SWIFT, EFAMA standardisation report shows rise in automated fund orders

Mid-year status update reveals an increase in the automation rate in Asia-Pacific, and a rapid growth in the adoption of ISO automated links for funds distribution

In May 2009, EFAMA published a first report on recent trends in standardisation and automation rates of fund orders received by transfer agents (TAs) in Luxembourg. The report was based on a joint EFAMA-SWIFT survey covering close to 80 percent of total Luxembourg order volumes, and is part of an initiative to inform all institutions involved in fund processing, as well as the European Commission, the European Parliament and other interested stakeholders, about the industry's progress towards greater standardisation and automation.

At that time, EFAMA and SWIFT confirmed their intention to issue
a mid-year status report to inform the industry of how standardisation rates had evolved during the first six months of 2009.

The status report is now available, and it carries a number of interesting and positive findings related to the progress of standardisation and automation in cross-border funds distribution.

These findings include:

• The total automation rate of orders processed by Luxembourg transfer agents during the first half of 2009 was 69%; this represents an increase of 3 percentage points compared to Q4 2008 (where it stood at 66%);
• The automation rate in the Asia-Pacific region (APAC) has progressed at a more rapid pace than previously and is now at 45%. This represents an increase of 9 percentage points compared to Q4 2008 where it stood at 36%;
• Overall, the percentage of automated orders based on the ISO messaging standard remains at 41% in volume terms. The ISO adoption rate in APAC now stands at 10% in volume terms, compared to 8% in Q4 2008;
• ISO adoption among market players however has progressed significantly, in line with EFAMA's recommendations. Indeed, survey contributors have reported 62 new ISO automated links implemented during the first half of 2009. This compares to 17 new proprietary file transfer links put in place during the same period. This trend is expected to lead to an increase in the ISO rate in volumes terms in the second half of the year.
• Order volumes have gradually grown again since January 2009. In total, 5.8 million orders were processed by survey contributors during the first half of 2009. APAC continues its progression in terms of incoming order volumes for Luxembourg TAs: APAC-based order givers now represent 34% of incoming orders, compared to 30% last year.

Jean Sonneville, Head of Funds Solutions at SWIFT, says: "The findings presented in this mid-year status update from SWIFT and EFAMA are very encouraging from the standardiser's perspective, in particular the rise in ISO automated links as opposed to proprietary file transfer links. It is clear that EFAMA's recommendation on the adoption of ISO standards is being taken very seriously by the funds distribution industry."

Alain Raes, Chief Executive EMEA, SWIFT says: "Our joint survey with EFAMA gives the funds community excellent insight into where more can be achieved together in support of developing and improving global operating models. SWIFT remains committed to helping our customers, and the funds industry, achieve more scale and efficiencies through the use of standardisation and automation."

The next joint EFAMA-SWIFT Fund Processing Standardization report is planned for publication in Q1 2010 and will cover 2008-2009 progress in standardisation rates.