the time is right to begin consolidated and inflexible system into a turn may hold back this process of expan-
servicing these new types of assets. We more fluid system, some say that this is sion. Japan’s direct exposure to sub prime
plan to bring global standards of pricing highly unlikely, at least in the alternatives or related issues was initially very small,
services to Japan and roll that out to a sector. with the domestic economy largely unaf-
We plan to bring global standards of pricing services to Japan and

roll that out to a broader client base next year
Andrew Erickson, State Street
broader client base next year.” Brown explains: “Hedge funds are inher- fected. But it is now feeling the knock on
Institutional and state pension funds ently unregulated vehicles, so in many effect of the freezing of inter-bank lend-
are also a growing influence on the type senses to establish a hedge fund in a ju- ing, and at the end of October the Nik-
of products available for investment. risdiction that has extensive fiduciary kei 225 closed at 8,576.98, a fall of 23.8%
Japan is an extremely wealthy country oversight, like Japan, is not really what over the month. The previous Monday
with the second biggest gross domestic the business is about. People buy into the index plunged 486.18 points, or 6.4%,
product (GDP) in the world and a size- hedge funds because they want to achieve to 7,162.90, its lowest close since October
able amount of public pension fund as- alpha, and once they have that mind set 1982.
sets. They also have an ageing population, then they want to minimise costs also.” Nevertheless, Erickson says State Street
with more people looking for their retire- Brown adds that the consolidated believes that Nomura’s and Mitsubishi’s
ment benefits now, than compared to 25 model provides a high degree of protec- acquisitions will provide the two banks
years ago. This puts pressure on the pen- tion to investors. “At the end of the day, with opportunities for further growth,
sions system, driving the desire of public the role of the trustee bank in Japan is to which in the long run will add to the
institutions to invest funds differently. look after the fiduciary obligations of the complexity of the business in Japan. This
Erickson says: Erickson says: “We see individual investors. Japan has been very will only create opportunities for global
that pension funds here are now looking active in that space. Consolidation ulti- players like State Street. n
to hire investment mangers because they mately leads to a reduction in cost which
are looking to provide more value in the is good for investors. The creation of a
way they invest. Pension funds and invest- number of trustee banks a few years ago
ment managers are streamlining services. was in order to achieve greater fiduciary
I believe we are looking at the combina- and operating efficiency. Utility banks
tion of the onshore traditional products designed specifically for this purpose
model versus offshore alternatives model achieve this very effectively.”
and that you will gradually see more ser- The Nikko Citigroup merger is anoth-
vicing of derivatives and other types of er indication of this further integration.
these products under locally based struc- The merger has allowed Citi a broader
tures. This is a real opportunity for com- distribution network, product depth and
panies like State Street that focus on the investor profile, which has ultimately
Japanese and offshore servicing market to given it increased access into the retail
a high degree, because we are more likely investor space, which may have a signifi-
to have solutions that apply. cant impact on the industry and type of
Investors in Japan will be looking to products that would be available onshore
44
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30-45 ISJ34 4.indd 45 10/11/08 13:00:55
Analyse This: Caribbean Fund Services ISJ | Investor Services Journal
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Analyse This:
Caribbean Fund Service
Robert Briant, managing partner at law firm Conyers Dill & Pearman,
British Virgin Islands, provides a double header of legal analysis
an investor between a creditor and What are the fiduciary
a shareholder. duties of a director to a fund?
Of issue is the point in time at
which the directors and manager The statute requires directors to act
perceive the fund as starting to be honestly and in good faith in what they
“in trouble”. From this point onward, believe to be in the best interests of
they need to consider how to treat all the company. The memorandum and
investors fairly. Unless redemptions articles of association are generally very
were suspended as of such point in time, broadly drafted to be consistent with
anyone who submitted a redemption such a framework. The memorandum
request which has crystallised has ceased and articles of association also set out
to be a shareholder. Rather, the person the rules on which the fund operates.
is a creditor, and all shareholders who Hedge fund directors must be
have not submitted redemption requests particularly aware of the provisions
or whose redemption requests have not relating to the suspension of
What are the implications crystallised remain shareholders. redemptions and the calculation of
of the credit crunch to fund advice As with any corporate vehicle, net asset value. The memorandum
in the British Virgin Islands? creditors get paid prior to shareholders. and articles of association will govern
As such, these creditor redeemers may these provisions, rather than the private
Although we will, of course, feel the get a higher net asset value than non- placement memorandum. The two
effects of a global recession, the British redeemers. This puts considerable stress documents should be consistent, but this
Virgin Islands are perhaps less directly on the directors in determining when to is not always the case.
tied to the crisis than other jurisdictions. suspend redemptions. Where there is inconsistency
The large number of BVI holding Many funds are receiving redemption between these two documents, it is the
companies around the world continues requests that are triggering their gating memorandum and articles of association
to bring corporate work, and with the provisions. The directors, especially the which will govern the mechanics of
opening of the new commercial court independent directors, need to seriously redemptions, calculation of net asset
and the strength of BVI’s insolvency consider the future life of the fund, or value and suspension. There may be
legislation, BVI maintains its position as more specifically whether it has a life. If a remedy for breach of contract if the
one of the most popular offshore hedge the gate is being triggered, then the fund PPM differs, but you must look at the
fund jurisdictions. may be in crisis, and it may be more memorandum and articles of association
In the current climate, advising funds suitable to suspend redemptions and to determine the mechanics.
in distress is a busy area, particularly start treating all shareholders equally by Therefore, the directors cannot
for Conyers Dill & Pearman. It is times redeeming all shareholders and planning merely rely on the PPM of the offshore
like this when the efforts in structuring an orderly wind down. fund but rather should review the
funds come to the forefront and what This is difficult, especially for the memorandum and articles of association
works and what does not work becomes manager who set up the fund, but if the to determine their obligations.
more apparent. directors wait too long and rely on the Directors who do not do so may be
When a fund is in difficulty, its gate then they risk possible law suits for in for a surprise when counsel for an
directors must be careful to act within failing to suspend redemptions earlier. investor sets out a different redemption
the scope of the fund documents. In However, if the fund otherwise has legs parameter from that in the PPM. n
the case of redemptions, the timing of a as well as gates, then gates could be
redemption request and whether it has utilised if there are immediate but not
crystallised can dramatically differentiate long term liquidity problems. n
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ISJ | Investor Services Journal Analyse This: Caribbean Fund Services
Greg Bennett, Managing Director, Butterfield Fulcrum Group,

focuses on the Cayman Islands
ongoing needs of the global hedge fund to be done at all levels to educate the
industry. various international constituents about
Cayman also continues to lead the the vital role these jurisdictions play in
industry with innovations such as terms of the global financial system.
introducing the E-Reporting initiative, Finally, Caymans’ leadership as a
whereby financial statements, including domicile is also closely tied to its
basic financial and non-financial strong fund administration industry.
information contained within the Consistent with the innovative and
financial statements, are now e-filed responsive reputation of the jurisdiction
with CIMA. While fund specific as a domicile, local administrators
information remains confidential, the span from the largest in the world, to
result is comprehensive and statistically boutique players as well as all sizes in
significant aggregate information between, ensuring the diverse needs of
being available regarding the hedge investment managers can be met locally.
fund industry, including gross industry Fund administrators such as Butterfield
How has the Cayman Islands inflows, total assets, and average Fulcrum Group provide NAV servicing,
developed into a leading domicile performance by strategy. shareholder services and middle and
for alternative assets? In terms of the recent market back-office support to hedge funds
As the hedge fund industry regains its turmoil, regulators in the US and UK globally. n
footing following the global credit crisis, are definitely taking a more proactive
one aspect of the industry that remains approach in relation to hedge fund
steady and sure: The Cayman Islands. regulation. That said, early indications
Cayman, the number one domicile for are that both the US Securities and
hedge funds globally with over 10,000 Exchange Commission (SEC) and UK
funds currently registered with the Financial Services Authority (FSA)
Cayman Islands Monetary Authority are satisfied with the Cayman Islands’
(CIMA), got its edge over competitor existing ‘quick to market’ regulatory Butterfield Fulcrum Group (BFG) is
domiciles in the early 1990s when the framework. In fact, recent concerns a leading global fund administrator
close partnership between government about hedge funds have been centred for the alternative asset industry,
and the financial community led to fund on concern about the possible systemic with over USD100 billion in assets
legislation that was conducive to setting risk these funds pose to the financial under administration from nearly
up professional fund structures. markets. Therefore any approach that 1,000 hedge funds, fund of funds,
While other prominent jurisdictions develops to monitor and mitigate these private equity and institutional
have now copied to a great degree risks is more likely to involve oversight investment management clients.
the Cayman Islands legislation, first- in the markets that the funds trade, BFG is among the top ten alternative
mover advantage coupled with a large rather than to require an increase in the asset fund administrators globally, is
infrastructure of financial professionals review and oversight in the jurisdiction headquartered in Bermuda and has
and a legal system based on UK common of domicile. around 400 employees in ten locations
law has allowed the Caymans to retain That said, this type of global crisis across nine countries. BFG employs
its significant lead in this market. In the lends support to increased market advanced technological and middle
meantime, the close partnership between scrutiny by legislators across the globe, office capabilities offering clients
regulators and the financial community and often “offshore” jurisdictions access to a full range of institutional
has continued, ensuring that updates to become an easy scapegoat in this financial services. For more
existing legislation continue to meet the process. As such much work will need information, visit www.bfgl.com.
47
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ISJ Directory of Services ISJ | Investor Services Journal
Asset Servicing Custody & Clearing
BHF-BANK is one of Germany’s most CACEIS, with EUR2.3tr under custody DnB NOR is the largest and leading
prestigious private banks. Its roots date and EUR950bn under administration is provider of Custody, Clearing and
GOAL is the widely-acknowledged back to the year 1854. As an advisory, one of the world’s leading asset servicing Remote Member Service in Norway. In
industry leader in providing creative service and sales & trading bank, we offer providers, dedicated to institutional addition, DnB NOR provides a wide range
products, services and solutions to our discerning clientele a comprehensive and corporate clients and the premier of value added services to both Foreign
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action compensation. Our research has with a long track record of capital market the significant financial support of our in Sweden, Finland and Denmark, DnB
shown that in excess of US$6 billion competence. shareholders, Crédit Agricole S.A. and NOR can offer seamless regional products,
of withholding tax remains unclaimed Trust, an individual approach and Natixis. Our services combine powerful IT which can be customized to our client’s
each year by the rightful owners and impartiality - these qualities are at the systems and expert staff to help clients needs.
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C: Saghar Bigwood or Services, Financial Markets & Corporates America, CACEIS delivers a comprehensive E: [email protected]
Stephen Everard and Private Banking. set of high quality services, covering W: www.dnbnor.com
A: 7th Floor, 69 Park Lane, The bank’s longstanding experience custody and depositary/trustee, fund
Croydon, CR9 1BG in the German securities services administration, transfer agency and
E: [email protected] or market goes hand in hand with a corporate trust.
[email protected] or corporate culture that values prompt
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BHF-Bank offers tailor-made custody E: [email protected]
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T: +49 69 718 3738
SMA Financial is the UK’s premier provider
F: +49 69 718 6050 Nordea is the leading financial services
of SWIFT services and a long standing
E: [email protected] group in the Nordic and Baltic Sea region
business partner of SWIFT. SMA’s vast
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63067 Offenbach a.Main (of SICAV, FCP, SIF, SICAR, SEPCAV, Nordea is the leading custody services
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on their in-depth and highly experienced
W: www.bhf-bank.com an efficient fund administration and high quality, tailor-made custody services
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assets. - The leading financial services group in
cost effective and quality hosted
For all kinds of Undertakings for the Nordic and Baltis Sea region
connectivity services to many satisfied
Collective Investment going from plain - A world-leading Internet banking and
clients.
vanilla cash, money-market, equity and e-commerce operation
bond funds to sophisticated alternative, - The largest customer base of any
Simon Murby
venture capital/private equity, pension financial services group in the region
Managing Director
pooling and funds of hedge funds, KBL
SMA Financial Limited
offers expert legal, fiscal and technical T: +47 2248 6238
Telephone : +44 (0)20 7940 4200
advice as well as access to the global Contact:
Bramah House,
markets. Anne-Lise Kristiansen
65-71 Bermondsey Street,
London. SE1 3XF Head of Sub-custody and Clearing
Business Development – Email:
Website: www.sma.co.uk Investment Fund & Global [email protected]
Custody Services 43, boulevard Royal
L-2955 Luxembourg
Stéphane Ries
Sandra Cortese
Stéphane Pesch
T : (352)4797 3512
F: (352)4797 73910
www.kbl.lu
48
Directory NEW.indd 48 13/11/08 14:08:11

ISJ | Investor Services Journal ISJ Directory of Services
Banking Securities Services provides Intesa Sanpaolo’s Transaction Services

award winning local and regional custody include :
services for investment professionals. • Sub Custody, Derivatives and
We are proud to be the largest custodian Remote Membership Clearing
provider in terms of assets and number • Global Custody and Depository Bank
of foreign clients in Central & Eastern for mutual funds, pension funds,
Europe. ING has been providing Securities real estate funds, private equity
Services in CEE since 1994 and we funds and hedge funds
• Fund Administration for mutual
will continue our ongoing pursuit of
funds, pension funds, real estate
excellence through new technology.
Designing custody solutions Innovation and client focus are the key
drivers to service our clients the best way.
funds, private equity funds and
hedge funds
• Paying Agent for foreign funds and
Other activities of ING Wholesale Banking sicavs
Securities Services are Paying Agency
– for the Nordic region Services and web-based management of
• Cash and Payment services like
swift to checks, mass payments,
employee stock option & share plans. checks and cash letters
ING is your local partner in: Belgium,
One region Bulgaria, Czech Republic, Hungary, INTESA SANPAOLO S.P.A.
Poland, Romania, Russia, Slovak Republic Financial Institutions
One custodian and Ukraine. Transaction Services
Piazza della Scala 6
One point of entry For further information please contact 20121 Milan
Lilla Juranyi, Global Head Custody Italy
at + 31 20 7979 435 T: +39 02 8794 2466
or contact her by email: F: +39 02 8794 1519
[email protected] W: intesasanpaolo.com
C: Riccardo Lamanna
E: riccardo.lamanna@
intesasanpaolo.com
Société Générale Securities Services

offers institutional investors, asset Financial Asset Services is the custody
managers and financial intermediaries and investments-servicing division of
RBC Dexia Investor Services offers a SEB is the leading provider of securities a comprehensive range of financial Standard Bank, providing a unique suite
complete range of investor services services in the Nordic and Baltic area. We securities services: custody, clearing & of services to sophisticated investors
to institutions worldwide. Our unique are committed to custody and clearing trustee services, fund administration, in South Africa and eight sub-Saharan
offshore and onshore solutions, processes for the wholesale market. We asset servicing and transfer agency. SGSS markets.
combined with the expertise of our hold securities worth over 560 bn EUR and currently ranks 3rd European custodian Standard Bank has assets under custody
5,200 professionals in 16 markets, provide services in more that 75 markets, and 9th worldwide custodian (Source: to the value of ZAR1.56 trillion and an
help clients grow their business and 10 of them under the SEB name (Sweden, Globalcustody.net) with EUR 2,580* overall market share of approximately
sustain enhanced performance through Norway, Finland, Denmark, Luxembourg, billion in assets held and valuates 40%.
efficiency improvements and robust risk Germany, Estonia, Latvia, Lithuania and 4,354* funds representing assets of EUR Standard Bank’s unique selling point
management practices. Ukraine). 405* billion (as of June 2007). lies in its consultative approach to
We offer a full range of securities relationships combined with the bank’s
Equally owned by RBC and Dexia, the services including corporate action and Sébastien Danloy commitment to custody and investment
company ranks among the world’s top 10 information services, securities lending Global Head of Sales, administration services.
global custodians with USD 2.8 trillion in and services to remote members of the Investor Services
client assets under administration. Nordic and Baltic stock exchanges. We Société Générale Securities Services A:Standard Bank
continuously develop new products in T: +33 (0)1 41 42 98 65 Financial Asset Services
rbcdexia.com connection with clients and partners E: [email protected] 3rd Floor
to ensure we deliver the high-quality W: www.sg-securities-services.com 25 Sauer Street
T: +44 (0) 20 7653 4096 products our clients demand. We always Johannesburg 2107
F: +44 (0) 20 7248 3946 strive to make the processes more T: +2711 636 6615
Contact: Tony Johnson efficient. With a history of over 150 years E: adam.bateman@standardbank.
Head, Sales & Relationship in the securities industry; we know the co.za
Management market and our clients well. W: www.standardbank.co.za
Address: 71 Queen Victoria Street, T: +46 8 763 53 04
London, EC4V 4DE, UK F: +46 8 763 69 30
C: Goran Fors, Global Head
of Custody Services
W: www.seb.se
49

Custody & Clearing Data Services
Swedbank provides client-focused custody Market Data & Analytics provides high- Interactive Data Corporation (NYSE:
Santander is Spain’s leading financial
services to domestic and international value real-time market data, indices IDC) is a leading global provider of
institution and the largest bank in the
securities lending (including auto-borrow and back office services. Information financial market data, analytics and
euro zone by market capitalization. Our
facilities), derivative clearing services, from diverse sources are provided to related services to financial institutions,
commitment and contribution to the
proxy voting, full corporate actions and its customers, tailored to their specific active traders and individual investors.
securities industry is well established
income service. Flexibility is an important information needs. Accuracy and The Company’s businesses supply
after more than a century of providing
aspect of Swedbanks products and reliability are ensured by collecting real-time market data, time-sensitive
services in this field.
services. Our dedicated Client Relations the data from the Group’s own trading pricing, evaluations and reference
Santander’s cutting edge technology
Managers and Account Managers are platforms, such as Xetra® and Eurex® data for millions of securities traded
enables it to offer a comprehensive
focused on personalized processing and and cooperation partners like STOXX Ltd. around the world, including hard-to-
array of innovative services in a broad
reporting solutions. and the Irish Stock Exchange. Avox®, value instruments. Many of the world’s
range of markets. Santander currently
Other Features: a majority-owned subsidiary, validates, best-known financial service and
has full local capabilities in Iberian and
- ISO9001:2000 quality certification. corrects, enriches and maintains software companies subscribe to the
Latin American markets along with a
- Swedbank Markets Online (SMO) internet business entity data. With an operational Company’s services in support of their
franchised presence in many others.
information and reporting toolfor Custody model, unique in the industry, Avox® trading, analysis, portfolio management
Santander`s experience and product
and Securities Lending. enables clients to comply with regulatory and valuation activities. Through its
range ensures that every aspect of the
- Nordic Custody alliance with DnB requirements and to achieve a holistic businesses, Interactive Data Pricing
securities business is fully contemplated.
NOR (Norway), OKO Bank (Finland) view of the risk exposure towards a and Reference Data, Interactive Data
and Amagerbanken (Denmark) to offer client. Real-Time Services, Interactive Data
T: Europe: (34) 91 2893932 / 28
regional custody product. Fixed Income Analytics, and eSignal,
T: USA: (1212) 350 39 02
Institutional Assets under Custody: USD Avox the Company has approximately 2,300
W: santanderglobal.com
70 billion Redwither Tower employees in offices located throughout
E: globalsecurities@
Redwither Business Park North America, Europe, Asia and
gruposantander.com
T: +46 8 5859 1800 Wrexham, LL13 9XT Australia.
F: +46 8 7237 147 United Kingdom
C: Neal Meacham, Head of Custody www.interactivedata.com
E: [email protected] T: +44 (1978) 661 813 T: 020 7825 7800
A: S tockholm SE 1 05 3 4 Sw eden F: +44 (1978) 661 668 F: 020 7608 3514
W: www.avox.infow Brendan Beith
European Sales Director
[email protected]
Fitzroy House
13-17 Epworth Street
London EC2A 4DL UK
Standard Chartered leading the way in
Asia, Africa and the Middle East. Unicredit Markets & Investment Banking
(MIB) serves as UniCredit Group’s global
Standard Chartered has a history of over product and competence center for global Telekurs Financial specialises in
150 years in banking and is in many of financial markets and investment banking the procurement, processing and
the world’s fastest-growing markets services, including Custody throughout distribution of international financial SmartCo is a leading provider of data
with an extensive global network of over Central and Eastern Europe, including information. Financial market management solutions for the financial
1,200 branches (including subsidiaries, Austria. specialists at Telekurs Financial gather industry.
associates and joint ventures) in over 50 information from all the world’s major SmartCo’s software, Smart Financial Data
countries in the Asia Pacific Region, South Brand diversitiy under which the group trading venues – directly and in real Hub, covers all the data area, including
Asia, the Middle East, Africa, the United operates (Bank Austria Creditanstalt, time. The Telekurs Financial database financial instruments, market data,
Kingdom and the Americas. HVB, Bank BPH, Bank Pekao, Zagrebacka with its structured, coded securities third parties, funds, transactions, and
Banka and International Moscow Bank), management data is unique in terms provides full connectivity, a powerful
As one of Asia’s leading custodians, has its roots in local market presence and of its depth of information and data and user friendly front-end, traceability,
Standard Chartered has an impressive knowledge, contributing into a single coverage. With offices in 22 countries, quality control, data enrichment and
track record across the 16 Asian markets unified product across the region. In Telekurs Financial combines the customisable workflow.
in which it provides securities services. 2006 the group was recognised by no advantages of global presence and local Our solutions are based on SmartPlanet,
It serves global, regional and local less than 3 independent surveys as being know-how. an innovative technology focused on
custodians and broker-dealers, as well the best region custodian. The group’s data management, and able to meet
as local and regional fund managers. The ability to deliver service excellence Telekurs (UK) Ltd evolving business requirements.
Bank plays a key role in promoting the across 13 markets is the cornerstone of 15 Appold Street SmartCo offers to its customers the
development of these markets and keeping our success. From participation in local London ability to respond in the fastest way to
the international investor community market associations to our inter group EC2A 2NE regulatory and business changes.
informed of industry developments across training sessions, to a client consultative For further information: www.smartco.fr
the region. approach, the group continues to work T: +44 (0) 20 7550 5000 or [email protected]
towards making a single impression - F: +44 (0) 20 7550 5001
C: Neil Daswani, excellence. E: [email protected] SmartCo
Global Head, Securities Services W: www.telekurs.co.uk 37 rue de Liège
T: +65 6517 0022 T: +43 50505-58510 75008 Paris
E: F: +43 50505-58579 France
Neil.Daswani@sg. C: Andreas Petzl , Head of Sales T: + 33 1 58 22 29 60
standardchartered.com and Relationship Management E: [email protected]
W: www.standardchartered.com E: [email protected] W: www.smartco.fr
W: www.hvb-custody.com/
50

Fund Administration
CACEIS is an Investor Services company Folio Administrators Limited, part of the Established in 2002, IMFC Fund As one of the world’s leading third-party fund
with six offices across Europe. Owned Folio Group of Companies supplying fund Services B.V. is a boutique hedge fund administrators, PFPC has over 30 years of
in equal parts by Crédit Agricole and administration, company management, administrator and a trustee with its experience delivering personalised solutions to the
Natixis, CACEIS provides Custody, director services and insurance offices in Amsterdam and Sydney. IMFC global marketplace. PFPC services an international
Fund Administration and Corporate management, is the leading fund offers third parties administration and client base from the United States, Luxembourg,
Trust services to demanding Corporate administration company in the British related services to all type of onshore Ireland and Poland, and from a presence in the
and Institutional clients. We have Virgin Islands. and offshore funds combining high Cayman Islands and London.
considerable expertise in Cross-Border We specialize in servicing the needs of quality, independency, technology,
Fund Distribution Support as well as start-up to medium sized hedge funds, timely calculation with flexibility, A: PNC Financial Services Group, USX Tower,
Alternative Investment and Private Equity covering all aspects of fund formation, experience, custom-made solutions and 600 Grant Street, Mailstop P6-PUSX-36-1,
servicing. structuring and on-going operations. competitive rates. Our services include: Pittsburgh, PA 15219
Our staff have the language skills and We work closely with an extensive number fund set-up and corporate services,
industry knowledge to develop business of banks, brokers, custodians, auditors NAV calculation and other accounting C: [email protected]
relationships into strong partnerships and services, R&T agent and other investors C: [email protected]
and lawyers
our powerful IT systems are constantly to ensure that our clients receive and compliance services.
updated to ensure high levels of process the best independent advice
automation. and structures. For more information visit our website:
CACEIS is responsible for over EUR1.75 www.imfcfundservices.com
trillion held under custody, and over Daniel Cann, Director
EUR850 billion under administration. [email protected] www.imfcfundservices.com
t +31.20.644.4558
International: Olivier Storme William Harris, Director f +31.20.644.2735
T: +352 4767 2847 [email protected] Mrs. Consuelo Nardon
E: [email protected] e: [email protected]
Folio Administrators Limited Rivierstaete Building, Amsteldijk 166,
France: Patrick Lemuet Folio House, Road Town 1079 LH Amsterdam, Netherlands
T: +33 (0)1 57 78 03 34 British Virgin Islands
E: [email protected] www.folioadmin.com
W: www.caceis.com T: 284 494 7065
F: 284 494 8356
Société Générale Securities Services offers Fund Services is a dedicated fund

institutional investors, asset administrator providing customized and
managers and financial intermediaries a Drawing upon an extensive track record
flexible services for traditional and alternative
comprehensive range of financial securities of proficiency, dependability and
investments.
services: Clearing, Liquidity Management, responsiveness, Swiss Financial Services
Our comprehensive range of services for
Custody and Trustee, Fund Administration, acts as administrator as well as registrar
investment funds includes fund set-up,
Asset Servicing, Fund Distribution Services and transfer agent of funds investing in
registration and support around the world,
and Issuer Services. SGSS currently ranks 3rd a broad range of financial instruments.
fund accounting, NAV calculation, risk control
European custodian and 7th worldwide These include futures, foreign exchange,
and reporting. We have practical experience
custodian (Source: Globalcustody.net) with equities, options, bonds and other funds.
with registering funds in 28 jurisdictions.
EUR 2,731* billion in assets held and valuates We provide a flexible offering from the full
5,158* funds representing assets of EUR 499* We perform accounting and
range of services, including Private Labelling,
billion (at end March 2008). administration services for diverse fund
to selected functions. Through our leading
types domiciled in, but not limited to, the
fund administration architecture, multi-
United States, Bahamas, Cayman Islands,
source pricing and powerful compliance tools,
Sébastien Danloy B.V.I. and Ireland.
we offer a tailored, cost effective service.
Global Head of Sales
Swiss Financial Services www.ubs.com/fundservices
Société Générale Securities Services
T: +33 (0)1 41 42 98 65 (Ireland) Ltd.
E: [email protected] Block 4B,Cleaboy Business Park, Luxembourg: Jean-Paul Gennari, tel. +352-44-
Old Kilmeaden Road, 1010 1
W: www.sg-securities-services.com
Waterford, Ireland Switzerland: Markus Steiner, tel. +41-61-288
T: +353 51 351180 4910
F: +353 51 871595
W: www.ubs.com/fundservices
Adrian Maher C: Andre Valente
E: [email protected] T: + 41 61 288 6269
A:UBS Global Asset Management -
Fund Services, Brunngässlein 12,
PO Box CH-4002 Basel, Switzerland
51

International Finance
Hedge Fund Administration
Centres
The British Virgin Islands has created a

progressive and transparent environment
for the establishment and regulation
of mutual/hedge funds and their
Apex Fund Services Ltd is a global hedge Custom House, which is one of the world’s Fund Services holds a leading position functionaries. By the end of Q3 2006 the
fund administration solution for hedge largest independent alternative investment in the area of hedge fund administration BVI had recognised or registered more
funds and private equity clients located and hedge fund administrators, was with specialized teams around the world. than 4,000 funds, and licensed some 700
in 12 separate jurisdictions across the awarded a SAS 70 Type I in May 2007 and a We offer a complete range of services managers and administrators, making
globe. The company uses the software SAS 70 Type II in December 2007. including accounting, NAV calculation, the BVI a leading domicile of choice for
solution, PFS PAXUS, which is a fully Custom House offers a round-the-world, shareholder services, banking and credit investment business.
integrated hedge fund accounting round-the-clock service from its office facilities. Benefits of conducting investment business
system combined with web-based in Dublin and representative offices With specialist expertise in both single in the BVI include:
reporting to allow clients and investors in Chicago and Singapore, enabling it manager and fund of hedge fund -Fast-track registration and licensing
to access their information 24/7 securely to provide, not only complete global administration, services can be provided system - funds can be registered in a few
online. We will tailor all solutions to administration services, but also the ability for both onshore and offshore funds. days.
meet your needs and our continuing to produce daily dealing NAVs. Through our comprehensive range of -Presence of qualified, experienced legal,
Custom House is authorised by the Irish accounting & administration practitioners.
focus on the quality of service and the services and products, leading edge
Financial Regulator under Section 10 of -A well-developed corporate professional
relationship with each and individual technology platforms and superior client
the Investment Intermediaries Act, 1995, infrastructure.
client ensures that we retain our ethos of service, we work in partnership to offer
which authorisation does not extend to -Modern, robust and cost-effective
providing a personalized service rather the solutions you need.
the Chicago and Singapore representative regulatory and corporate regimes.
than a generic solution.
offices. -BVI private and professional funds fall
Highly qualified and experienced staff, Cayman Islands: Darren Stainrod,
tel. +1-345-914 1076 outside the scope of the EU Savings
mirrored with top tier technology and
Custom House Administration & Ireland: Don McClean, taxation Directive.
competitive fee structures make Apex
Corporate Services Limited tel. +353-1-436 3636 - Segregated Portfolio Companies - also
Fund Services Ltd the clear choice for
A: 25 Eden Quay, Dublin 1, Ireland US: Concetta Mastrangelo, known as Protected Cell Companies - can
your fund administration needs.
T: +(353) 1 878 0807 tel. +1-212-882 5523 now be formed as mutual funds under the
F: +(353) 1 878 0827 Hong Kong: Michelle Chua, BVI Business Companies Act 2004.
C: Peter Hughes
C: dermot.butler@ tel. +852-3712 2387
Group Managing Director customhousegroup.com British Virgin Islands
T: +1 441-292-2739 C: david.blair@ International Finance Centre
W: www.ubs.com/fundservices
F:+1 441-292-1884 customhousegroup.com C: Darren Stainrod Haycraft Building
E: [email protected] ww.customhousegroup.com T: +1-345-914 1076 1 Pasea Estate
John Bohan E: [email protected] Road Town
Group Manager of Operations A: UBS Fund Services (Cayman) Ltd, Tortola
T: +353 21 4633366 PO Box 852 GT, Grand Cayman, Cayman British Virgin Islands
F: +353 21 4633377 Islands T: +1 284 494 1509
E: [email protected] F: +1 284 494 1260
W: www.bviifc.gov.vg
Payments & Settlements Prime Brokerage
innovative portfolio-based cross-margining

solution, a dedicated account management
VocaLink
desk, hedge fund start up services,
Drake House
quantitative information on the hedge fund
Homestead Road
industry, capital introductions services, and
Rickmansworth
Hertfordshire recently prime brokerage services to Sharia
VocaLink is the payment transaction compliant hedge funds.
WD3 1FX
specialist. Trusted by the world’s top Newedge is a major new force in finance,
banks our automated payment system T: +44(0)870 1650019 resulting from the merger of the two
processes over 90 million transactions F: [email protected] brokerage firms - Calyon Financial and Fimat
per day. The VocaLink switching platform W: www.vocalink.com - on January 2nd, 2008. Newedge is wholly
powers the world’s busiest ATM network owned by Calyon and Société Générale, with
Newedge Global Prime Brokerage Group
and provides end-to-end management both companies having
is a global, multi-disciplinary, solution-
of Europe’s largest ATM estate, while the 50% ownership.
providing team dedicated to delivering
Real-Time Payments platform provides
superior services to alternative investment
the central infrastructure for the UK industry participants including hedge Philippe Teilhard de Chardin,
Faster Payments service. The VocaLink Global Head of Prime Brokerage
funds, commodity trading advisors (CTAs),
EuroCSM delivers reach for our clients T +44 20 7676 8536
fund of hedge funds, family offices,
throughout the SEPA and beyond with Vincent Tournant,
and institutional investors (insurance
a range of value-added services that Head of Business Development
companies, banks and pension funds). T +44 20 7676 8171
leverage our know-how and technical The Newedge prime brokerage team
capabilities. VocaLink is the partner of Duncan Crawford,
offers a global range of brokerage services Head of Capital Introductions
choice internationally, working with BGC covering a wide range of asset classes T +44 20 7676 8504
to process Sweden’s automated payments. including equities, bonds, currencies, E: [email protected]
Find out how we can help your business at commodities, and their related listed and www.newedgegroup.com/
www.vocalink.com OTC derivative products. We also offer an primebrokerage
52

Securities Lending
Data Explorers Limited, a specialist and EquiLend is a leading provider of trading eSecLending is a leading global provider JPMorgan’s Securities Lending program
independent company, offers impartial services for the securities finance industry. and administrator of customized securities is unparalleled due in no small part to
quantitative measurement of securities With its robust suite of automated trading lending programs and they have grown the Firm’s breadth of capability, financial
lending performance services to the tools, EquiLend enables its clients to scale their to become one of the largest lending strength, professional expertise and
global securities financing industry. We businesses with great efficiency on a global agents in the marketplace. Their program seamless operations.
help our clients monitor and understand basis in all securities finance markets. Used by has been adopted by some of the world’s
the relative performance of their lending borrowers and lenders throughout the world, largest and most sophisticated asset Our program enables investors to access
activity and risk, and turn raw lending, the EquiLend platform automates formerly gatherers including pension funds, mutual a broad spectrum of lending markets,
borrowing and collateral data into useful, manual trading and post-trade processes. funds, investment mangers and insurance with a diverse borrower base, offering
actionable information. We also provide Using EquiLend’s complete end-to-end companies. eSecLending’s approach has a broad indemnification against
proxies for short selling information. services reduces the risk of potential errors and introduced investment management borrower default, while achieving very
Working with the industry we ensure eliminates the need to maintain costly point- practices to the securities lending competitive bids for their securities - all
information flows are appropriate and to-point connections while allowing firms to industry, offering beneficial owners an of this in an environment designed
peer groups relevant. We are not involved drive down unit costs. Firms can then free more alternative to the custodial lending model. not to compromise the activities of
in transactions. resources to expand their business and grow Through eSecLending, beneficial owners their fund managers. As one of the
All of our services: Performance trading volumes without increasing costs. This have achieved optimal returns, greater founding members of EquiLend, a global
Explorer, Transaction Explorer, Risk makes the EquiLend platform a cost-effective transparency and increased control over automated platform for borrowers and
Explorer, Index Explorer and Report choice for all institutions, regardless of their their program as compared to traditional lenders, JPMorgan is at the forefront of
Explorer are web based and available to size. lending models. technology and is ideally placed given
clients over the internet. eSecLending maintains offices in Boston, its integrated lending, custody and
London and Burlington, Vermont. accounting platforms.
United Kingdom (London) A: 54 Lombard Street, London, EC3V 9EX
2 Seething Lane, T: UK- +44 (0)20 7743 9510 T: US- +1 617 204 4500 New York: William Smith
London, EC3N 4AT C: Michelle Lindenberger T: UK- +44 (0)20 7469 6000 T: 212-623-5664
T +44 (0) 20 7264 7600, E: michelle.lindenberger C: Christopher Jaynes E: [email protected]
F +44 (0) 20 7392 4004 @equilend.com E: [email protected]
United States (New York) W: www.eseclending.com London: Michael Fox
75 Rockefeller A: 17 State Street, 9th Floor A: 175 Federal Street, 11th FL, Boston, MA T: 44 207 742 0256
Plaza, 19th Floor New York, NY, 10004 02110, US E: [email protected]
T: US- +1 212 901 2224
New York C: Michelle Lindenberger A: 1st Floor, 10 King William Street, Sydney: David Brown
10019, USA E: michelle.lindenberger London EC4N 7TW, UK T: (61-2)92504606
T +1 212 710 2210 @equilend.com E: [email protected]
F + 1 212 710 2212 W: www.equilend.com W: www.jpmorgan.com/wss
Julian Pittam
T +44 (0) 207 264 7616
E:julian.pittam@dataexplorers
.com
New York:
Richard Allin Eurex is one of the largest derivatives
T +212 710 2210 (ext 353) exchanges and the leading clearing house Around the world, USD9 trillion
E: richard.allin@data in Europe. Wherever you are located, we in securities financing is managed
explorers.com Santander is the only Spanish financial provide you with access to the benchmark on SunGard’s proven solutions for
www.dataexplorers.com institution with a team exclusively futures and options market for European international and U.S. domestic
dedicated to securities finance & with derivatives. Eurex also offers short term securities lending and repo for over
the purchase of Abbey in 2004 has funding products, such as Eurex Repo. 250 clients. Through our Loanet,
expanded its capacity on a Global basis Eurex Repo is among the forerunners in Global One, Martini and Astec Analytics
with trading teams in London (UK) & providing integrated trading and clearing products and services, we provide
Connecticut (USA). for repo transactions. Eurex’s latest comprehensive business solutions and
Santander’s leading local capabilities innovative marketplace is called Eurex information with worldwide reach for
FINACE® is the only fully integrated in Spain, Portugal, UK, USA & Latin SecLend. equities or fixed income securities
solution today which supports the America, along with its solid balance Eurex SecLend. Europe’s leading financing. These solutions – all in an
future business model within the area sheet & combined with the state-of- investment banks participate as borrowers integrated, exception-based processing
of Securities Finance and Collateral the-art technology, provides its clients in the Eurex SecLend marketplace, architecture – includes order routing,
Management. The architecture of with the broadest range of solutions in acting as principal brokers, dealers and pre-trade analytics, trading, position
FINACE® is based on a stable, leading securities lending & financing, including intermediaries. They all benefit from management, operations, accounting,
edge technology platform, which availability across all assets classes, as Eurex’s leading state-of-the-art trading settlement and reconciliation.
was developed with performance and well as access to uncommon emerging and processing services. For Eurex,
robustness as the focus of design. With markets. service and technology innovation is not Email:
flexibility at its core, customer-driven just a buzzword. New trends are being [email protected]
extensions and modifications can be W: www.gruposantander.com transformed into inventions through the
quickly and easily applied to the standard T: (3491) 289 39 42/54 adoption of advanced trading practices. Contact: Switch board: +44 (0) 208 081
component set. E: securitieslending@ Find out more on www.eurexseclend.com. 2000 Marketing: +44 (0)208 081 2853
gruposantander.com
T: +41 (0)44 218 14 14 W: www.eurexseclend.com Visit: www.sungard.com/loanet www.
F: +41 (0)44 218 14 18 T: +41 58 854 2066 sungard.com/globalone www.sungard.
E: [email protected] F: +41 58 854 2455 com/martini www.astecgroup.com
A: COMIT AG, Buckhauserstrasse 11, E: [email protected]
CH-8048 Zurich, Switzerland Eurex Zurich Ltd., Selnaustrasse
W: www.finacesolution.com 30, 8021 Zurich, Switzerland
53

Technology
Advent Software EMEA, established in BI-SAM is a leading provider of analytics Broadridge Financial Solutions, Inc., with
1998, provides trusted solutions for the software, client reporting and data over $2.0 billion in revenues and more
front through to back office operations, management solutions to the investment than 40 years of experience, is a leading
Accuity is the leading provider of data, based on a true real-time fund/portfolio management community. global provider of technology-based
software and services that enables banks accounting platform, to the investment Our integrated and innovative solutions outsourcing solutions to the financial
and corporations to maximise payment management community throughout have already been adopted by many services industry.
efficiency and AML compliance for Europe, Middle East and Africa. Advent renowned asset managers in France, Our systems and services include
financial transactions. has an established network of offices Belgium, Luxembourg, UK, Hong Kong investor communication, securities
Our Payment Solutions are designed to across the region serving a growing and Singapore who have assets under processing, and clearing and outsourcing
deliver the critical payment information client base of asset managers, hedge management ranging from 10 to 450 solutions. We offer advanced, integrated
necessary to improve payment straight fund managers, prime brokers, fund billion Euros. systems and services that are dependable,
through processing rates. Our Compliance administrators, wealth managers, The B-One suite of products covers: scalable and cost-efficient. Our systems
Suite offers a complete range of private banks and family offices who performance measurement, performance help reduce the need for clients to
caution lists and screening tools that continue to improve their businesses attribution (equities, balanced and make significant capital investments
defend against participation in illicit using Advent’s suite of integrated fixed income), risk attribution (ex-post in operations infrastructure, thereby
financial activities. Accuity’s Strategic investment management solutions. and ex-ante), as well as multi-lingual allowing them to increase their focus
Services Group provides businesses with Advent Software EMEA is part of Advent client reporting and factsheets. This on core business activities.The product
consulting, training and services. Software Inc. (Nasdaq: ADVS), a global suite of products can be used either as listings will still stay the same apart from
Since 1836 we have helped businesses organisation that has been providing stand-alone applications or ASP hosted Securities Data Management needs to be
around the world and our role as the solutions to the world’s leading financial solutions. replaced by the following:
Official Registrar of the American Bankers professionals since 1983. Firms in The Company has approximately SWIFT Service Bureau - provides fast-
Association (ABA) Routing Numbers more than 50 countries using Advent 45 employees in offices located in track access to the SWIFT network for
since 1911 has enabled us to compile and technology manage investments totaling Europe (Paris, London, Luxembourg). full range of SWIFT messages including
maintain the most authoritative and more than US $8 trillion. Offices in Asia and North America are securities, treasury, derivatives, payments
comprehensive database of global bank under consideration. The Company is and corporate actions, all in a complete
information available. T: +44 (0)20 7631 9240 headquartered in Paris. service environment.
F: +44 (0)20 7631 9256
Luis F. Rolim E: [email protected] A: BI-SAM Ltd Broadridge Financial Solutions
Marketing Manager - EMEA and Asia A: One Bedford Avenue, 1 Cornhill The ISIS Building
Pacific Accuity London WC1B 3AU, UK London EC3V 3ND 193 Marsh Wall
1 Quality Court W: www.advent.com T: +44 (0)20 3008 5834 London E14 9SG UK
Chancery Lane F: + 44 (0)20 3008 5831 T: +44 (0) 20 7551 3000
London WC2A 1HR E: [email protected] E: [email protected]
United Kingdom W: www.bi-sam.com W: www.broadridge.com
t: +44 20 7014 3454
f: +44 20 7061 6478
e: [email protected]
www.AccuitySolutions.com
Aquin are the market leader in investment Financial Tradeware provides integrated
compliance software with MIG21® powered solutions for medium to small sized Eagle Investment Systems LLC is a global
by Aquin LawCards® for global compliance Investment Management firms, Fund provider of financial services technology,
including UCITS III and SEC 1940. Managers and Hedge Funds, covering the serving the world’s leading financial
The company has built its reputation on full trade life cycle. It is part of the Dharma institutions. Eagle’s Web-based systems
DST International is the world’s premier Group of companies and benefits from the support the complex requirements of
solid compliance and IT experience in long
vendor of technology solutions to the global joint contributions and experiences within firms of any size including institutional
term relationships with its clients.
investment management community with the group of market traders, business investment managers, mutual funds,
Aquin services a blue-chip client base of
over 700 clients in 55 countries, and 1500 analysts, financial services professionals hedge funds, brokers, public funds, plan
the world’s leading investment
employees in 19 of the world’s leading and skilled Microsoft Certified sponsors, and insurance companies. Eagle
management companies, hedge funds,
financial centres. Our wide range of asset programmers. The company has developed is committed to providing enterprise-
fund administrators and custodians.
management solutions meet the needs of a suite of applications that integrate and wide, leading-edge technology and
These include Citi, State Street, BNP
fund managers, dealers, settlement staff, Straight Through Process (STP) real-time professional services for investment
Paribas, Credit Suisse, CACEIS Investor
custodians and record keepers operating trading, back office administration, accounting, data management, and
Services, Allianz Global Investors, Pioneer
as international asset managers; from front accounting and compliance. Ultra.net®, performance measurement. Eagle’s
Investments and Commerzbank. The
office simulation, opinion management S-Messenger® and H-Fund® arwe the product suite is offered as an installed
company has its headquarters in Frankfurt,
and modelling functions, through data company’s flagship products all based on application or can be hosted via Eagle
Germany with subsidiaries in Boston,
management, dealing and settlement to Microsoft.NET infrastructure. The company ACCESS, Eagle’s application service
London, Paris, Dublin, Luxembourg and
custody and corporate actions. The suite of also offers a Member Concentrator for provider. Eagle Investment Systems LLC is
Zurich.
products can be used either as stand-alone hosted SWIFT connectivity and Member a division of The Bank of New York Mellon
applications or brought together in flexible Administered Closed User Group (MA-CUG) Corporation. To learn more about Eagle’s
Annette Lindinger
combinations according to specific needs. services for Corporates and Hedge funds. solutions, contact [email protected]
[email protected]
T: +49 69 21 93 66 600 or visit www.eagleinvsys.com.
T: UK +44 (0)20 8390 5000 F: +49 69 21 93 66 650 W: www.f-tradeware.com
Boston +1 617 482 8800 Mainzer Landstr. 199 T: +44 (0)20 7493 2773 W: www.eagleinvsys.com
Hong Kong +85 225 812 880 60326 F: +44 (0)20 7495 4858 T: +44 (0) 20 7163 5700
F: +44 (0)20 8390 7000 Frankfurt am Main C: GrahamBright F: +44 (0) 20 7163 5701
E: [email protected] Germany E: [email protected] A: Mellon Financial Centre 160 Queen
A: DST House, St Mark’s Hill, Surbiton, W: www.aquin.com A: 31 Dover Street Victoria Street London, EC4V 4LA
Surrey, KT6 4QD London W1S 4ND UK
W: www.dstinternational.com
54

Odyssey Financial Technologies is an

industry leader in the global provision of
wealth and asset management solutions
and services to the Private Banking,
Elemes NM is your partner in global GL TRADE is your global financial Information Mosaic is a global provider of Mass Affluent and Retail Banks as well as
agent bank custodian network software solutions company, operating advanced custody, corporate actions and Institutional and Fund Managers. Over
management providing a global view in over 50 countries and serving 1,600 wealth management solutions to the global 200 financial institutions in more than 30
of your relationship network in a clients. We are the leading provider securities industry. Information Mosaic’s countries have chosen Odyssey solutions.
powerful and easy to use package. It of multi asset front to back solutions, business professionals leverage decades of Odyssey focuses on providing a
includes diary, invoice verification, connectivity and information services. financial industry expertise and technical comprehensive range of components
document management, multi-entity We deliver trading solutions that ensure knowledge to deliver complex projects on for portfolio management (PMS),
views, reporting, account information our clients success on securities, listed time and within budget. Since inception, advisory process, customer relationship
incorporating fee and rate structures, derivatives, commodities, fixed income the company has utilized the most modern (CRM), compliance, risk, analytics and
contacts, notes and supports eFee – and foreign exchange. technology to develop solutions to run on a Enterprise Data Management (EDM). The
electronic fee invoicing technology. Dedicated to post trade securities scalable, single platform. Today, Information components are deployed on a single
Unrivalled extensibility allows you to operations, GL RIMS is your Mosaic’s supports clients from offices in scalable wealth and asset management
develop your own functionality with your comprehensive real time securities post Boston, Dublin, London, Luxembourg, New platform, facilitating the enterprise-wide
in-house development team. execution processing solution, covering York and Singapore. Currently, six of the top 10 implementation of solutions and data
middle office, settlement and accounting global custodians deploy Information Mosaic management. Founded in Luxembourg
Flexibility does not stop with the requirements. Its wide use of automation solutions worldwide. in 1995, Odyssey today has offices in the
software, our commercial terms offer enables global capital markets key financial centers, including London,
adaptable pricing to suit present and organisation to achieve maximum STP. New York, Singapore, Zurich, Frankfurt,
For more information on Information
future requirements for all sizes of It is a flexible, highly scalable and easy Brussels, Geneva, Madrid, Toronto and
Mosaic, please visit our website at
organisation. to install platform with a new Service www.informationmosaic.com Tokyo. Odyssey’s operational head office
Oriented Architecture feature that allows Global: and main development centre is located in
Fingertip Developments Ltd smooth and efficient connections with [email protected], Lausanne, Switzerland. Throughout this
Curtain Court other third parties within a company. US: knowledgeable network Odyssey employs
7 Curtain Road emullaninformationmosaic.com over 600 professionals.
London EC2A 3LT www.gltrade.com Europe:
UK [email protected] London Office:
GL TRADE Asia: Martin House
T: +44 (0)20 7100 9280 Cheapside House [email protected] 5 Martin Lane
enquiries@fingertip- 134-147 Cheapside General Enquires London EC4R 0DP U.K.
developments.com EC2V 6BJ London UK [email protected]
Tel: +44 207 665 6200 T: +44 (0)20 7621 5800
Email: [email protected] F: +44 (0)20 7621 5899
W: www.odyssey-group.com
Pirum provides a full suite of automated

reconciliation and straight through IGEFI is the foremost provider of
processing (STP) services supporting software solutions for international
Operations within the global securities For more than a decade, administrators, fund promoters, third-party service
finance industry. The company’s on- managers, and advisors have relied providers and fund managers. Its
line SBLREX service encompasses daily on KOGER for dependable software tools prestigious client-base is testimony to
our commitment, service and quality Building on over twenty years of experience
contract backed by extensive industry in capital markets and cross-asset software
compare, monthly billing comparison, experience and expertise. Now, for those who with more than 200 expert staff
supporting clients from seven offices solutions, Murex introduces Mx Asset Manager
mark-to-market & exposure processing, want to reduce costs and streamline business - a unique cross currency, cross asset fund
pending trade comparison, income claims processes, Koger offers Fully Integrated Fund worldwide including Bangalore, Boston,
Frankfurt, Geneva, London, Luxembourg management solution capable of handling the
processing and Administrator, a vertically integrated suite full range of products, from plain vanilla to the
custody reconciliation. serving the back-office software needs of the and Paris. MultiFonds is operational
in more than 20 countries worldwide most complex derivative products.
Subscribers to Pirum’s services fund industry. Coupled with a high degree of flexibility and
significantly increase their operational Fully Integrated Fund Administrator consists and support investment funds assets
in excess of US$ 2 trillion. MultiFonds customization, Mx Asset Manager
efficiency and reduce their risk by using of three core programs: features a multifaceted design catering to the
Pirum’s solutions, as staff are able to ~ NTAS, the New Transfer-agency System Fund Accounting and MultiFonds
Transfer Agency are developed on a “one needs of both service providers
focus on fixing the exceptions instead ~ E*TAS, Electronic Transfer Agency System (prime brokers, administrators, asset servicing
of using their time to check and process ~ GRID, Global Reach Interface Daemon system-one database” philosophy and
provide significant advantages including providers) and direct clients (portfolio managers
routine business. These automated Other programs, such as PTAS, KIT, and for mutual, pension or hedge funds, insurance
processes are more scalable and risk KORS available separately, complement the reduced overhead and IT support costs
and single look and feel reporting for companies).
controlled too, allowing core competency of Fully Integrated Fund With so many new challenges presented
significantly higher volumes to be Administrator. global clients.
to buy-side managers when integrating
managed without corresponding increases increasingly-complex derivatives into their
T: 001-201-291-7747 A:IGEFI Group Sàrl - 7, Rue des
in operations headcount. portfolios and funds, Mx Asset Manager
F: 001-201-291-7808 Primeurs,
L-2361 Strassen represents a strong and reliable ally for dynamic
T: +44 20 7220 0961 C: Mr Ras Sipko
T: +352 26 44 211 position keeping and multi-dimensional risk
F: +44 20 7220 0977 E: [email protected]
KOGER USA F: +352 26 44 21 44 management in a thriving market.
C: Rupert Perry E: [email protected]
E: [email protected] 12 Route 17 North
Suite 111 W: www.igefi.com C: Hélène Desbiez
A: Pirum Systems Limited C: Mr. Jesper Steiness - Head of Business Development Manager
37-39 Lime Street Paramus
New Jersey, NJ 07652, USA Business Development T: +33 1 44 05 32 00
London, EC3M 7AY Europe & Asia E: [email protected]
W: www.pirum.com W: www.kogerusa.com
E: [email protected] W: www.murex.com
55

Princeton Financial Systems, a wholly owned

subsidiary of State Street Corporation, is a SimCorp Dimension is a powerful,
Orc Software is the leading global provider comprehensive and truly seamless Over 100 Capital Markets firms worldwide
of powerful solutions for the worldwide leading provider of investment management rely on Singularity to achieve step-change
investment management system. It can
financial industry in the critical areas of and accounting systems and ASP services for improvements in efficiency and cost-
handle NAV and other calculations, with
advanced derivatives trading and low-latency global institutional investors. effectiveness. Across front, middle and
complete related accounting, for a huge
connectivity. Orc’s competitive edge lies in Its flagship PAM® investment management variety of fund structures and product back office operations, Singularity’s clients
its depth of knowledge gained by deploying systems provide comprehensive STP-ready types, including regional specialities. are improving performance by automating
advanced solutions for professional traders functionality that can be licensed for SimCorp Dimension has been designed process and leveraging their human capital
for over 20 years. Orc Trading and Orc Connect in-house use or accessed via the Internet. from scratch as an enterprise-wide most effectively. Our process automation
provide the tools for making the best trading PAM® systems are currently used worldwide system, handling all aspects of the solutions combine deep knowledge and
and connectivity decisions, strong analytics, by over 275 leading investment managers, investment management process and long-standing capital markets experience
unmatched market access, powerful automated insurance companies, mutual funds and related administration functions, with award-winning technology. Clients
trading functionality, high performance unit trusts, pension funds, hedge funds, consistently. Data is recorded once into include JPMorgan, Bank of Tokyo Mitsubishi
futures and options trading capabilities a core database so that reporting is made UFJ, Raymond James, Prudential, Invesco,
endowments, banks and corporation, which
and risk management. Sophisticated and easy, there is no reconciliation of data and BNPParibas, Morgan Stanley, American
manage combined total assets over US$3
high-frequency traders use Orc’s solutions to no duplication of procedures. Express and M&G.
make markets or undertake complex trading trillion. Princeton Financial has offices -By cutting latency in securities processing,
-By cutting latency in securities
strategies like volatility trading, futures located throughout the United States, our clients are recognising new efficiencies,
processing, our clients are recognising
spreading and index arbitrage. United Kingdom, Belgium, Australia, reducing costs and increasing throughput
new efficiencies, reducing costs and
Singapore, Amsterdam and Canada. -By streamlining their customer on-boarding
increasing throughput
New York: -By streamlining their customer on- processes, our clients are gaining faster access
Michael Noto For more information, visit Princeton boarding processes, our clients are to fees, increasing customer satisfaction,
T: 1.212.507.0000 Financial’s website. gaining faster access to fees, increasing gaining greater cross-sell opportunities.
E: [email protected] customer satisfaction, gaining greater -By automating their KYC & other compliance
London: T: +1 609-987-2400 cross-sell opportunities processes, our clients & reducing risk.
Lee Griggs F: +1 609-514-4794 -By improving collaboration in their client
T: 44.20.7942.0950 C: Lorne Whitmore, Vice President, T: +44 (0)20 7260 1900 reporting cycle, our clients are providing more
E: [email protected] Global Sales & Product Management F: +44 (0)20 7260 1911 timely and insightful investment performance
Hong Kong: E: [email protected] C: Elizabeth Gee, sales director information.
Dennis Chen A: 600 College Road East, of SimCorp Dimension
T: 852.2167.1950 Princeton, NJ 08540, USA E: [email protected] T: +44 (0)20 7826 4470
E: [email protected] W: www.pfs.com W: www.simcorpdimension.com F: +44 (0)20 7826 4480
www.orcsoftware.com A: SimCorp, 100 Wood Street, C: Nick Stevens
London EC2V 7AN E: [email protected]
A: Singularity
4th Floor, 101 Moorgate
London EC2M 6SL UK
Further Contacts:
Misys provides integrated, comprehensive US T: +1 212 946 2685
With annual revenue of USD5 billion,
solutions that deliver significant results to Singapore T: +65 9616 7732
peterevans is a leading provider of front SunGard is a global leader in software
over 1,200 financial institutions globally.
to back office solutions for the financial and processing solutions for financial
Our buyside solutions help asset servicers,
services sector. With 23 years experience services, higher education and the public
asset managers and hedge funds handle
peterevans takes a sophisticated and sector. SunGard also helps information-
the latest complex products, streamline
dynamic approach to assist customers dependent enterprises of all types to
processes, reduce costs and improve
ensure the continuity of their business.
in reducing costs and witnessing an STP. Misys Summit is our award winning,
SunGard serves more than 25,000 Founded in 2002, Redi2 Technologies is
increase in margins by seamlessly replacing multi-asset class solution that boasts 18
customers in more than 50 countries, a leading provider of fee billing solutions
costly and restricting legacy platforms. years OTC derivatives market expertise.
including the world’s 50 largest financial to the global financial services industry.
peterevans works in a collaborative manner With extensive OTC buyside coverage and
services companies.
and sees clients as partners to help meet the market leading structured products Redi2 offers flexible, feature-rich
all the demands in today’s marketplace. module, solutions that help firms streamline
Visit SunGard at
Misys Summit delivers the solution you operations, improve cash flow, reduce
The xanite product suite offers a highly www.sungard.com
need for handling the end to end process costs, enhance client service and meet
configurable, flexible and fully integrated,
for OTC. We also provide a customisable compliance obligations.
browser based, comprehensive front
ASP service for fast implementation and Redi2’s flagship fee billing and revenue
to back solution that complies with lower costs.
message standardization and settlement management solution Redi2 Revenue
harmonization. Deployed as a single Manager helps financial professionals
www.misys.com
application or integrated as components [email protected] more easily manage the fee billing
into your existing platform. Each of the process, including client setup, multi-
xanite modules can be delivered via an Netik’s team have spent the past 25 years currency fee and accrual calculations,
ASP or self-hosted. Covering: wealth perfecting the art of bringing together invoice and advice generation, accrual
management, custody corporate actions market, reference, portfolio accounting, reconciliation, adjustments and reversals.
clearing and settlement private client and performance and risk data from Our open APIs and support for industry-
on-line stock broking. disparate sources into a single version standard relational databases ease
of the truth (SVOTTTM). The result is integration with third-party solutions,
peterevans a highly scalable and sophisticated including accounting, performance
New Broad Street House business data model that has been measurement and CRM systems.
35 New Broad Street designed to process all securities and
London EC2M 1NH offers a complete model for traditional Redi2 Technologies, Inc.
T: +44 (0) 29 20 402200 and alternative markets. 1771 Broadway St.
E: [email protected] Oakland, CA 94612
W: www.peterevans.com For more information please visit: T: +1 (510) 834-7334
www.netik.com E: [email protected]
or email: [email protected] W: www.redi2.com
56

RZ_AZ_MIG21_203x267.mx 13.08.2008 16:25 Uhr Seite 1
C M Y CM MY CY CMY K
Probedruck
Diversity of services means the
world to our clients.
Now we have a name that
reflects this.
PFPC is now PNC Global Investment Servicing.

For over 30 years PFPC has been the we have been building and evolving for more
name asset managers, distributors and financial than three decades. Our new name recognises
advisors have turned to for fund administration our credentials in the investment industry as a
and accounting, shareholder recordkeeping, provider of integrated technology, business
regulatory compliance, custody and wealth intelligence and processing services.
management reporting services. Our record All of our services are bolstered by our
of precision and accountability has enabled position within The PNC Financial Services
our clients to focus on what is most important Group, one of the most financially robust and
to them: managing and growing their own technologically forward banking organisations in
clients’ assets. the world. PNC provides a foundation of strength
Now, in recognition of our continuous and stability that enables us to further broaden
expansion of innovative solutions and product our offerings while at the same time giving our
offerings, we have taken on an identity that clients the reassurance that they are working
more accurately reflects the breadth of our with an industry leader. PNC’s commitment to
capabilities. PNC Global Investment Servicing supporting our plans for continued growth will
signifies a more diversified mix of services that help us to do the same for you.
Ranked No.1 in Europe in hedge fund

administration by Global Custodian.*
pncgis.com
*2008 Global Custodian Hedge Fund Administration Survey. ©2008 The PNC Financial Services Group, Inc. All rights reserved. PFPC PDF 1108-012
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THE GLOBAL SECURITIES SERVICES INDUSTRY MAGAZINE

Fair value? Volume 5 No. 34 - 2008

Front Cover .indd 1 12/11/08 15:50:59

1-18 ISJ34.indd 1 10/11/08 17:30:56

04 Letters to the editor 25 Benelux in flux - profile

21 Asia’s payment Caribbean Fund

To RENEw youR SuBSCRiPTioN

1-18 ISJ34.indd 2 10/11/08 17:32:40 Caceis

A global player in asset servicing...

CACEIS, your comprehensive securities servicing partner.

1-18 ISJ34.indd 3 11/11/08 19:31:04

Planning for the next six

The successful managing down

4 To express your views, write to [email protected] or write a blog at www.ISJ.tv

1-18 ISJ34.indd 4 10/11/08 17:34:50

ISJ_SEB_Eye_Map_203x267.indd 1 07-07-13 07.58.43

News and Mandates ISJ | Investor Services Journal

October BNY Mellon Farglory Life Taiwan Admin/custody n/a

October BNY Mellon Troubled Asset RP Washington Custody USD700 billion

September Citi OCBC Singapore Custody n/a

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1-18 ISJ34.indd 7 11/11/08 18:23:01

An agency reform needed, at any rate

1-18 ISJ34.indd 8 10/11/08 12:28:19

Online dotTV brand extensions of two of our leading

These new interactive video streaming sites will move out of

For more information contact Group Editor Giles Turner

Reporter Ben Roberts can be reached on:

Reporter Catherine Kemp can be reached on:

ISJ.TV Advert.indd 1 13/11/08 16:13:49

a rescue package agreed by the European

bolster the nations finances following

1-18 ISJ34.indd 10 10/11/08 12:28:28

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Clear El-Erian plots

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Head of the explorers

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Ola Laurin Tiina Norberg

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1-18 ISJ34.indd 17 10/11/08 12:29:19

1-18 ISJ34.indd 18 10/11/08 12:29:21

19-29 ISJ34 3.indd 19 10/11/08 12:10:06

19-29 ISJ34 3.indd 20 10/11/08 12:10:11

Asia’s payment dilemma

19-29 ISJ34 3.indd 21 10/11/08 12:10:15

19-29 ISJ34 3.indd 22 10/11/08 12:10:16

When you know

In Northern Ireland the right people are always in

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19-29 ISJ34 3.indd 24 10/11/08 12:10:19

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CH_Advert_266mmx201mm.indd 1 23/09/2008 17:28:40

CH_Advert_266mmx201mm.indd 1 23/09/2008 17:28:40

of the money managed and promoted its Luxembourg-based platform. Along

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Merger profile: Custom made fit

Urge to merge: Equity Trust’s 38-year expansion