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Funds Industry Extends its Support to SWIFT on Key Initiatives

Migration, standardisation and Business Continuity Planning remain high on the industry’s agenda

Published on 30 Nov 2012

The Association of the Luxembourg Fund Industry (ALFI),  a non-profit-making association that is the representative body of the Luxembourg investment fund community, recently held its 13th edition of the Transfer Agent (TA) and Distribution Forum in Luxembourg, during which SWIFT participated to two interactive breakout sessions about Distribution Operations and Infrastructure Developments. The panel was composed of Sue Lee, Head of Global Distribution Support and Transfer Agency Product at HSBC Securities Services, Edouard Bokuetenge, Director Client Operations Global Fund Platform at RBC Investor Services Bank S.A. and Chairman of the Fund Platform Group, and Michèle De Boe, Head - Global Funds Markets at SWIFT, and was moderated by Gary Janaway, Head of Operations Luxembourg Fund Services at Schroder Investment Management.

The panel took a tour of horizon of several challenges that the Fund industry is facing in the Operations world, by providing a respective update of the Findel Group and Fund Platform Group activities, followed by a section focussed on the challenges of UCITS cross border distribution in Asia, and where SWIFT presented the results of the most recent EFAMA-SWIFT standardisation report..

Many items were covered, amongst which a subset is relayed here below.

Migration to ISO 20022

With Standards Release 2015 (November 2015) being the end date of the Funds Migration programme,  35% of the global funds traffic is already fully migrated to ISO 20022, whereas the readiness rate (coupling fully migrated traffic with traffic that could be already migrated today, as counterparties are ready) reaches 68%.

With the start of the restriction mechanism and disincentives programme in January 2013, the opportunity was taken to poll the audience and get a snapshot of their own migration status, that revealed a steady migration towards the 20022:

"These results are another very encouraging sign that migration is high on the Luxemburg fund industry agenda and that 2013 will be the year of a substantial migration implementation by many major institutions. This now needs to be pursued and achieved globally to make the migration a success.” 

Michele De Boe, Head, Global  Funds Markets at SWIFT

 

EFAMA Standardisation report mid-2012 results

With the recent publication of the joint EFAMA-SWIFT standardisation report, outlining the evolution of automation and standardisation rates of fund orders received by transfer agents in the cross-border fund centres of Luxembourg and Ireland in the first half of 2012, this forum was a good opportunity to share the key highlights of this semester:

  • 11.9 million orders have been processed during first half of 2012 (same as H2 2011)
    Amongst which 2.8 million incoming faxes (-7% compared to H2 2011)

  • The total automation rate (ISO and proprietary files) reached 77% in Q2 2012 (+1.4% compared to Q4 2011), and in particular
    - ISO Automation: 42.4% (+4.4% compared to Q4 2011)
    - Proprietary FTP: 34.5% (-3.1% compared to Q4 2011)
    - Manual processing: 23.1% (-1.4% compared to Q4 2011)

With this joint report being published since 2007, and the coinciding automation and standardization levels increase, it has been shown that quantification does help automation to move forward. As such, SWIFT shared the wish to expand the report to transfers and/or reconciliation messages, in order to push the automation in these areas too. The ultimate target being to reach the 90%+ automation levels that are achieved in other securities areas.

"Kill the Fax"

The panel discussed the importance of this programme, facilitated by SWIFT and that aims to target manual distributors in a coordinated way to support the Funds community's efforts towards more automation. This follows EFAMA's recommendations, and has an objective to pursue a focused and coordinated action plan to progress together with tangible results.

The panel as such encouraged Transfer Agents in the room to actively collaborate to this programme.

Alliance Lite2 and Business Continuity Planning

During the forum, Business Continuity Planning and how SWIFT could help tackle this industry wide challenge was raised by the panellists. With its 99.999% network reliability, SWIFT provides peace of mind to its 10,000 customers in 210 countries. For customers needing a reliable BCP solution in case their own SWIFT connectivity fails, SWIFT offers Alliance Lite2, which provides a secure and cost-effective emergency alternative. In addition, unlike faxes, this does not impose to the counterparty unexpected manual processing.

Supporting ISO 20022 take up in APAC

The panel discussion was also the good occasion to reflect on some of the new market initiatives that provide connectivity to SWIFT and as such enable the take up of the ISO 20022 standard in the APAC region.