VOLUME 3 No. 15 - Pre-Sibos 2006 ISJFORUM.

COM
£ 25 - UK, ROW
$ 43 - Americas
INVESTOR € 35 - Europe, Mid-East, Africa

S ERVICES
JOURNAL

THE
GREAT BEYOND
THE NEW ROAD FOR SINGAPORE CUSTODY

LEADING VENDOR PROFILES - SIBOS '06

PENSION STRUCTURES - AFRICA
SPECIAL REPORT: SOUTH EAST EUROPE
PETEREVANS - TECHNOLOGY
LEGAL EAGLES - CLASS ACTIONS PLUS
PRIME BROKERAGE - PANEL DEBATE
ISJ ESSAY AWARD - WINNER
PENSIONS INTERVIEW - LOTHIAN
RISK REPORT - FOOTBALL FEVER
NORDIC CUSTODY - EXPERTS

THE GLOBAL SECURITIES SERVICES INDUSTRY JOURNAL

 Editorial

INVESTOR GROWTH AND COMPETITION

S ERVICES Welcome to the pre-Sibos edition of the magazine amidst
news of the growth and success of ISJ.
JOURNAL First, in this edition we focus on some of the future areas
of evolution of custody and securities services.
VOL 3 No. 15 - Pre-Sibos 2006 Brian Bollen takes Singapore by the horns and looks at
some of the near and long-term opportunities (in
competition with Hong Kong) amid turbulent times in the
Asian markets.
In Africa following recent legislative changes and
modifications to its pension law, ISJ examines the pension
fund landscape. Also in Italy we look at what the future
holds for custodians and services providers in that country.
South Eastern Europe is also on the menu as we focus
in on Turkey and Greece, looking at the growth of the
markets, the future collaboration of the Turkish and Cypriot
financial systems and regulatory change in the securities
space following the European Union’s spread.
Not able to resist the football fever that has gripped us
over the last few weeks, our resident disaster recovery expert
delves into how our office work/play balance can change
around times of national sporting events…….roll on The
Ashes!
Our panel discussions in this edition look at the latest
developments in the Prime Brokerage sector and also focus
on consolidation in the Nordic region and
a rare moment? why this is seen as future growth area for client servicing.
Here at the magazine this year’s ABC audit has proven
ISJ’s exponential growth with our number of readers reaching 160 per cent of that of
the next largest publication in this sector. So please give yourselves a firm pat on the
2006 PPA MAGAZINE AWARDS back whilst I extend a hearty ‘thank you’ for your continued support for the magazine
PUBLISHER OF THE YEAR over the past year.
HIGHLY COMMENDED June also saw the second ISJ Student Essay Awards that drew some of the best talent
MEMBER - PERIODICAL PUBLISHERS ASSOCIATION and drive from tomorrow’s people in the securities services industry to The Dorchester
on London’s Park Lane. Many
congratulations to our winner, Nathalie Aubry, whose essay ‘The Impact of Regulation
on Securities Services’ can be read on page 60 and many thanks to Citigroup and ABN
AMRO Mellon who kindly sponsored the event.
Finally, we welcome Ben Katzler to ISJ, experienced in the field - and known to many
of you, Ben is an asset for our team.
TOTAL NET CIRCULATION 11,188
Analysis for the Audit Issue Vol 3, No 14 distributed June 2006. Deputy Editor - Alan Duerden
Source: AUDIT BUREAU OF CIRCULATIONS, www.abc.org.uk

Managing Editor: Mark Latham (Mark.Latham@ISJforum.com)

Deputy Editor: Alan Duerden (Alan.Duerden@ISJforum.com)
Contributing Editor: Brian Bollen. Contributors: Christine Senior, Rekha Menon, Keith Ford

Publishing Manager: Nicola Barker-Moseley (Nicola@ISJforum.com)

Account Managers: Kenny Thomas (Kenny.Thomas@ISJforum.com)
Nicholas Parsons (Nick@ISJforum.com),
Ben Katzler (Ben.Katzler@ISJforum.com)
Directory Sales: Monique Theart (Monique.Theart@ISJforum.com)
Operations Manager: Katerina Dimitrova (Katerina@ISJforum.com)

Publisher: Justin Lawson (Justin.Lawson@ISJforum.com) investor

Chairman: Mark Latham (Mark.Latham@ISJforum.com)
intelligence partners
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Contents

INVESTOR
S ERVICES
JOURNAL

INVESTOR
VOLUME 3 No. 15 - Pre-Sibos 2006
£ 25 - UK, ROW
$ 43 - Americas
€ 35 - Europe, Mid-East, Africa
ISJFORUM.COM
1 Editorial Technology
S ERVICES 41 peterevans
JOURNAL
6 News - The Tech Touch
- Roundup of global news
Custody
THE Funds 42 Nordic Custody
GREAT BEYOND
THE NEW ROAD FOR SINGAPORE CUSTODY 12 Domicile Report - Panel Debate
LEADING VENDOR PROFILES - SIBOS '06
PENSION STRUCTURES - AFRICA
SPECIAL REPORT: SOUTH EAST EUROPE
Jersey Ireland Cayman
PETEREVANS - TECHNOLOGY
LEGAL EAGLES - CLASS ACTIONS PLUS
PRIME BROKERAGE - PANEL DEBATE
ISJ ESSAY AWARD - WINNER
Securities Lending
PENSIONS INTERVIEW - LOTHIAN
RISK REPORT - FOOTBALL FEVER
NORDIC CUSTODY - EXPERTS Special Report 52 Analyse This
13 The Neighbours - Expert Impressions
THE GLOBAL SECURITIES SERVICES INDUSTRY JOURNAL
- Turkey & Greece
Legal & Compliance
VOL 3 No. 15 - Pre-Sibos 2006 Pensions 56 Class Actions
15 Italy - In a Class Of Their Own
- The Italian Job
ISJ Essay Award 2006
18 Lothian Pension Focus 60 The Winning Essay
- Strategies, Scottish Style - The Impact of Regulation
on Securities Services
20 Africa
- The Lion Sleeps Tonight Regulars
66 Events
24 Singapore - Cover Story - Where & When To Go
- Switzerland In Asia?
67 Meet The Future
Data Services - Its All In A Days Work
27 Proxy Voting
- X Marks The Spot 68 Mandates
- And Relax......
Infrastructure
30 Prime Brokerage 69 Disaster Recovery
- Panel Discussion - Fever Pitch

34 Bermuda & Cayman 70 People Moves

- Taking a Dip - Moving & Shaking

Download ISJ back issues at 38 SIBOS Preview 72 ISJ Directory

WWW.ISJFORUM.COM - Leading Vendor Profiles - Directory of Securities
Services

2 INVESTOR SERVICES JOURNAL

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Letters to the Editor
MiFID:
THE CHALLENGE TO
SECURITIES PROCESSING
Regulatory initiatives such as MiFID
are attracting a lot of debate. When
the new European regulations come
into effect in November 2007, it will
become much easier for exchanges
and depositories within the Eurozone
to offer trading and settlement servic-
es for all Eurozone securities. In the
spirit of open markets and competi-
tion, this makes sense: let the mar-
kets decide if there is a more effi-
cient or cheaper venue for execution
and settlement.
The principles of competition and
open access that the new regulation
mandates for capital markets trading
and settlement are sound. However,
they also mean that more assets are
likely to be traded and settled in mul-
tiple venues. This seemingly simple
flexibility has created more than a
few operational headaches. With more
settlement locations comes more risk
and the challenge is that there are a
large number of firms that simply do
not have the kind of flexible and
rules-driven transaction management
systems needed to accommodate the
market practices that come with new
sources of liquidity.
“Seemingly simple
flexibility has created
more than a few
operational
headaches.”
Approaches to exception manage-
ment that attempt to fix a problem in
isolation without feeding back into
inventory management and decision
processes risk missing the point alto-
gether. The real purpose of the trans-
action settlement process is to have
accurate, timely information on secu-
rities positions available at all times –
either locally or globally, no matter
how many settlement locations are
involved or how complex regulatory
4 INVESTOR SERVICES JOURNAL
requirements may become. Are asset
managers, custodians and brokers
ready for this challenge just yet?
That debate is still very much open.
Geoff Harries, director of STP product
management at CheckFree Software
AUTOMATION OF CHANGE
As we enter the third quarter of
2006, the dramatic upturn in for-
tunes witnessed by the securities
market during the first half of the
year appears to be gathering consider-
able momentum.
To such an extent that a few bro-
kers of our acquaintance say they are
now doing so well that they feel under
enormous pressure from their clients
to be seen to reinvest substantial
resources into new technology and
improving the services and value that
they offer.
“Is the scene now
set to move into STP
solutions and
automation of
currently manual
processing areas?”
Is the scene now set for financial
institutions to move into STP
(Straight Through Processing) solu-
tions and general automation of cur-
rently manual processing areas? I
believe we could actually be in for a
big change. Until now, it’s been very
much a buyers market, with supply
more than matching demand.
With demand at current levels, STP
software implementations can be
scheduled at a time to suit the pre-
cise needs of an organisation. So now
it’s becoming increasingly important
to make sure you keep ahead of the
crowd, to retain full control of any
planned investments.
Harvey Colborne, Principal Consultant
of Mondas PLC
OWNERSHIP
IMPLICATIONS FOR THE
LONDON STOCK EXCHANGE
The IMA has noted the statement
published on 12 June by Callum
McCarthy, Chairman of the Financial
Services Authority, regarding the regu-
latory implications of a change in
ownership of the London Stock
Exchange. We agree with his analysis
of the issues and would have concerns
if in the longer term the Exchange
were no longer subject to UK regula-
tion as a Recognised Investment
Exchange.
As users of the London Stock
Exchange, our members consider that
the market works well for participants,
that is, issuers, members and end-
investors. The regime is based on
market-developed solutions that have
evolved and generally kept pace with
the sophistication of the market. The
FSA plays no small role in this. By
virtue of its role as Competent
Authority for listing, and more specifi-
cally through its oversight of the sec-
ondary market activities of the
Exchange, there has over time devel-
oped a well-judged regime that offers
appropriate, suitably flexible regula-
tion that takes account of the very dif-
ferent profile and needs of the market
users.
“We would have
concerns if in the
longer term the
Exchange were no
longer subject to UK
regulation.”
Any change in ownership should not
prejudice these strengths and we
would have concerns in particular if
the FSA’s role and influence were
diminished as a result of encroach-
ment by non-domestic regulatory
authorities, the trading arrangements
provided by the Exchange were sub-
ject to non-market-led change that
does not fully take into account the
needs of end-users of the market, or if
any new owner sought to rationalise
its existing business with that of the
Exchange without full consultation
with market participants and the
endorsement of users of the market.
Richard Saunders, Chief Executive,
Investment Management Association
(IMA)
If you are effected by, or have an
opinion on, any aspect of investor
services get it off your chest, write to...
Alan.Duerden@ISJforum.com
News - Europe Middle East Africa
Market Infrastructure
Frankfurt - Deutsche Borse has signed a
‘Memorandum of Understanding’ with the
China Foreign Exchange Trade System &
National Interbank Funding Center
(CFETS) to enhance cooperation concern-
ing financial markets development in
China. Under the MOU, both parties have
agreed for Deutsche Borse to contribute
to the development of sophisticated inter-
bank and foreign exchange markets in
China. “Deutsche Borse Group looks for-
ward to enhanced cooperation with
CFETS,” said Ulrich Becker, Deutsche
Borse Managing Director Corporate
Development, responsible for group activ-
ities in Asia.
London - A survey released by Morgan
McKinley has shown that job vacancies
continue to rise within London’s financial
services industry. New job vacancies with-
in London’s investment banking and
financial services industry continued to
rise in May 2006, up 19.4% compared to
May 2005 and average basic salaries con-
tinued to push above the £50,000 mark
for the third consecutive month.
London - Pension funds that currently
invest in commodities should be aware
that they could lose money by following
the traditional passive futures approach to
investment according to Mercer
Investment Consulting. More institutional
investors, including pension funds, are
now showing interest in this asset class,
6 INVESTOR SERVICES JOURNAL
but due to the current position of the
futures market investor returns will be
lower than the change in commodity
prices. If cash flows into commodity mar-
kets remain high, there is a risk that com-
modities futures will stay in contango.
Frankfurt - Dresdner Bank is to cut 2,480
jobs by 2008, half of which will be from its
back office operations, it has been
announced. The move comes as part of a
market offensive in which the bank
intends to ‘safeguard its long-term suc-
cess’ by ‘simplifying’ its hierarchies, struc-
tures and processes. Of the 2,480 jobs
that are to be cut, half will be in transac-
tion processing and loan processing. “We
intend to use these job cuts to keep the
overall cost base stable and grow our
income at a faster pace than the market,”
said Herbert Walter, Chairman of the
Board of Managing Directors of Dresdner
Bank.
Technology
London - Exchange Data International and
AIM Software have entered into a partner-
ship to provide price, static and corporate
actions data from EDI via AIM Software's
reference data management platform
GAIN, which offers clients a range of func-
tions for the automatic processing of data
and securities information. The combined
offering helps financial institutions min-
imise the costs and risks associated with
back office processes and improve opera-
tional efficiencies. “The expertise and
know-how of both companies will help
companies reduce overall costs by
increasing the reliability and the efficiency
of their data processing.” said Josef
Sommeregger, Head of Business
Development of AIM Software.
Paris - GL Trade has announced that Fortis
has extended their existing contract with
the group to provide connectivity to Asian
markets via GL NET, GL TRADE’s order
routing and data feed network. “We are
pleased that FORTIS relies on GL TRADE
to enable its Asian clients to have access
to European and US markets and vice
versa,” said Franck Peltier, GL TRADE
Managing Director NEA-SEA. “This deal is
the logical evolution of a long term part-
nership.”
Funds & Administration
London - Financial Tradeware plc has
announced that Bahamas based Hedge
Fund, Karla Derivatives Strategies Fund
Ltd (Karla Derivatives), has joined the
Financial Tradeware/EGP Member
Administered Closed User Group (MA-
CUG). Registered in the Bahamas, Karla
Derivatives opened in July 2005 and is a
Strategy European macro hedge fund that
trades in a variety of stocks, bonds, future
and options, and money market instru-
ments. Alberto Fontana, Managing
Director of Financial Tradeware, said: “We
are uniquely positioned to offer the MA-
CUG service for companies who can bene-
fit from low-cost SWIFT connectivity. We
offer the highest level of security, efficien-
cy and reliability associated with SWIFT
Network with the benefit of affordable
fees for Hedge Funds such as Karla
Derivatives. Our MA-CUG is an excellent
offering for hedge funds with these chal-
lenges.”
London - National Australia Bank UK
(NAB UK) has appointed Xchanging to
manage indirect spend and transactional
procurement processing on behalf of
Clydesdale Bank and Yorkshire Bank. The
deal covers all of the indirect spend trans-
acted by Clydesdale Bank and Yorkshire
Bank both wholly owned subsidiaries of
NAB UK. As part of the partnership,
Xchanging will also manage the banks'
transactional procurement activity.
Custody & Outsourcing
London - Royal Mail Pension Plan has
consolidated £2.2 bn of assets with
JPMorgan Worldwide Securities Services
in a move to bring all of its segregated
assets under one global custodian. Royal
Mail Pension Plan has approximately £22
bn in assets and JPMorgan has acted as
global custodian for Royal Mail Pension
Plan since 1999.
Zurich - Credit Suisse Group has
announced that it has entered into a
definitive agreement for the sale of
Winterthur Swiss Insurance Company to
AXA for a cash consideration of CHF
2.3bn. AXA will acquire 100% of
Winterthur and the deal is expected at
year-end 2006. Leonhard Fischer, CEO of
Winterthur, said: “The sale of Winterthur
to AXA is a significant step for the clients
and employees of Winterthur as well as
for the Swiss market. By joining AXA,
Winterthur's businesses will be best posi-
tioned for future growth.”
FREE NEWS DAILY AT
WWW.ISJFORUM.COM
News - Americas
Market Infrastructure
Boston - According to a new report by
Aite Group, LLC, the financial services
industry will spend about US$15 bn on
brokerage, clearing, and exchange fees in
2006. In reviewing recent trends, the Aite
Group expects the financial services
industry will sustain a Compound Annual
Growth Rate (CAGR) of 18.95% over the
next four years, based on increased trad-
ing activities and expansion into global
markets and alternative investments.
“While financial services firms still have a
very long way to go, the market is driving
renewed efforts in STP,” said Adam
Honore, author of the report, “As trade
volumes continue to rise, cost will also
climb.”
Technology
New York - Thomson Financial
and the Toronto Stock Exchange
have announced an alliance to
deliver market data, analytics
and competitive information
to investor relations profes-
sionals in Canada through the
launch of TSXconnect.
Thomson will also become a
content provider and sponsor
of market data to the TSX
Broadcast Centre, which is also
a satellite location to Canada’s
financial news outlets. The plat-
form enables IROs to monitor the
performance and trading activity of
their stock and that of their peers and
identify current shareholders. In addition,
they can monitor earnings and research
domestic and international trading instru-
ments.
New York - JPMorgan Worldwide
Securities Services has announced that
Charles Schwab Investment Management
(CSIM) selected the firm to provide out-
sourcing services for separately managed
accounts included of approximately $180
bn in assets. JPMorgan Managed Account
Solutions is providing CSIM with a variety
of separately managed account outsourc-
ing services designed to automate back
office functions such as shadow account-
ing, account reconciliation, new account
setup, performance calculation and
account maintenance.
Mumbai - Reveleus has announced that
Wachovia Corporation has selected the
Reveleus Basel II Solution. Reveleus will
provide a solution enabling Wachovia to
8 INVESTOR SERVICES JOURNAL
compute regulatory capital as per the
Advanced Internal Ratings Based
Approach of the Basel II Accord. Speaking
on the relationship, Pete Carlson, Senior
Vice President, Director of External
Reporting at Wachovia said: “We chose
Reveleus for the completeness and flexi-
bility of the Reveleus Basel II Solution and
its ability to meet our current and future
requirements.”
New York - Risk Control Limited has
announced the launch of its Risk
Controller
solu-
tion
from the
SIA Technology Management Conference
2006. The solution was engineered to
measure risk over a wide range of instru-
ments. It uses sophisticated modelling
techniques to analyse trading scenarios
and compute both portfolio and enter-
prise-wide risk measures. With this level
of information, it is hoped that firms can
make informed decisions on the efficient
allocation of capital across divisions and
have the ability to devise return efficient
trading strategies and remain informed
on the effect these strategies have on
their overall risk profile and the capital
required for reserves.
Funds & Administration
Boston - John Hancock Financial Services,
Inc. has announced that its mutual funds
unit has added seven mutual funds as a
result of a sub-advisory relationship with
FREE NEWS DAILY AT WWW.ISJFORUM.COM
GMO, the Boston-based institutional
asset manager. The new GMO sub-
advised funds will be available through
financial advisers and will join other John
Hancock offerings within John Hancock's
401(k) retirement plan division. “We look
forward to serving those who invest with
John Hancock,” said Tony Ryan, partner
and head of global client relations and
sales for GMO. "Since our founding in
1977, we have focused on managing insti-
tutional assets. John Hancock's historical
strength serving financial advisers and
individuals complements our capabilities,
and allows us to reach a broader base of
investors.”
New York - JPMorgan Worldwide
Securities Services has announced that
ProShares has selected the firm to
provide a full range of fund services
including accounting, administra-
tion, transfer agency and custody
services. JPMorgan will be sup-
porting ProShares in its launch of
eight new exchange-traded funds
(ETFs), which are based on
indexes such as the Standard &
Poor's 500, the Nasdaq 100 and
the Dow Jones Industrial
Average. “ProShares selected
JPMorgan to provide a full range of
custody services because they have
the people, technology and experi-
ence to help us make the launch of
ProShares Exchange Traded Funds a suc-
cess,” said Michael Sapir, CEO of
ProShare Advisors LLC.
Custody & Outsourcing
Boston - Mellon Financial Corporation
has announced that its Global Securities
Services (GSS) group has been named
custodian and provider of value-added
services for Makena Capital. Mellon will
provide domestic and global custody,
monthly valuation of the securities in
Makena's portfolio, securities lending and
foreign exchange support. “Both newly
created investment management firms
such as Makena and well-established
managers are looking to us for value-
added services to go along with our core
custody offering,” said Vince Sands, pres-
ident of Mellon Global Securities
Services, U.S. “We continue to invest in
our advanced technology infrastructure so
we can provide the types of services that
sophisticated investors such as Makena
Capital require.”
“A masterpiece! The story hinges around BNP Paribas Securities Services, who are always coming up
with new and ingenious ways of providing their clients with a winning solution. In this book, we uncover the
secrets of their success: their on-the-ground presence in Europe and Australasia means they are perfectly
placed to address the full range of their clients’ business needs, on a global scale.
BNP Paribas Securities Services - close to clients, close to markets. ”
BNP Paribas Securities Services is authorised and regulated by the CECEI & AMF in France and is regulated in the conduct of its designated investment business in the UK by the Financial Services
Authority. BNP Paribas is a diversified financial services group operating under the trademark BNP Paribas and offering products through various affiliated entities, including in the U.S., BNP Paribas
Securities Corp., a NASD registered broker/dealer and a member of SIPC.

www.securities.bnpparibas.com
News - Asia Pacific
Market Infrastructure
Shanghai - HSBC has received approval from the China
Banking Regulatory Commission (CBRC) to open a branch
in Xi'an, enabling HSBC to provide banking and financial
services from Xi'an to support China's ‘Go-West’ cam-
paigns. Preparations are under way to inaugurate the Xi'an
branch within the year, upon further receipt of the opera-
tional licence from the CBRC. Richard Yorke, CEO China at
The Hongkong and Shanghai Banking Corporation Limited,
said: “We see great potential in the region which has
attracted considerable overseas and domestic investments
in recent years. HSBC looks forward to supporting the
development of the local economy and meeting customers'
needs for international financial services."
Sydney – The Australian Stock Exchange (ASX) joined with
Australian custodians and SWIFT to work towards improv-
ing the automation of the corporate action processing
cycle. This industry partnership will launch in July 2006
with an intra-day corporate action service via SWIFTNet in
the ISO 15022 format. This SWIFT corporate action service
forms part of the new range of reference data and corpo-
rate action services, ReferencePoint, that was recently
launched by ASX. Colin Scully, ASX Deputy CEO and Group
Executive, Markets said: “ASX is pleased to introduce this
new service. It reflects the benefits of engaging with leading
international organisations and industry partners such as
SWIFT and the custodians to provide industry leadership
and deliver innovative new services to meet industry chal-
lenges.”
Hefei - DBS Asset Management will acquire a 33% stake
from the existing shareholders of Changsheng Fund
Management Company Limited. DBSAM will become a
strategic shareholder of Changsheng and acquiring stakes
from all three existing shareholders of Changsheng, includ-
ing 8% from Guoyuan Securities Company Limited, 13%
from Anhui Provincial Innovative Investment Company
Limited and 12% from Anhui Provincial Investment Group
Company Ltd. The shares will be acquired for a total cash
consideration of RMB174, 900,000 (approximately S$34.4
million).
Tokyo – The Tokyo Stock Exchange has imposed a censure
penalty on H.S. Securities Co., Ltd. as the company was
10 INVESTOR SERVICES JOURNAL
deemed to have an insufficient trade management system
for the prevention of transactions deliberately made to form
an artificial market price that does not reflect the actual sit-
uation. TSE has also requested that HS Securities submit a
business improvement report regarding the inspection of
trading monitoring, establishment of an appropriate trad-
ing monitoring system and verification of how managing
directors are involved in the trading monitoring system.
Shanghai - The Shanghai Stock Exchange has rounded off
compilation of the "SSE Guidelines for Internal Control of
Listed Companies.” Since 2003, the repeated exposure of
out-of-line issues involving the senior management of listed
companies has stirred the securities market. The
Guidelines are regarded by the industry as the Chinese ver-
sion of the "Sarbanes-Oxley Act" and a blueprint of the
Guidelines is expected to promote listed companies to
establish an effective transparent regulatory mechanism for
improving the quality of listed companies in China.
Technology
Singapore - i-flex solutions has announced that The Hong
Kong and Shanghai Banking Corporation Limited (HSBC)
has selected FLEXCUBE Investor Services as the software
solution for its Transfer Agency (TA) and Investor Servicing
business. An agreement has been signed between the com-
panies and HSBC’s Institutional Fund Services (IFS) busi-
ness will deploy FLEXCUBE with its Investor Services mod-
ules across its markets in Asia and the Middle East. Kishore
Kapoor, CEO, i-flex solutions pte ltd, said: “HSBC is a
tremendous opportunity for us to showcase our compre-
hensive solutions and this contract has further reinforced
the position of FLEXCUBE Investor Services as the leading
new generation Transfer Agency and Fund Distribution
solution in the global market place.”
Custody & Outsourcing
Sydney - RBC Dexia Investor Services has been selected to
provide custody, investment administration and unit reg-
istry services for Denning Pryce’s newly launched Equity
Income Fund. “We were impressed by RBC Dexia Investor
Services‚ extensive knowledge and experience with deriva-
tives, as well as their reputation for excellent client service,”
said Michael Pryce, Founder and Director of Denning Pryce.
“We are confident that we have selected the best partner in
the marketplace to help us successfully launch this fund
and help to grow our business over the long term.”
Mumbai - ICICI OneSource has announced that it is to
invest in setting up outsourcing centrers in Northern
Ireland, creating around 1,000 jobs over the next two years.
The investment, supported by Invest Northern Ireland (INI)
is expected to deliver over
£28 million in salaries to the local economy by 2008.
Ananda Mukerji, MD & CEO said: “We are delighted to be
in Northern Ireland and value the support and encourage-
ment we have received from Invest Northern Ireland.
Northern Ireland has a proven track record in providing a
large pool of talented people and an extremely conducive
business environment and we intend to leverage this to
global advantage.”
FREE NEWS DAILY AT WWW.ISJFORUM.COM
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Domiciles Report

Jersey, Ireland and Cayman

comment on the outlook

Graeme McArthur Deirdre Norris Valia Theodoraki

Jersey’s funds sector continues to grow,
with the statistics for the first quarter of
2006 announcing further record levels for
the Net Asset Value of Funds under admin-
istration of £156billion - an increase of 50%
compared to the same period last year.
A more detailed analysis of these recent
statistics confirms that whilst there is
growth across the board, the main engine is
the alternative investment classes of private
equity, property, fund of funds and, of
course, hedge funds.
Much of this current momentum in the
funds industry is the result of the successful
implementation of the Expert Fund regula-
tions last year, but the island has not stood
still as the recent introduction of Incorpor-
ated Cell Company legislation has shown.
The other key development taking place is
the broadening of the funds industry in the
island. Jersey is a base for a number of
Fund Managers and recently there have
been numerous enquiries from fund pro-
moters and managers currently located out-
side the island who are now considering
using Jersey as a physical base for their
international fund management activities.
The funds sector is actively marketing
itself as a jurisdiction of choice for hedge
fund managers with key considerations for
such firms including, current financial and
business regulations as well as fiscal rules
and housing regulations that apply in Jersey.
As well as Jersey’s reputation as a well
regulated jurisdiction, factors such as prox-
imity to the UK , culture, language and
schools will all work in Jersey’s favour in
attracting hedge fund managers and their
families to relocate to the Island.
Graeme McArthur, representative of the Jersey
Funds Association and Managing Director of
Northern Trust in Jersey
Dublin continues to be an attractive centre From its start as a listing facility for Cayman
for investment funds, despite increasing Islands’ specialist products, mutual funds
labour costs and the relocation of fund and debt securities, the Cayman Islands
administrators around the country. Stock Exchange (CSX) has emerged as an
Irish domiciled funds are mostly divided innovative, global gateway to accessing cap-
into UCITS and Non-UCITS funds. As an ital markets in just over eight years.
OECD (Organisation for Economic 2005 was of particular significance for the
Co-operation and Development) country, CSX, as its ongoing efforts to build a com-
Ireland is recognised for its high standards prehensive listing facility combined with a
of regulation and service levels. The coun- high level of market activity produced one
try also allows for the distribution of UCITS of the most successful years in its history.
funds into other European countries. An important achievement was surpassing
The Irish financial services industry is 1,000 approved listings. Reaching this
regulated by the Irish Financial Services milestone less than eight years from incep-
Regulatory Authority. tion is a testament to the confidence that
Rather than ‘sitting on’ investors from a the global marketplace has in the CSX.
regulatory point of view, the Irish The CSX continued to benefit from strong
financial regulator operates a flexible sys- fund activity in the Cayman Islands, with the
tem of regulation, which assumes that Cayman Islands Monetary Authority report-
sophisticated investors who invest a certain ing another year of double-digit growth in
amount of money accept the risks that go fund licences for 2005.
along with that. The key advantages of Cayman’s fund
Investment managers are increasingly industry continue to be the depth of expert-
outsourcing non-core functions such as ise in global finance, delivered by world-class
fund accounting, administration, investor law, accounting and fund administration
services, and trustee and custody services. firms. Cayman’s legislative framework
This trend places Dublin-based service allows for sophisticated investment tech-
providers in a unique position to look after niques, including substantially leveraging
these managers’ assets. portfolios, making loans of securities on an
Opportunities within the Irish financial unlimited basis and investing without
services industry are guaranteed as more restriction in any currency or instrument.
institutional investors enter the alternative Cayman-registered funds now number
investments arena. more than 7,000 and the CSX experienced a
The hedge funds market is growing 25 per cent increase in fund listings from
rapidly by the day and will present huge the previous year. With a combined market
opportunity in the future. capitalisation of more than USD89 billion
and an international cadre of issuing com-
panies, broker members and listing agents,
the CSX’s position as a leading offshore
exchange remains solid.
Deirdre Norris, is director of marketing and By Valia Theodoraki, CEO, Cayman Islands
communications, Dublin Funds Industry Stock Exchange, Cayman Islands
Association. ISJ staffers contibuted to this report.

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 Special Report - South Eastern Europe
The South Eastern part of Europe
is still defined as an ‘emerging’
part of the world, but growing
economies and EU membership
could see it rise as a jewel in
Europe’s crown.
The
Neighbours
The South Eastern part of Europe
has been in the doldrums of recent
years. On the fringes of an econom-
ically successful and slick operating
Western Europe, the East has been
lagging behind somewhat.
In many countries, high rates of
inflation and shaky political and
social systems have been responsible
for repressing the economic
development of the East. The tide is
changing now however, with
inflation rates in the region at
historical lows and new government
influences allowing countries
branded with emerging market
“Surrounding Greece we have no mature
markets. Our neighbourhood is an
emerging one.”
status to fight for their right to
European Union membership.
In 2001, the Greek market was
upgraded in its status from being an
emerging market, but as Dinos
Bottom, right? Kanarisk, Head of Treasury &
Capital Markets, HSBC in Greece
believes, it is hard to shake off the
emerging market image.
“Greece is not an emerging market in
many ways,” he states. “When the Greek
market was upgraded in 2001, in many
desks it stayed in the emerging markets
group. We even received an award at
HSBC Athens as the best custodian in an
Emerging Market and we were
supposedly a mature market by 2001.”
It is not with bitterness that Kanarisk
says this, but with an understanding that
until recently the Greek market has been
the only one in the South Eastern part of
Europe to really stand out and so people’s
perceptions of this area of Europe is that
it is still very under developed.
“Surrounding Greece we have no EU
members and no mature markets,” says
Danarisk. “Turkey, Bulgaria, Romania,
Macedonia, our neighbourhood is an
emerging one at best, but for Greece to
expand, the only way is to look close to
home.”
Alex Kartalis, BNP Paribas echo’s this
sentiment and believes that the Greek
market has come on leaps and bounds
since its inclusion in the European
Union. “Greece is advanced compared to
other markets, the size of the market is
quite big here, of course we are small in
comparison to the ones in Western
Europe but it’s trading practices and legal
framework are in a very advanced stage
compare to the other markets.”
The capital markets area in Greece is
quite advanced compared to the size and
the maturity of the other markets in the
region and this is mainly because of its
participation in the European Union.
New administration of the exchange in
Greece is set to make Athens the hub for
the South Eastern European region and
this is naturally very much supported by
the financial world in Greece.
“I think this strategy makes sense
because I do not see what would add to
the value of the exchange if we were to
link up, for example, with Euronext. I
think our liquidity would disappear and I
don’t see any benefits for the market. It
makes sense to create a hub in the
region,” says Kartalis.
INVESTOR SERVICES JOURNAL 13
Special Report - South Eastern Europe
The Greek exchange is linking up with
Cyprus, who recently joined the
European Union. The two countries are
setting up a common financial platform
and the Cypriot market has adopted all
the regulations, systems and trading prac-
tices from the Greek market. Through
this cooperation, Greek brokers will be
able to become remote lenders in the
Cypriot exchange.
For custodians in Greece this is a posi-
tive step as they will be able to provide
remote clearing and settlement and
other custody services in the Cypriot
market. This is a move that BNP Paribas
will pursue and their Greek arm has
applied to the bank in France to get a
license for operating in Cyprus.
“For us it is an opportunity because
there are cultural links, language links
and technical links,” explains Kartalis.
“Additionally, Cyprus has recently
joined the EU so they had to reform
and upgrade their legal framework so
now it provides a level of market
transparency and safety, quite similar to
the standards of the European Union.”
The exact date for this move with the
Cypriot market has not yet been decided
but the plans are hoped to go ahead later
this year.
“How much of this move the authori-
ties are going to be ultimately successful
in, we don’t know, but certainly the col-
laboration with Cyprus, is certainly a
first step forward,” says Lianna Biniaris,
Senior Relationship Manager, Custody &
Clearing, HSBC Greece.
The authorities in Greece are also look-
ing to expand into the Balkan countries
in the same way and have them purchase
the Greek system as well. But as Biniaris
explains, this may be limited to fixed
income instruments as the Greek market
currently only uses Swift in its fixed
income market.
Whilst the Greek government are look-
ing to expand into other countries there
is mixed feeling as to how successful this
move will be due to the complexity of
the different markets and socio-political
structures in the countries around
Greece. “If you look at Euronext, it is a
combination of markets in very similar
countries, very similar in terms of wealth
and market discipline and unfortunately
for us, our neighbours are in a different
situation than we are so it is a bit diffi-
cult to make cooperation easily,” says
Biniaris.
14 INVESTOR SERVICES JOURNAL
The Underdog
Turkey is seen as a big part of the equa-
tion for the South Eastern European
region. It is the biggest country in the
region with a population of about 70-80
million, has a large economy and with
the government pushing to become a
member of the European Union the
country is a growth area for the future.
“The Turkish capital market has been
improving on a yearly basis and we have
seen this in the number of companies
open to the public through initial public
offerings. The market capital has
increased substantially over the last five
to ten years and most importantly
Turkey is now in negotiations with the
“Turkey is seen as a big part of
the equation for the South
Eastern European region”
European Union and in the process of
adjusting all its systems and regulatory
infrastructure to meet with the
European requirements,” believes
Ibrahim, HSBC.
In January 2006 a new tax law came
into force in Turkey that has helped accel-
erate the pace of banking reform in the
country. Under the new law, substantial
changes have been realized regarding the
taxation of interest income and capital
gains from securities and other financial
instruments. Now, the income retained
from securities and other financial instru-
ments is taxed at a single rate of 15%.
“As a sub-custody provider in the mar-
ket we also provide tax services for non-
domestic institutional investors.
Basically, the tax calculation and pay-
ments has been given to the local sub-
custodians, so therefore HSBC as a serv-
ice provider is providing those services
to institutional investors,” says Ibrahim.
Pension funds are a new product for
HSBC in Turkey as the first pension fund
was only established a couple of years
ago. The Turkish private pension law was
drafted in 1999 and was implemented in
2002. This is a milestone for Turkey,
allowing a voluntary, defined contribu-
tion scheme to work in tandem with the
current state social security scheme.
“For the time being, local pension funds
are not mandatory, however if local pen-
sion participation becomes mandatory
then the collective savings will be quite
substantial.”
Before the law was passed a only state
pension fund system existed in Turkey
however the system was not efficient and
legislation has been changed to give it a
more professionally managed approach
for the funds and administration side and
it is planned to bring the pension fund
system inline with European legislation.
Currently the primary investment
vehicle for pension funds in Turkey is
fixed income securities as high rates of
inflation in the country have meant that
corporate bonds and bond sector have
been quite under developed but this is
likely to change in the future.
“With the new pension system, the
instruments that the funds
can invest in are enhanced.
Not only the fixed income
securities, but also equities,
long-term and short-term
deposits and derivatives will
be used. Securities that are
not only issued and quoted
on the Istanbul stock exchange but also
quoted outside the Turkish market will
also be possible for those newly estab-
lished pension funds,” says Ibrahim.
While many aspects of the Greek mar-
ket seem to be advanced compared to
the markets of other countries in South
Eastern Europe, like Turkey, the Greek
market is not yet mature enough for
pension fund services. Currently there is
no provision for private pension funds
and the state pension funds that operate
in the market have to follow very conser-
vative and restrictive investment policies.
The market is yet to open up in this
space as pension funds are currently
only allowed to invest small parts of
their assets in the stock market.
Big players in the market target finan-
cial foreign institutions, which make up
95% of their revenue. This does not
mean that local clients are neglected, but
they are not really the target market
behind the expansion of the region.
While Greece is undoubtedly leading
the way in South Eastern Europe, other
countries such as Cyprus and Turkey
will come into their own in the months
and years to come. With many countries
in this part of Europe striving to make
the necessary legislative and economic
changes to compete for European Union
status it seems like the doldrums years
are coming to an end and new time
beginning.
ISJ

Anyone who follows football will have
heard of the corruptions in the Italian
pemier division, Serie A, that have
forced the relegation of some of its
top flight clubs.
Its political stance is not much better
with its new Prime Minister already in
need of a major boost.
Does this apparant shakey structure
follow through into Italy’s financial
securities world? ISJ investigates.
The Italian Job
Pensions - Italy
Under the previous Prime Minister,
Silvio Berlusconi, the pensions law in
Italy was reassessed and plans made to
increase the age of retirement from 2008
onwards. A strong manifesto however,
brought the centre-left government of
Romano Prado into power, leaving
Burluscoli to lick his wounds after
defeats in general, local and regional
elections in April and May.
The new Prodi government has said
however that the rate at which the retire-
ment age with rise, post-2008, is still
open for debate but other pensions
reforms could surface before then.
One such reform will see a change in
the law around severance pay. “In Italy,
each year you work, your employer
accrues one months full salary,” explains
Massimo Cotella, CEO, 2SBanca. “When
you resign, that full amount is paid to
you in cash.” Pension law reform will
give individuals the opportunity put that
severance pay into the company pension
fund where is can be used to generate
income growth.
It is expected that 50% of employees will
elect for their pension funds to accept this
severance pay option that will generate
approximately EUR 6 billion in revenue
for the pension fund industry in Italy.
There is a slow pace of pension reform
in the country and that is holding the
market back in an alternative invest-
ments space that is very regulatory
restrictive for investors and service
providers alike.
Regulation
The regulators in Italy are quite strict
and in their determination to protect the
ultimate investor, and some investors
have found it easier to establish funds
elsewhere in Europe where some of the
regulations are more relaxed.
“With the last directive the regulators
accepted some of the European rules but
yet they are more demanding in terms of
administration than they are elsewhere,
and to tell you the truth, the fiscality
does not favour Italian funds as sup-
posed to Luxembourg funds or Irish
funds,” says Massimo Cotalla, CEO,
2Sbanca.
The number of domestic investors is
thought to be shrinking as they look for
more attractive returns and better tax
structures in other centres such as
Luxembourg or Ireland where the regu-
lators are not as stringent.
Jean-Marc Crepin, Head of State Street
INVESTOR SERVICES JOURNAL 15
Pensions - Italy
in Italy, acknowledges that Italian domi-
ciled funds have been moving away from
the country but does not feel that it is
necessarily because other locations are
much more attractive.
“A lot of people believe that this is
because there is a fiscal advantage to buy
funds abroad but this is not exactly
true,” he says. “The performance advan-
tage that one can have between an
Italian fund and a foreign fund is not
that big, but over the last twelve months
EUR 50bn have moved out of Italian
domiciled funds into offshore funds.”
So what is making investors relocate to
other parts of Europe, Italy’s stringent
regulatory framework?
“The recent evolution
in terms of official
regulation seems to
favor the development
of a new market.”
“Definitely not,” Crepin believes. “I
don’t think the rules are that different in
Italy for the retail investor than abroad.
The Italian asset managers are as good as
the foreign asset managers. It’s true that
in the past it was probably quicker to
open a fund structure in an offshore
location than in Italy but even now in
Italy it doesn’t take that long to open
new funds or have an asset manager
authorised.”
The rules by the bank of Italy have
been loosened up a little in recent years.
Investors previously had to own or buy
EUR 1 million if they wanted to invest in
a fund. This has been reduced to EUR
500,000 and has caused some growth in
the alternative investment arena in Italy.
One problem with this base rate however
is that it is the same for retail investors
and institutional investors alike which
means that some retail investors are
priced out of the market.
That said, the Italian market is a
growth market and is attracting the
attention of the large custodians and big
players in the securities space. Citigroup,
BNP Paribas and Societe Generale have
all been drawn to Italy and are now
dominant players in the Italian market.
On the fund administration side State
Street are also now key players in the
market after acquiring Deutsche Bank’s
global custody business in 2001 and
16 INVESTOR SERVICES JOURNAL
doubled staff numbers in Milan.
Companies are drawn to Italy to become
pan-European players in the custody and
securities market that shows how far the
previously very traditional and retail
based Italian market has come.
“The recent evolution in terms of offi-
cial regulation seems to favor the devel-
opment of a new market, through the
possibility to offer integrated fund and
securities services. Specifically, this new
market should receive a big impulse
from the asset management companies
to fully outsource both fund administra-
tion and transfer agency, with the aim to
reduce costs and to better perform the
service,” says Elisabetta Pellichero, Head
of Transaction Services, Banca Intesa.
Challenge
With mutual funds and pension funds
making up the majority of alternative
investment funds in Italy, a lot of funds
have trade unions attached to them
through employers. With the regulators
being extremely stiff on protecting the
end investor, this can make things quite
difficult and slow. Due to this set up,
there is an educating process needed for
investors’ as they don’t understand the
need for taking risks and want guaran-
teed returns on their investments. In
light of this, there has to be a compre-
hensive approach by service providers to
ensure that there is a strong level of
service, secondly that it is able to be
done at a very low price and thirdly that
all the risks are highlighted and solu-
tions given. Building confidence in the
market will definitely be a key factor for
service providers in the future.
One of the challenges that service
providers in Italy also face is the small
volume of pension funds that the coun-
try is involved with. “The market is still
very fragmented,” says Crepin. “There
are 100’s of pension pools all with a
small amount of assets so it is difficult
for them to achieve a good performance
because the administration costs and
management costs are high.”
The servicing of alternative investment
funds is still done at very low volumes,
however, the change in pension legislation
which is due to take effect in 2008 is
hoped to revolutionise this and potentially
open up a lot more investment in the mar-
ket. Service providers in Italy ware waiting
to embrace this legislation and hope to
pounce on any opportunities that opening
up of the market will bring. ISJ
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Pension Profile - Lothian Pension Fund
Strategies,
Scottish style
Shortlisted for two
honours in leading
pensions awards,
Christine Senior talks
to Lothian Pension
Fund about the
pattern of investments
in the North.
THE LOTHIAN PENSION FUND
INCORPORATES THREE FUNDS - THE MAIN
FUND PLUS LOTHIAN BUSES FUND AND
THE SCOTTISH HOMES FUND. CURRENTLY
THE MAIN FUND IS WORTH AROUND £2.7
BILLION, WITH THE BUS FUND VALUED AT
£180M, AND THE SCOTTISH HOMES FUND,
NOW CLOSED, AT £125 MILLION.
THE MAIN FUND COVERS AROUND 125
EMPLOYERS – THE LOCAL AUTHORITIES OF
EDINBURGH, EAST AND WEST LOTHIAN,
AND MIDLOTHIAN, PLUS SOME VOLUNTARY
ORGANISATIONS, COLLEGES, UNIVERSITIES
AND OTHER NON-PROFIT-MAKING ORGANI-
SATIONS. MEMBERS NUMBER JUST OVER
58,000 IN THE MAIN FUND, AROUND 4,000
FOR THE LOTHIAN BUSES FUND AND 2,000
FOR SCOTTISH HOMES.
ALM review
The scheme undergoes a full ALM
review once every 10 years, (with an
interim review after each three yearly
actuarial valuation), but the market col-
lapse following so soon after its 1999
review prompted further action.
“There was a tremendous change in
investment markets and I was very con-
cerned that what we decided in 1999
was still valid with the market taking a
dive,” said Geik Drever, Head of
Investment & Pensions. “So we com-
missioned another full review in 2002.”
Currently the main issue for Drever is
to increase stability in the fund, to ease
18 INVESTOR SERVICES JOURNAL
pressure on employers over their contri-
bution rates.
She commented: “Employers are con-
stantly telling us they can’t handle the
continuous raising of the contribution
rate, which is understandable. We con-
ducted a review at this time to manage
the balance of risk and return.”
New investment strategy
The latest review resulted in a new
investment strategy which has received
approval. This is still in the process of
being implemented. The main change
has been to reduce the total equity allo-
cation from 80 per cent to 75 per cent,
and then to abandon the fifty-fifty
UK/overseas equity split by reducing UK
equities to 20 per cent and increasing
overseas equities to 45 per cent. Lothian
includes alternatives within its equity
portfolio, so the remaining change was
to up its allocation to alternatives from
5 per cent to 10 per cent.
The switch of emphasis to overseas
equities is to open up the portfolio to
opportunities in faster growing global
economies. “The overseas allocations
recognise the importance of emerging
markets, such as the Chinese economy -
with less than 3 per cent of the world
capital market but 13 per cent of GDP
outputs,” said Ms Drever. But another
issue was the risks inherent in the UK
equity market. “There is a lot of concen-
tration in the UK market: ten stocks rep-
resent about 49 per cent of the
FTSE100,” she added.
The new target allocation in overseas
equity puts 15.4 per cent in North
America, 9.6 per cent in Europe, exclud-
ing the UK, 13.5 per cent Pacific, includ-
ing Japan, and 6.5 per cent in emerging
markets.
Alternatives
The breakdown of where the increased
allocation to alternatives will go is still a
matter for discussion. Likely destina-
tions are private equity, private finance
initiatives, commodities, and activism
funds – like the Hermes UK Focus
Fund, and clean energy funds. Hedge
funds are currently not on the list, but
they may be in the future.
“Our current agreement is for PFI
infrastructure funds and private equity
where we are in funds of funds,” said
Ms Drever. “We have to do a lot of
research before we invest. We look at
everything to see whether it fits into our
structure and whether we are comfort-
able with it or not.”
Who manages the money
Lothian manages some of its UK equi-
ty portfolio internally, with the remain-
der in the hands of Martin Currie.
Overseas equities are managed by Axa
Rosenberg and BlackRock (European
equities); Goldman Sachs Asset
Management and Oppenheimer (US);
Baillie Gifford (Pacific including Japan),
Wellington (global) and Lloyd George
(emerging markets). Henderson Global
Investors manages the fixed income
portfolio, and Standard Life Investments
handles the property portfolio. The Bus
fund’s balanced portfolio is managed by
Baillie Gifford, and SSgA manages the
Scottish Homes Fund.
Three currency managers were
appointed in April this year: Record
Currency Management, AG Bisset, and
JP Morgan. The brief is for them to
manage currency risk in the portfolio
but also to add value through active
currency management.
Socially responsible investment
Lothian’s SRI policy is to use engage-
ment with the companies it invests in,
and it implements this strategy through
F&C’s reo product. Drever is firmly
against negative screening: “We don’t
believe in screening. We want to encour-
age our managers to have an effective
dialogue with all these companies to try
and change their minds and adopt best
practices. An exclusion policy is not
conducive to that,” she said.
Custody
The fund appointed a new custodian,
Citigroup this year, to replace the Bank
of New York. As well as handling the
global custody Citigroup also manages
a securities lending programme for the
fund. “We are always looking at income
as a matter of course,” said Ms Drever.
“We want to make effective use of all
the assets we have, and stock lending is
one way to do that.”
The biggest impact on the scheme in
the near future will be from the new
Local Government Pension Scheme
which is still a matter of debate between
the government, employers and unions
but is expected to come into effect in
2008. Drever hopes this will be positive
for the fund. “Our main issue is the
sustainability of the scheme going for-
ward, to make it affordable.” ISJ
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Pensions - Africa

money except for investment and the

Th asset representation is kept with the
lan e Afr custodian who settles transactions made
c d ic on the investment.
in onsi scape an p Despite this reform however, outside
r t d e investment coming into the country to
conegulahe pa ered has nsio invest in pension fund vehicles has been
spr tin tor st, fai bee ns scarce and has not been helped by limits
ing ent y re ho rly n put on Nigerian pension funds to invest
Ala bo co for wev blea abroad by the government. “While there

wil n D ard uld ms er k is no provision at the moment for

d s ue for pro ac , rec domestic pension funds in Nigeria to

invest outside, there is provision for it
ide der gro vid ross en in the Pension Reform Act 2004 but it
. nt wth e a th t will take a presidential decree in order
ake . e to facilitate the opening up of that
sa piece,” says Steven Faulkner, United
wa Bank of Africa.
lk o There has been an emergence of cer-
tain Nigerian funds, two of which were
nt created by the United Bank of Africa.
he Currently a bond fund, cash fund, equi-
ty fund and balanced fund exist, with a
number of index funds being intro-
duced from outside the country but it
will take a while, maybe months for
them to gain credibility.

The Lion “The successful

Sleeps Tonight
After many years of economic and
social instability, the result of civil wars
and political corruption, Africa is
somewhat stabilising itself.
In a recent report by the Organisation
for Economic Cooperation and
Development (OECD) it is estimated that
Africa’s economy grew by almost 5% last
year, and is expected to increase by a fur-
ther 5.8% in 2006 and 5.5% in 2007. This
sustained economic growth is due to a
number of factors which include the
global demand for oil and other raw
materials for industry. The soaring prices
of particularly oil and minerals has
brought windfall gains for oil-exporting
countries in Africa, however economic
growth is not limited to just the countries
producing these commodities.
In other countries on the continent,
slicker running economies has caused a
fall in inflation, which now averages 8% a
year, despite the increasing price of oil.
Political stability has also been a key
factor in making the continent a location
that is attractive to investors.
The successful economies and stock
markets of Africa have drawn foreign
investors to the region and foreign direct
investment (FDI) has increased tenfold
over the last twenty years and is believed
to be somewhere in the region of $20
billion now.
So, with an increase in investment from
outside the continent and an ever more
buoyant economy is this stream of
success flowing through into other areas
of the financial markets?
Pension Fund Reform
In Nigeria the growth of the pension
funds industry goes back to 2004, and the
Pension Reform Act, that enshrined
twelve pensions fund administrators
(PFA’s) and 4 pension fund custodians
(PFC’s) to safeguard against financial
impropriety. Where a PFA opens an
account it will not have access to the
economies and stock
markets of Africa have
drawn foreign investors
to the region.”
“I think pension funds will find some
of these vehicles more attractive than
taking direct exposure to particular
bond or equities themselves,” believes
Faulkner, “but I don’t see a massive
investment externally into pension
funds per-se.”
Nigeria’s secondary bond market is
due to be re-launched this August with
15 primary market makers and is sure
to attract investment to this sector. With
the Niara relatively stable against the
Dollar and traditional interest rates of
14-16 per cent the returns are attractive
compared to traditional alternative
investments.
“I think a lot of people are waiting
to see what happens in the elections
next May, to reduce the risk,” says
Faulkner, “but from the people we have
seen in the investment bank and broker
dealer community, there has been huge
interest.”

20 INVESTOR SERVICES JOURNAL

 Pensions - Africa

South Africa is undergoing pension
reform through the Pension Finds Act.
The alternative investment market in
the country is healthy with a large, and
growing hedge funds industry of
around 70 funds worth $7 billion of
assets. The pension funds industry is
limited, under Regulation 28 of the
Pension Fund Act, in the extent of
investment into certain asset classes.
There was a real need to update the
Pension Fund Act in South Africa to
allow investments into other asset class-
es other than bond, cash,
equity and property investments that
had essentially been the focus, however
the Act remains very restrictive at
allowing investment into other
investments such as derivative type
products and hedge fund products.
“This is being reviewed, although it is
not yet completed,” explains Janet
Johnstone, Chief Representative, The
Bank of New York in South Africa.
“Opening up the pension fund market
to include alternative investments will
give some diversification to pensions
fund investment scope.”
The socio-political landscape has
changed in South Africa in the past
decade and through the Black
Empowerment Act of 2003 has become
more inclusive of people that were pre-
“There was a real need
to update the Pension
Fund Act in South
Africa to allow
investments into other
asset classes.”
viously disadvantaged. This reflects on
the pensions industry in terms of its
participants, with more people now
contributing to pension funds because
they have sufficient disposable income.
South Africa has moved from defined
benefit pension plans to the more flexi-
ble, defined contribution plan structure.
In response to the Black
Empowerment Act there has been a
growth of Black Economic Empowered
(BEE) companies on the investment
front and the emergence of empowered
brokers and fund managers in the pen-
sions industry and asset management
industry. The Black Empowerment
Initiative works on a scorecard basis and
any company that wishes to benefit
from government mandates needs to
prove that they employ the requisite
number of empowered vendors and
suppliers in their business.
“For example, a pension fund would be
obliged to consider the appointment of
BEE fund managers and brokers in the
market, and similarly on the
administration side,” says Johnstone.
It is unsure what affect initiatives like
this will have on the wider scope of the
pension funds industry but they defi-
nitely support the increased volumes
that administrators have to cope with in
the ever-consolidating market.

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Pensions - Africa
Service Side
In South Africa, consolidation has
been seen amongst custodians with
additional services such as investment
administration, compliance monitoring
and performance measurement
increasingly. Some of the pension funds
in the market are now more directly
involved in the appointment of service
providers, and are notably moving
towards the appointment of a single
custodian. Consultants continue to
provide advisory and acturarial services
to pension funds as well as providing
performance measurement and
transition management products.
“What we are seeing now is more of a
need for the appointment of single
custodians who provide a wider range
of services such as custody, investment
administration, performance
measurement and transition manage-
ment, as opposed to the fund managers
choosing multiple custodians,” says
Karen Wall, Vice President, Investor
Services at The Bank of New York.
Transition Managers operating in the
market are providing pension funds
with the ability to effectively manage
the restructuring of investment
portfolios in a way that minimises risk
and costs for the asset owners.
Securities lending has become a low
risk and effective way for pension funds
to enhance returns on their portfolios
without additional costs. Income
generated from securities lending
programmes can typically offset
custodians’ costs.
In Nigeria outside entities have been
offering securities services for the last
20 and this has been dominated by one
South Africa player in the market that
people have used because of the lack of
service providers.
This is set to change however, with the
recapitalisation of the banking sector
back in December 2005, Nigeria has
gone from 89 banks to 25 with the top
five or six offering securities services. In
many cases these banks have a Chief
Operating Officer from one of the large
banks such as HSBC, Citibank or Credit
Suisse and have brought in the expertise
on securities processing from outside.
“Im not sure that we will see a rash of
Western Banks queuing up to offer
securities services,” believes Faulkner.
“But that’s not to say that it wouldn’t
22 INVESTOR SERVICES JOURNAL
happen in the next year or 18-months, if
only to facilitate the investment that was
coming in from outside.”
The recapitalisation of the banking
sector was an initiative set up by the
Nigerian Government which put in
stricter regulations that decreed that
banks had to have 50 billion Niara (the
equivalent of USD 200 million) and that
forced banks to either go under or
merge with another.
Twenty-five banks leapt the hurdle in
December last year and the general
consensus is that there will be further
consolidation down to as few as 16
banks. “The top 5 or 6 are going to
“One of the challenges
for Nigeria moving
forward is getting the
RSA beneficiaries
reconciled with the
pensions they
have accrued.”
control up to 90% of assets in the
country,” says Faulkner.
The Nigerian Government has also
encouraged local banks to partner with
western banks to manage foreign cur-
rency reserves and part of that will
mean that there will be a transfer of
additional securities service skills that
are already on the ground to facilitate
and compliment the actual management
of the foreign currency there.
The Future
In the near future it is envisioned that
a presidential decree will be passed so
that the domestic pension funds market
in Nigeria will be able to access say 10-
15 per cent of that fund to markets
outside Nigeria. “I think the key chal-
lenge with regard to Nigeria is to get
some more traction going,” says
Faulkner. “I think that it would make
sense while these institutions have
appointed global banks to help with the
management of the foreign currency
reserves, it would make sense for them
to be appointing those same global cus-
todians to look after the assets of their
domestic customers who had then
decidedto invest internationally.”
In the public domain the pensions
market in Nigeria has a way to go in
terms of the central data and records
regarding pension funds. National
insurance numbers, or RSA numbers
still have to be generated and one of the
challenges for Nigeria moving forward
is getting the RSA beneficiaries
reconciled with the pensions they have
accrued under heritage government
schemes. Until this happens the pension
monies cannot be released to the PFA’s
for them to invest and consequently
about 60 billion Niara is still awaiting
release from the government.
In South Africa the shift from defined
benefit to defined contribution pension
funds has made the general public more
aware of their responsibility for their
own financial futures. “People are really
starting to take an interest in the returns
that are generated, and in the costs that
are having to be absorbed by pension
fund administrators and the fund man-
agers who are appointed,” says
Johnstone. “There is a much greater
recognition and ownership by pension
contributors to the financial dynamics.”
In turn Johnstone believes that this will
lead to tougher decision-making on the
part of pension fund trustees.
Coupled with this, governance and
transparency issues are key within the
South African market and the Financial
Services Board (FSB) has taken steps to
ensure that fund managers and adminis-
trators have the best interests of
investors at heart.
Growth
It is evident that Africa is growing
economically and its financial markets
are able to support more complex prod-
ucts and funds. It seems however, that
the policies in place have quite a restric-
tive impact on the economies, none
more so than in the pensions arena.
Legislative reform has stimulated
monies being paid into pension funds
from the domestic market place, yet in
the same breath legislation has restrict-
ed custodians in the ways in which that
money can be used in foreign markets
to grow the economy further. Whilst the
African continent is enjoying something
of a boom period off the back of the
commodities market maybe it’s time for
diversification rather than bundling all
the eggs into one basket. ISJ
Pensions - Singapore
Singapore has show optimistic
growth in the securities services
sector. Brian Bollen get to grips
with the country that is hailed as
the ‘Switzerland in Asia.’
Singapore
Slinging
The Singapore investor services market
is confident and optimistic about near and
long term opportunities within the region,
despite recent turmoil in global markets
and, in particular, Asian markets. The out-
look is not universally rosy, and the country
faces challenges as well as opportunities, but
a number of market participants take a
broadly optimistic view of the recent past
and the short- to medium-term future. Says
Richard Surrency, The Bank of New York,
“In the domestic Singaporean market,
opportunities are beginning to appear out-
side of the traditional government-linked
investment base, and regional opportunities
continue to develop as Asian markets con-
tinue opening up their investment markets
to both external and internal players.”
Yow-Fee Lee, senior vice president, State
Street investor services in Singapore, adds:
“There has been an increase in portfolio
investments by institutional investors into
the region and global capital markets. As a
result, investment management and hence
demand for securities servicing is growing
strongly.”
The story repeats itself elsewhere,
though not always precisely, or wholly
optimistically. “As a global custodian oper-
ating in Singapore, we do see fund man-
agers here doing a fair bit of asset gather-
ing,” says Lawrence Au of Northern Trust
Global Investments. “But there remain
issues and concerns. Singapore acts on the
basis of banking secrecy laws. If it begins
to experience the same pressure to open
up as Switerland did, how will that affect
business here?”
In the meantime, assets under manage-
24 INVESTOR SERVICES JOURNAL
ment stood at around S$600bn at the end of
2005, continuing the trend in recent years of
above-inflation growth, notes Arjun
Bambawabe, who looks after HSBC’s securi-
ties services business in Singapore. He pin-
points business trusts and shipping trusts as
two interesting areas of future development,
as the market attempts to replicate the
investment experience of real estate invest-
ment trusts with higher yields.
“Singapore is the
operational hub for
over 35 global private
banks, compared
to 20 in 2000.”
"Asset allocations to Asia are increasing as
the region has improved in its corporate
governance coupled with strong perform-
ance,” observes Priscilla Soh, Head of
Securities Services, SouthEast Asia at
Standard Chartered Bank. "We expect that
to continue. Despite recent short-term mar-
ket corrections and the rebalancing of the
MSCI Indices in May, the longer-trend is
undoubtedly positive. Singapore's emer-
gence as an alternative to Dublin and
Luxembourg for GDR issuance and the suc-
cess of new asset classes for investment will
be a further contributing factor."
“With the influx of capital into Asia, the
outlook for Singapore, strategically posi-
tioned at the crossroads of Asia, certainly
looks positive,” adds Elizabeth Chia, manag-
ing director of Securities & Fiduciary
Services at DBS Bank. “The investor services
market in Singapore is competitive, but
being the only Asian bank, with Asian ori-
gin and orientation, we believe that we’re
really a niche player in the Asian market.”
Casting an eye back on recent history,
Richard Surrency notes that prior to 2004,
Hong Kong was considered the financial
centre of Asia (excluding Japan) due to its
open and transparent legal system and
established financial services infrastructure.
Having seen the dominance of Hong Kong
in the Asian financial services realm,
Singapore undertook a significant push to
create a ‘Switzerland in Asia,’ designed from
the ground up to attract the growth markets
of the future, being Hedge funds, private
banking, and trust services.
“This initiative was largely an effort to
expand Singapore’s traditional services sec-
tor away from electronics and manufactur-
ing towards higher value services, largely to
reduce concentration in areas such as elec-
tronics that had been adversely affected
during the Asian financial crisis,” he com-
ments. “By 2004, Singapore had made
sweeping changes to its banking laws creat-
ing a structure that was seen as more strin-
gent than Switzerland. Today, Singapore is
the operational hub for over 35 global pri-
vate banks, compared to 20 in 2000, open-
ing up substantial opportunities for investor
services organisations to service and sup-
port these activities on a global scale from
Singapore. ”
He identifies several trends in the market-
place that have had, and will continue to
have, a positive impact on the investor serv-
ices business in Singapore and Asia. “First
and foremost, we are seeing regulatory
changes around the region that have begun
to allow institutions to take advantage of
traditional value-added products such as
securities lending. Both Singapore-based
institutions, as well as other regional mar-
kets (most recently India and the
Philippines), have amended legislation
allowing public and private sector institu-
tions access to this valuable service.
Although securities lending has been avail-
able as an investment option for domestic
institutions, we have begun to see a trend
towards securities lending as a ‘required’
product within the investors arsenal.”
Institutional investors are gaining greater
exposure to wider asset classes such as Asian
fixed income, corporate credit, derivatives,
commodities, and alternative investments
adds Yow-Fee Lee. “For retail investors, we
are seeing an increasing interest in REITs
investments, structured products, and off-
shore funds which are registered and dis-
Pensions - Singapore
tributed in Singapore. There is also an
increase in exchange-traded funds availabil-
ity in Singapore and in the region. We are
also seeing a growing number of hedge
fund managers establishing their hedge
fund management offices in Singapore.”
Significant growth has also been seen in
Collateral Management services, supporting
vital capital and liquidity opportunities
throughout Asia via Tri-Party Repo,
resumes Richard Surrency. The develop-
ment of this market in Asia, albeit in its
infancy, has been strong as Asian institu-
tions realise the benefits of these products
as a low risk investment platform and an
efficient means of fulfilling short and medi-
um term capital requirements, he com-
ments. “It is our expectation that once this
product becomes more widely understood,
a significant market will emerge as it has
done in the US and European financial
markets,” he notes.
“Global Funds Services have also been
selling well across the entire region, as fund
houses begin to open and distribute their
funds in multiple jurisdictions across Asia.”
In an effort to manage risk within their
portfolios, investors across Asia have
begun to employ comprehensive and
sophisticated risk management solutions,
says Richard Surrency. Custodians have
responded to this need by integrating
advanced analytics and performance meas-
urement solutions into their custody and
administration solutions available over
their traditional client reporting systems.
“Supplementing traditional investor serv-
ices products is the development of alterna-
tive investment solutions specifically
designed for an investor service organisa-
tions client base,” he continues. “Today,
Asian clients can expose themselves to a
wide range of investment solutions to meet
their requirements, including alternative
investments including hedge funds, REITs,
ETFs and alternative debt programmes. By
offering these investment alternatives to
their underlying client base, custodians are
able to manage the entire lifecycle of the
investment, from management through to
custody, a model that has seen significant
growth within Asia, particularly within cen-
tral banks, pension funds, and private banks.
“The largest issues today surround the
availability of offshore investment options
within the Asian marketplace. Many mar-
kets in Asia remain highly regulated, and
although global investment dollars are well
received, these markets do not reciprocate
by offering global investment opportunities
to their citizens. Examples include India,
26 INVESTOR SERVICES JOURNAL
where recent changes to foreign investment
regulations allowed Indian citizens to invest
US$ 25,000 per annum overseas. One only
needs to see the recent 30% fall in the
Indian market to recognise that the oppor-
tunity to diversify one’s holdings is a vital
part of an efficient investment market.
“In Singapore specifically, the rapid
growth of back and middle office services
for global institutions taking advantage of
the banking reforms has led to an extremely
tight labour supply in the local market, par-
ticularly for experienced personnel.
“Many institutions in Singapore have seen
vital positions remain open for over six
months, sometimes over nine months, sim-
ply due to a shortage of experienced per-
sonnel in the local market.”
“Hong Kong remains a
strong financial centre
but environmental
issues are beginning
to impact its ability to
attract top tier talent.”
While the regulatory changes designed to
attract the private banking community to
Singapore are hailed as a critical component
of Singapore’s success, other factors con-
tribute too. “I would extend this discussion
into a lifestyle decision by professionals as
to where they wish to reside,” says Richard
Surrency. “Hong Kong, once the crown
jewel of Asia, remains a strong financial
centre but environmental issues are begin-
ning to impact its ability to attract top tier
talent. The pollution from China is hitting
critical levels, and is a regular topic of dis-
cussion within the community, especially
for expatriates with children.”
Looking ahead, Richard Surrency con-
tends that Singapore will continue to
demonstrate consistent growth, particularly
in the fund services, securities lending, risk,
and collateral management areas. “Our
expectation is that fund services will be par-
ticularly strong as Singapore domiciled
funds houses begin to establish funds run
from Singapore but sold into regional mar-
kets. New prospects should be encouraging
as well, Singapore is attracting sizeable new
institutions into the market and we expect
this trend to continue.”
Richard Surrency does not, though, envis-
age significant changes to the line-up of
service providers, whether through an
influx of new players or the exit of estab-
lished providers. “In Asia we have seen the
entry of Brown Brothers Harriman into the
Chinese market, as well as Northern Trust,
however these should not be considered
new players as their services have always
been offered in Asia for many years. The
expectation is that most custodians will
have already set up in Asia as this is a major
growth area for assets, versus the more sta-
ble markets of Europe and the US.
“Consolidation may begin to occur in
domestic markets. however this analysis has
been consistent for the past ten years and
has never come to fruition.”
Singapore continues to offer growth
opportunities since it has become a centre
for wealth management and hedge funds,
adds State Street’s Yow-Fee Lee.
“Consequently, we expect to see more serv-
ice providers and specialist service providers
entering the market.
“Due to the heightened awareness of cor-
porate governance, investors participate
more actively in proxy voting. In addition,
the increased awareness of the transaction
costs of investing and the desire to generate
incremental revenue has created the
demand for transition management and
securities lending, respectively.
“As Singapore continues to become a
regional financial centre for wealth manage-
ment and hedge funds for which the gov-
ernment has been actively promoting, we
anticipate Singapore will continue to estab-
lish its prominence in these segments.The
Singapore government is also thinking of
ways to further liberalise national pension
fund by offering low cost products, and to
further attract global investment managers
setting up in Singapore.”
So what does the future hold? “Despite the
growth and sophistication of the investment
industry, the Singapore market is still rela-
tively small compared to other markets such
as the U.S. and Europe,” says Yow-Fee Lee.
“While we are optimistic about the potential
growth and the outlook in the securities
servicing industry, service providers are also
cautious in terms of deploying global tech-
nology due to the scale of the industry. With
an increasing number of new products in
the market, such as hedge funds and private
equity, there is pressure to have more service
providers to support these new products.
Singapore is often considered to be an opti-
mal location to establish investment and
securities servicing business and as a spring-
board to tap into the growing securities
servicing opportunities available in the
Southeast Asia region.”
ISJ

A new age for voting
Proxy voting has
come under scrutiny
of late. But with
heightened interest
from investors in the
voting process could
the tide be about to
change?
ISJ reports.
Marks the Spot
Electronic proxy voting has taken a
quantum leap forward over the past
decade, and continues to change the
way in which investors engage with the
companies they invest in. Don’t take
our word for it; this is the view of
Michelle Edkins, a Managing Director of
Governance for Owners, which was
established by a number of former
Hermes staff in late 2004 as an inde-
pendent partnership between major
financial institutions, shareholders and
executives dedicated to adding long-
term value for clients by exercising own-
ers’ rights. “We have advanced hugely
from when I first joined Hermes 10
“The technology
was there to make
electronic voting
a reality.”
years ago,” she says. “Back then we did-
n’t vote outside the United Kingdom at
all and even within the UK you could
spend longer filling in proxy voting
Data Services - Proxy Voting
cards and posting than on talking to the
companies about investor concerns.”
For once in the investor services
world, it wasn’t for the lack of appropri-
ate technology, she recalls. “The tech-
nology was there to make electronic vot-
ing a reality, but there were very few par-
ties prepared to pay for the extra IT
development needed to make electronic
voting a reality.”
Sarah Wilson, Managing Director of
Manifest, thinks along similar lines. “It
is very regrettable that electronic proxy
voting has not received the resources
and the backing from regulatory authori-
ties that it deserves,” she comments.
“Shareholders are being disenfran-
chised across Europe, but awareness is
growing, and development is ramping
up.”
There is still however a long way to go
before the market moves anywhere near
perfection, opines Glen Good, a director
of the international shareholder com-
munications business at ADP. “In many
countries voting entitlement is not
clearly defined. In the UK, for example,
companies are required to notify share-
holders whose names appear on their
register but there is no obligation to
advise beneficial shareholders. It
becomes a commercial decision for the
nominee company owners, normally
custodian banks and retail brokers,
whether to forward meeting information
to, and facilitate the return of any voting
responses by, beneficial shareholders.”
“Over the past few years there has
been a significant growth in interest in
proxy voting, in particular there is a
strong desire to ensure voting is, and
remains, both easy and transparent,”
says Nigel Colgan, Senior Product
Specialist & Vice-President, ABN AMRO
Mellon Global Securities Services.
“Most pension funds we speak to are
extremely interested in the voting
process, and in how we can facilitate a
simpler and more streamlined voting
mechanism for them. Technology has
definitely played a key role in reducing
the paperwork and cutting the time it
INVESTOR SERVICES JOURNAL 27
Data Services - Proxy Voting
takes investors to provide notification of
their voting intentions. It has become
easier for them to access and lodge
their votes without question.”
“That said, there is a lot more that
needs to be done before we reach an
acceptable level of transparency from
the voter’s perspective.” The only prob-
lem with automation, argues Hendrik
Jan Boer, Head of Sustainable Equity
Investment at ING Investment
Management, is that the introduction of
automation has introduced more links
into the processing chain. “This creates
delay, and means that in practice we
might still only have a day or two to
decide how to vote any individual
stock,” he says.
Key steps in creating the new reality
included the work carried out by ADP in
the USA, to enable a number of funds
there to meet growing regulatory and
quasi-moral requirements to vote the
stock they owned, and the launch of
online voting by BP, under the company
secretaryship of Judith Hanratty. “This
showed the way for other companies to
work with their registrars to make elec-
tronic voting secure and effective,” says
Sarah Wilson.
Fast forward sev-
eral years and “The average voting level was 61.06% at AGMs
SWIFT currently
has nine mes- held in 2005 by FTSE All Share issuers.”
sages in the test-
ing stage to make the process even eas-
ier and more widespread, subject to
buy-in from issuers, and banks, she
comments.
The mechanisms in place today are
largely electronic proxy voting mecha-
nisms, rather than direct electronic vot-
ing, note the authors of a report on the
subject in Australia, Richard Alcock,
Andrew Daly and Caspar Conde, updat-
ed in February 2006. These mecha-
nisms typically require instructions to
be submitted to a proxy collection
agency that receives the instructions
and passes them on to a person who
will execute the instructions at the
meeting. “The vast majority of online
voting systems retain a reliance on
proxy mechanisms, and there is only a
small amount of evidence that proce-
dures have been implemented allowing
shareholders directly to cast a vote at
general meetings,” they say.
Simon Coleman, Director of
Operations at RBC Dexia, is only one of
many to draw a clear distinction
28 INVESTOR SERVICES JOURNAL
between direct electronic voting via the
internet, and electronic proxy voting
using an intermediary that has seen a
gap in the market and built a business
out of the distribution of voting materi-
als to registered shareholders and man-
aging the resulting votes back to the
issuer. “This allows investors to access
their entire portfolio in one place, and
encourages them to vote. End-to-end
global electronic proxy voting for insti-
tutional investors is still a distant aim,
but the industry has made significant
strides in the past five years but the
quantum leap required to make this a
reality will only be driven by adopting a
best of breed standard through legisla-
tion.”
The increasing ease with which elec-
tronic votes can be cast, combined with
growing moral and regulatory expecta-
tion that shareholders will exercise their
shareholding rights, would seem to be
having a positive impact on investor
behaviour. The Shareholder Voting
Working Group, chaired by Paul Myners,
issued its second progress report on the
voting process in the UK, observes
Michelle Edkins, in her contribution to
the ICGN Yearbook 2006, discussing
UK Corporate Governance since July
2005.
“The Group was set up in response to
concerns that votes were getting lost,
which was undermining confidence in
the system and resulting in lower partic-
ipation,” she notes. “The findings of
the progress report were that voting lev-
els have increased (from 50% in 2003 to
61% in 2005) and that electronic voting
and communication had significantly
increased. This ties in with anecdotal
evidence that companies are making
much better use of their websites for
providing information on the annual
general meeting and corporate gover-
nance matters generally.”
The most recent figures available from
CREST show that every single one of the
FTSE100 companies has now signed up
for its electronic proxy voting service
and that the average voting level was
61.06% at AGMs held in 2005 by FTSE
All Share issuers. “Conversely, the pro-
portion of votes cast by paper
decreased from 40% in the previous
year to just 16%,” adds Sarah Wilson.
“UK voting has more or less doubled
since Manifest was created in the mid-
1990s.”
If the Euroclear-driven harmonisation
of European clearing and settlement
continues, the CREST system could be
leveraged up to provide a platform for
other European markets, suggests
Robin Arita, a Managing Director
responsible for the global custody prod-
uct management team at The Bank of
New York, in New York. “Good corpo-
rate governance is certainly a priority,
which makes proxy voting a priority,”
she says. “Automation reduces errors,
and mitigates risk, as Paul Myners indi-
cates in his report which included an
electronic voting recommendation -
with a focus on the use of CREST's elec-
tronic voting platform.”
This is of more than academic inter-
est, argues Edkins. “The most impor-
tant point about electronic proxy voting
is that it enables you to devote more
professional resources to talk to compa-
nies about change, rather than filling in
forms. It’s less about casting a vote for
the sake of cast-
ing a vote, and
more about cast-
ing a vote intelli-
gently.”
She goes on to
note that the preliminary results of a
study of the Hermes UK Focus Fund
suggest that investor engagement
results in changes in companies that
cause a positive share price reaction
and result in out-performance by the
stocks in the portfolio. At a time when
every basis point of return is arguably
more important than ever, who in their
right mind could argue with that?
Edkins does however utter one word
of caution, reminding us that enabling a
procedure to take place electronically is
not in itself the complete answer. “The
question of whether electronic proxy
voting can bring about a change in a
company’s behaviour depends on how
intelligently the voting decision is taken.
A downside is that people can automate
the whole process, so that instead of
taking a decision after analysis of the
facts, they will set up their systems to
vote in accordance with the analysis of
their proxy research adviser, even if it’s
not the right thing to do in terms of
long-term value creation.”
 The Global Vote
Processing Solution
“Neither issuers nor investors want informed
voting swamped by uninformed voting,” says Sarah
Wilson. “This is the problem with ADRs. Corporate
management can wield enormous political, social
and economic power, and they need to be held to
account,” adds Glen Good. “The first step is to get
investors to vote. The next step is to have them
provide reasoned voting, to think about how they
use their votes.”

“The first step is to get

investors to vote. The next is
to have them think about how
they use their votes.”
One experiment in electronic proxy voting that
looks set to be intriguing is that launched in Japan
late in 2005 by ICJ, a joint venture between the Complete outsource solution
Tokyo stock exchange and ADP. “It’s still in the early
embryonic stage but it is developing quite rapidly,”
says Shaik Ismail Hakim, Senior Vice President, Web based convenience
Custody and Clearing, at HSBC in Japan. “We know
that late last year there were just five issuers
participating in it, out of Japan’s 3,000-plus plus All electronic investor tools
listed companies. Today, there are around 100-150
companies participating. While intermediaries are
interested in it, it’s not necessarily more efficient for
them. People are adopting a wait and see attitude.” Multi-custodial product
There is something in it for issuers who want
shareholders to vote, he argues. It is an efficient,
easier channel in a system that requires substantial Comprehensive reporting
paper processing and is cumbersome for foreign
investors.
While shareholder voting ranks alongside
motherhood and apple pie as good and wholesome, Over 90 active markets
the fact is that in Japan, about 2,000 meetings will
be held on the same day in June every year. This
makes it all but impossible for people known as Over 2600 institutional investors
Sokaiya. The horror of embarrassment in Japanese
society and corporate life enabled the Sokaiya to
hold companies to ransom in return for not making Global client service
trouble at shareholder meetings. Today, the Sokaiya
are literally a dying breed, but the system designed
to thwart their ambitions now faces the prospect of
renewed shareholder activism, if electronic proxy
voting truly catches on.
But Shaik Ismail Hakim believes the impact of
electronic proxy voting on enhancing corporate
governance will not be huge. “It’s not a big issue in
Japan,” he says. “Foreign institutional investors go
via the global custodian or broker route, so they
already have a voting channel. What electronic proxy
voting gives them is more time to analyse facts and
consider issues in a company’s performance. While
this will give the perception of better corporate gov-
ernance, it won’t actually help to improve it; you’re
only talking about two or three days advantage
through the electronic platform.” ISJ
www.ics.adp.com
adpinfo@adp.com
Funds - Prime Brokerage Panel

Prime Brokerage
Our panel of experts discuss the Michael Brian
evolution of prime brokerage
Michael Brian, Head of Equity Prime Brokerage, Europe,
Barclays Capital. He is a Director in Barclays Capital’s Prime
Services team and responsible for sales and service across
Europe. Brian joined Barclays Capital in May 2003 from Merrill
Lynch where he was Head of Sales for Equity Finance and Prime
Brokerage in Europe.

David Aldrich, Managing Director, The Bank of New York. David Aldrich
He is responsible for the management of the hedge fund and
broker/dealer businesses across Europe. Prior to joining the
bank, Aldrich was at JPMorgan Chase in London, where he was
head of sales and relationship management of the securities
clearance and collateral management business lines in Europe.

Angela Henderson, Director, Global Prime Services, Deutsche

Bank. She is responsible for sales to hedge fund managers, is
based in London and joined Deutsche Bank in 2000. Previously
she set up and ran the legal department at Citco Fund Services Angela Henderson
Europe, having responsibility for funds of funds structuring and
general advice to the fund administrator and its directors.

What are the latest issues to affect the prime brokerage
sector?
Brian: The dynamic nature of our client-base dictates that
the prime brokerage business is in constant evolution. Hedge
funds differentiate themselves by their ability to move quick-
ly and expect their service providers to be responsive and
flexible in dealing with change and innovation.
The last year has seen hedge funds increasingly using
derivatives across asset classes, seeking to exploit the boom
in commodities and looking for access to emerging mar-
kets. Access to bank loans is another area where hedge
fund demand for product has grown exponentially
In response, current key initiatives at Barclays Capital
include further building out our centralised clearing plat-
form for derivatives including foreign exchange, interest
rate swaps, OTC commodities and CDS and continued
investment in our market-leading cross-margining solu-
tion to include new products.
Aldrich: The Bank of New York is not a player in the
Prime Brokerage area for the simple reason that some of
the Bank’s biggest revenue producing clients are the large
US and European prime brokers. From our perspective the
key issue affecting the prime brokers is one of competi-
tion. This is driving the development of better technology,
designed to be used by hedge fund clients of the big
brokers, and this factor is also causing spreads to narrow.
Henderson: As hedge funds advance further into emerging
markets the importance of a global presence increases.
Deutsche Bank capitalises on its global reach by offering
clients access to markets in over 70 different countries
through its prime services platform and continue to add
new markets to our range. Recently, we have added access
to Pakistan, Lebanon, Kazakhstan and Israel and found
financing solutions for opportunities in Russia and Turkey.
With a limited number of opportunities in the straight-
forward listed securities markets we are finding that the
star hedge funds are using more complex products to dif-
ferentiate themselves. Clients expect a full-service prime
broker like Deutsche Bank to provide full asset class cover-
age, including bank debt, OTC options, private placements
and access into new markets and regions, as well as effi-
cient cross-margin capabilities.
On that basis, how important are additional or added-

30 INVESTOR SERVICES JOURNAL


value services to your offering in this sector?
Henderson: Clients appreciate the ability to address and
resolve complex financing propositions with experienced
financiers. This applies to hedge funds at every stage of
their development, be it at the beginning, when they are
deciding how to structure their businesses, one to two
years in as they start to encounter more complex transac-
tions and as mature businesses when their strategies
become more sophisticated.
Capital Introduction is an established additional service
and we work intensively with early stage start up funds
right up to multi-billion dollar funds. Larger firms seek
help to diversify their investor base with capital from
investors such as pensions and endowments, a service that
we have specialised in offering. Proprietary information
has become a key differentiator, our hedge fund capital
group is renowned for its annual Alternative Investment
Survey which is based on its own research covering more
than two thirds of the alternative investment community.
When clients choose a prime broker they are
increasingly looking at the overall relationship with their
firm of choice, rather than focussing only on the essential
financing and balance sheet strengths. The ability to
deliver the whole firm, as well as a robust product is
valued highly by clients.
Brian: Historically, in a more immature hedge fund indus-
try, prime brokers sought to differentiate themselves via
ancillary services such as capital introductions, ‘start-up’
services and free technology solutions.
As the industry becomes more mature it is increasingly
dominated by larger alternative investment groups that are
more institutional in outlook. They are no longer depend-
ent upon investment banks for technology products or
introductions to investors and are keen to receive more
transparent unbundled services. They also have the
resource to isolate and look more closely at the core prime
brokerage solution provided by the investment banks.
At Barclays Capital we have always focused on providing
excellence in operational service and transparency around
margining and financing. We believe that this is where we
genuinely ‘add value.’
Aldrich: The large Prime Brokers are all competing to have
the biggest and broadest service offering. Key factors
include capital introduction and trading technology. Also
important is reporting and client service is a core differen-
tiator.
How important is technology in keeping ahead of the
competition?
Aldrich: Technology is of prime importance for two rea-
sons; one it allows brokers to offer more exciting and
value-added trading tools to their trading counterparts,
and two, it acts as an effective barrier to entry for smaller
players, who do not have the revenue streams to compete
with the dominant players.
Henderson: It is essential to invest in technology to keep
ahead of the competition and to capitalise on Deutsche
Bank’s strengths. There are the given areas of web report-
ing and delivery of information but the background tech-
Funds - Prime Brokerage Panel
nology is crucial to being able to provide more advanced
services such as cross product margining capabilities.
Deutsche Bank allows clients to view their entire portfolio
(equity, debt, FX, OTC, futures) online and have the ability
to drill down on each position to retrieve the appropriate
margin calculation. This has allowed us to maximise not
only the product coverage and, most importantly, capital
efficiency for clients, but also the degree of transparency
and predictability of our margin requirements.
Maintaining the quality of our product within this fast
moving and innovative business requires heavy investment
in technology.
“As the industry becomes more
mature it is increasingly dominated by
larger alternative investment groups
that are more institutional in outlook.”
Brian: Technology is an integral and key component of
any prime brokerage solution. This is particularly relevant
in the competitive arena of trade execution where trades
worth tens of trillions of dollars per year are now executed
electronically.
At Barclays Capital, we seek to differentiate ourselves via
our e-commerce trading technologies under the banner of
‘BARX’ that provides over 3,000 of our clients direct mar-
ket access to global equity, fixed income, foreign exchange,
futures and commodity markets.
We are also very focused on automating the processes
around our prime services business to ensure scaleability.
In particular, the STP technologies supporting cash and
synthetic prime brokerage, credit intermediation and
cross-margining products.
Has there been an evolution in the types of strategies you
see hedge funds pursuing and how has this affected the
prime brokers?
Brian: The most obvious trend has been towards a more
discretionary multi-strategy approach with managers allo-
cating funds dynamically across asset class, as opportuni-
ties arise. This has tested prime brokers ability to service
and margin our clients across a combination of cash and
derivative products in multiple asset classes, including new
areas such as leveraged bank loans. At Barclays Capital, our
multi-asset class prime brokerage platform and cross-mar-
gining product have allowed us to benefit from this devel-
opment.
During an extended period of low volatility, arbitrage
strategies appeared crowded and many underperformed.
Hedge fund investors gravitated towards more directional
fundamentally driven managers. It will be interesting to
see how the equity market correction and increased
volatility in May and June impacts that particular trend.
The desire to find returns has also seen investors more
willing to look at areas such as emerging markets, high
yield and commodities.
In general, a more challenging returns environment acts
as an incentive to hedge fund managers to look more
closely at their prime brokers from a ‘value’ perspective.
Funds - Prime Brokerage Panel
Institutional investors increasingly expect their hedge
fund managers to demand a high level of transparency and
to scrutinise and justify the fees charged by prime brokers.
Henderson: The hunt for alpha during recent years has
taken some hedge funds into less liquid assets, markets
and instruments, such as private equity, PIPEs, real estate,
bank loans, distressed debt, unlisted securities, and emerg-
ing markets. Clients look to their prime brokers not only
for basic access to these new areas but also for financing.
Investment banks such as Deutsche Bank who have the
expertise and balance sheet to accommodate these oppor-
tunities are clearly providing an added-value service and
are thereby able to remain ahead of the competition.
“The requirements from prime brokers
have clearly changed as a result of the
explosion in the use of derivatives.”
Aldrich: The strategies are constantly evolving and the key
issue is the development of new derivative products, which
is a wonderful profit opportunity for brokers for whom
these are much higher revenue producers than vanilla
securities. Additionally the increased pace of investment in
emerging markets, including new markets in Africa, poses
interesting challenges for the brokers, in terms of valuation
and network management.
Is the increased derivatisation of assets problematic for
prime brokers?
Aldrich: Derivatives are the main engine of profit growth
for the bulge bracket prime brokers and their expertise in
derivative products gives them an opportunity to exploit
opportunities that were not widely available when the
market was exclusively a long-short equity play.
Brian: The requirements from prime brokers have clearly
changed as a result of the explosion in the use of deriva-
tives. Cross-margining solutions, OTC credit intermedia-
tion products and synthetic equity prime brokerage prod-
ucts have increasingly become key differentiators.
Henderson: For some, yes but for Deutsche Bank, no.
Synthetic solutions have always been part of Deutsche’s
prime brokerage offering and we leverage our derivatives
offering to accommodate clients trading these types of
instruments.
How much of a challenge for prime brokers is the trend
towards hedge funds trading across multiple asset classes?
Henderson: Deutsche Bank’s resources and appetite make
this trend exciting for us. Our balance sheet, understand-
ing of asset classes and commitment to being a full service
provider make it easier for us to accommodate multi asset
class trading and further our relationships with clients and
their reliance upon us.
Aldrich: The advantage of the new entrants to prime bro-
kerage is that they are not burdened with legacy systems
that the more dominant, established players have.
Consequently they are in a better position to cheaply
32 INVESTOR SERVICES JOURNAL
utilise new technology to address cross-collateralisation
and margining questions from multi-strategy hedge funds.
Brian: I think it varies by prime broker. Some prime bro-
kers who built their business exclusively around equity
strategies have struggled to create a cohesive multi-asset
class product offering.
At Barclays Capital, we have always serviced bonds and
equities via one legal contract, operating platform and
service team.
What other challenges do you see in the coming months
and years?
Brian: The expectation is that hedge funds will continue to
receive significant inflows. Capacity constraints in certain
strategies and markets will lead to hedge fund managers
identifying and exploiting opportunities in new areas. It is
imperative that we maintain a good dialogue with our
clients to allow us to develop our products to address their
future requirements.
We will also need to continue to commit extensive
resources to enhancing the technologies that support our
clients trading, clearing and financing activities.
In order to retain our client service position in a
business that continues to experience dramatic growth,
we need to work hard to retain and recruit the most
talented individuals.
Aldrich: The competition for clients is driving spreads
down, and this in itself causes demand for larger and
larger volumes to be added to the books.
“In a business that continues
to experience dramatic growth,
we need to work hard to
retain and recruit the most
talented individuals.”
Henderson: Challenges faced by hedge funds themselves
cause challenges to us as prime broker. Clearly perform-
ance, the ability to produce real alpha and the flow of
investment into and out of the industry are issues for
everyone.
Investment strategies are becoming more crowded and
funds are trading more esoteric strategies and markets to
capture alpha and arbitrage opportunities. As a prime bro-
ker our challenge is to anticipate trends in terms of new
markets and new trading strategies so that we are a ready
to service them when clients make the demands.
ISJ
Disclaimer: The opinions and recommendations expressed in
this article are those of the authors and may not be represen-
tative of the individual banks and securities firms participat-
ing in this virtual panel discussion. The availability of prod-
ucts and services mentioned in this article may be restricted
by law in certain jurisdictions. Without limitation, this arti-
cle does not constitute an offer, an invitation to offer or a rec-
ommendation to enter into any transaction or investment
agreement with any of the participants.
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Funds - Cayman & Bermuda

The Cayman Islands and With Cayman home to over 60% of the
world’s offshore hedge funds and
Bermuda are two growing Bermuda growing as the location of
choice for US-based fund managers to
offshore jurisdictions. register investment funds, both have a
blend of regulatory benefit, locational
advantage and securities service expertise
ISJ joins them both for a dip on offer.
“Competitively, we are not a jurisdic-
in the warm waters tion that rests on our laurels and realise
that much of the industry globally is
of the Caribbean. essentially commoditised,” believes Ted
Bravakis, Cayman Islands Government, of
the Cayman Islands. “We believe the way
to differentiate ourselves is through our
quality and expertise.”
Bermuda is also making headway in
promoting itself as a fund domicile and
for those who work on the island it is as
good a domicile as any for foreign
investors to services their funds.
“We believe Bermuda sets a high standard
within the offshore financial industry by
providing the highest degree of integrity
and oversight, which lends further credi-

Island Hopping
bility to fund managers setting up in
Bermuda,” said Paul Kneen, General
Manager, Bermuda Commercial Bank.

The Jurisdictions
Today, the Cayman Islands financial
services industry encompasses banking,
mutual funds, captive insurance, vessel
registration, companies and partnerships,
trusts, structured finance and the
Cayman Islands Stock Exchange. “Our
uniqueness is reflected in our attributes
of excellence, experience and client focus,
coupled with a balanced regulatory
regime and highly entrepreneurial busi-
ness climate,” says Bravakis. “The avail-
ability of experienced professionals dedi-
cated to providing first-class service has
helped the Cayman Islands grow and
diversify its financial services industry for
more than 40 years.”
Recruiting and retaining high calibre
talent is one of the things that the island
prides itself on
“Our uniqueness is reflected in our attributes with increased
globalisation in
of excellence, experience and client focus.” the financial
world and bar-
riers to accessing talent from other juris-
dictions coming down
Bravakis also explains that in the
Cayman Islands, clients can experience a
“one-stop shop” from the fund industry
and expertise of service providers allows
institutional clients from all around the
world to be served. “Clients have come to

34 INVESTOR SERVICES JOURNAL

U n i q u e l y

Established in 1971
the Bermuda Stock
Exchange (BSX) is today
the world’s fastest growing
offshore securities market.
p o s i t i o n e d

The BSX is internationally

recognised as an attractive
venue for the listing of:
Hedge Funds
Investment Fund Structures
Equities
Fixed Income Structures
Derivative Warrants

Advantage Bermuda
www.bsx.com e-mail: info@bsx.com
22 Church Street, Hamilton HM 11, Bermuda
Tel: 1-441-292-7212 • Fax: 1-441-296-1875

The BSX is a full member of the World

Federation of Exchanges.
Bermuda is a British Overseas Dependent
Territory and is part of the UK for the
purpose of OECD membership.
Funds - Cayman & Bermuda
expect unparallel market knowledge,
global perspective, responsiveness and
quality and this has contributed to the
jurisdiction’s worldwide recognition as a
domicile for funds,” he says.
Bermuda too pride’s itself on the work
force that it can attract to the location
through its low-tax structure and
favourable work-life environment, and
attracts talent from the Canadian, UK,
and Australian markets.
“We believe Bermuda sets a high stan-
dard within the offshore financial indus-
try by providing the highest degree of
integrity and oversight, which lends fur-
“Location is critical to the success of both
jurisdictions with short the US, the UK
and Europe within easy reach.”
ther credibility to fund managers setting
up in Bermuda,” says Kneen.
He believes that the working relation-
ship between the Bermuda Government
the business community has made
Bermuda a unique market for financial
services that offers a deep knowledge of
its core business areas and clients, an
internationally recognized stock
exchange and a good understand the
markets and products.
The Bermuda Stock Exchange has
grown from strength to strength and
lists over 300 funds. “BSX is becoming
the location of choice in the offshore
world for those wishing a ‘superior’ level
of support from their listing,” says
Kneen. “Almost half of the funds that
list on the BSX are domiciled in other
locations.”
The Regulatory Environment
The structure for establishing funds in
the Cayman Islands is governed by the
Mutual Funds Law of 1993 a 15 year-old
piece of legislation. The Law was enacted
in 1993 and the age of this piece of legis-
lation has given regulators the hindsight
of a tried and tested system that can be
applied to funds on the island.
Subsequently, funds have become a key
sector in the Cayman Islands with
almost 7,000 registered to date.
“The Cayman Islands’ approach to the
development of the financial services
sector recognises that an appropriate
regulatory and legal environment is
not an impediment to, but rather a
key driver for commercial success,”
36 INVESTOR SERVICES JOURNAL
says Bravakis.
International anti-money laundering
standards have also been adopted by the
Cayman Islands and they have been dili-
gent in taking on global standards such
as Basel. This is recognised in a report
released in 2005 by the International
Monetary Fund (IMF) that assessed
regulation in the Cayman Islands around
its banking, insurance and securities
industries, that said: “An extensive pro-
gram of legislative, rule and guideline
development has introduced an
increasingly effective system of
regulation, both formalising earlier prac-
tices and
introducing
enhanced
procedures.”
The report
further
stated: “the
supervisory system benefits from a well-
developed banking infrastructure with
an internationally experienced and qual-
ified workforce as well as experienced
lawyers, accountants and auditors.”
Bermuda too, has introduced legisla-
tion in the funds sector that is hoped
will reduce the time it takes to incorpo-
rate funds on the island. “Bermudas reg-
ulatory environment retains flexibility to
ensure regulation is both light but effec-
tive yet quick to adapt to the increasing
demands of the developing regulatory
environment,” explains Kneen.
All investment schemes must apply to
be classified under The Bermuda
Monetary Authority (Collective
Investment Schemes Classification)
Regulations 1998, known as the ‘CIS
Regulations’. These aim to establish stan-
dards and criteria for the setting up and
running hedge funds in Bermuda whilst
protecting the interests of the investor.
“The ability of our commercial sector
to work with our regulators ensures that
key developments in our markets are
understood and analyzed so as to place
us in a position to act should the need
be or to assist in the support that new
regulation for the benefit of the global
industry overall,” says Greg
Wojciechowski, President & CEO, The
Bermuda Stock Exchange.
Room to Service
Location is critical to the success of
both jurisdictions with short the US, the
UK and Europe within easy reach.
As Bravakis explains, the Cayman
Islands is about one hour’s flight from
the United States with the airport han-
dling close to 1,000,000 international
and domestic passengers each year from
the U.S., Canada, Central America and
the UK.
Most, or all of the administrators in
Cayman can provide the full range of
securities services. A lot of shareholder
interaction activities such as subscrip-
tions, redemptions, shareholder state-
ments and communications with share-
holders are all delivered on the island,
with processing and accounting services
based in other locations where there are
lower costs and more flexible
immigration policies.
Wojciechowski believes that location is
critical to Bermuda’s success, with only
two hours flying time from most of the
east coast of the US, a short flight to
Canada and daily services to the UK and
Europe. “We are truly at the crossroad
between Europe and North America and
in a complimentary time zone to Asia,”
he says. “The US is one of our largest
trading partners and we sit right off its
doorstep in a jurisdiction that provides a
solid, proven framework of regulatory
operational infrastructure while sup-
porting product innovation.”
The core services that the jurisdiction
offers are similar to those found in other
jurisdictions around the world; account-
ing, portfolio pricing, investor servicing,
custody and trust servicing.
“Clients are looking for service and
support, they have commercial needs.
The challenge for any exchange is to
carefully balance its desire and ability to
meet the needs of clients while main-
taining its commitment to the effective
and prudent regulation of the market,”
says Wojciechowski. “At the BSX we feel
that we have struck the appropriate
balance in that Exchange is entrepre-
neurial in its approach to new products
and innovation but is steadfast in rela-
tion to it’s administration of key global
regulatory principles and client needs.”
Both the Cayman Islands and
Bermuda have a lot to offer in the funds
and servicing space. Embracing
legislation to open up the market whilst
retaining flexibility for those seeking to
operate funds from the islands seems to
be a successful formula. Coupled with
their advantageous locations, these two
jurisdictions could be set to be the
success stories of the future.
Watch this space. ISJ
Pre-Sibos 2006 - Leading Vendor Profiles
sibos Raising ambitions
Sibos 2006 at a glance
In October 2006, Sydney will host Sibos - the world's
leading financial forum. The annual conference and
exhibition draws over 5,500 executives and technology
managers from the banking and securities industry.
The Sibos 2006 theme is “Raising ambitions”. Sibos
2005 in Copenhagen challenged the financial community
to raise aspiration levels and capitalise on the communi-
ty’s assets and potential. We have already proven in the
past that as a community, we are capable of great
achievements if we have the collective ambition to do so.
This year’s Sibos theme invites the global financial com-
Patrik Neutjens munity to set the agenda for the future. It also calls for
decisions on how to tackle current issues efficiently.
Following "Time for growth" in 2004 and "Transformation" in 2005, it is now time
for the financial community to agree on new ambitions, to plan and realise them fast
and efficiently, to optimise results sooner than later. Sibos 2006 will examine how
the financial community needs to solve current issues, complete existing projects
and jointly tackle ambitions on future opportunities: new markets, infrastructures,
geographies, business models, operational solutions and partnerships.
The theme is also extremely relevant for the region that will host Sibos 2006.
‘Raising ambitions’ is about growth and about ‘opening up’ to new ways of doing
things to achieve our collective ambitions. It is about emerging markets, it is about
the corporate space, global and regional market infrastructures, integration and
transaction management, partnerships and cooperation with regulatory bodies, as
well as SWIFT, Standards and Solutions.
Sibos is the place to be for networking and critical dialogue in the financial services
industry. If historical trends are anything to go by, we can expect Sibos 2006 to
attract a record number of attendees and exhibiting companies.
We look forward to seeing you in Sydney.
Patrik Neutjens is the Director of Sibos
An industry-leading outsourcing vendor for global
transaction processing and investor communication
services to banks, brokerages, fund managers and
issuing companies. ADP provides integrated
multi-currency securities processing solutions to sup-
port securities operations in almost any instrument
and market. Investor communication services include
proxy voting services in over 82 markets, company
reports, meeting notification and vote tabulation for
all beneficial shareholders.
CONTACT
MIKE WEST, VICE PRESIDENT, INTERNATIONAL MARKETING
THE ISIS BUILDING
193 MARSH WALL
LONDONE14 9SG, UK
TELE - +44 (0)207 551 3000
EMAIL – INFO@BSG.ADP.COM
Stand No: E10
38 INVESTOR SERVICES JOURNAL
Bank Austria Creditanstalt (BA-CA) and its affiliates
through-out Central and Eastern Europe (including
Bank BPH (Poland), International Moscow Bank and
HVB brands) is recognised as one of the leaders in
the specialised provision emerging market custody.
The group offers both custody to both domestic and
foreign investors or their agents in 14 markets across
the region.
CONTACT DETAILS
MICHAEL ASCHAUER, HEAD OF CUSTODY, CEE
DAVID PENSTONE, CEE REGIONAL SALES AND RELATIONSHIP
MANAGEMENT
RADOSLAW IGNATOWICZ, POLAND, LOCAL HEAD OF CUSTODY
ATTILA SZALAY-BERZEVICZY, HUNGARY, LOCAL HEAD OF CUSTODY
DORA HORVATH, HUNGARY, LOCAL RELATIONSHIP MANAGER
MIROSLAV VELIKOV, BULGARIA, LOCAL HEAD OF CUSTODY
Stand No: C08
BNP Paribas Securities Services is a leading provider
of securities services and investment operations solu-
tions to issuers, financial intermediaries and institu-
tional investors worldwide. With award-winning oper-
ations and a presence in 18 countries across Europe
and Australasia, BNP Paribas Securities Services
delivers a comprehensive range of services based on
unrivalled local market expertise, innovative solutions
and excellence in client relationship management
CONTACT DETAILS
CHARLES COCK
GLOBAL HEAD OF SALES AND RELATIONSHIP
MANAGEMENT, +33 (0)1 42 98 42 30
STEVE CHEW
HEAD OF SALES AND RELATIONSHIP MANAGEMENT
FINANCIAL INTERMEDIARIES, +44 (0)20 7595 1685.
Stand No: B02
home
Wherever you settle should feel like

Demands for a single European

capital market have set
harmonisation in motion.

We are convinced of the benefits

of harmonised financial markets
in Europe and are committed to
removing barriers to cross-border
securities settlement.

DELIVERING A DOMESTIC
MARKET FOR EUROPE
Pre-Sibos 2006 - Leading Vendor Profiles
Clearstream is the premier international settlement &
custody organisation offering a comprehensive serv-
ice covering both domestic and internationally traded
bonds, equities and investment funds. Since July
2002, Clearstream has been an integrated part of
Deutsche Borse Group.
In Q4 2006, Clearstream will launch the ‘Next
Generation of Collateral Management Services’ and
the Central Facility for Funds is Clearstream’s latest
initiative to offer a more efficient post trade solution
for investment funds domiciled in Luxembourg.
REPRESENTATIVES IN SYDNEY
SAHEED AWAN, ARMIN BORRIES, MICHEL BARBANCEY,
MIKE BARRETT, PHIL BROWN, ALTON CHAN, MARK GEM,
BENOIT KRIER, STEFAN LEPP, PHILIPPE METOUDI, ALAIN
MEYERS, KIYOICHI MURAKAWA, PHILIPPE SEYLL, ROBERT
TABET, JEFF TESSLER, TOM ZEEB
Stand No: J10
With 19 offices and over 1500 staff globally, DSTi
offers the most comprehensive suite of technology
solutions for the global financial services communi-
ty. Over 700 clients, ranging from single-site instal-
lations to large global institutions with operations
in every financial centre, rely on DSTi to help them
run their business more effectively.
Products on Show
DSTi’s investment management solutions include
front, middle and back office functionality that handles
multi-currency portfolios for both institutional and
retail markets. The suite of products can be used
either as stand-alone applications or brought together
in flexible combinations according to specific needs.
CONTACT
VISIT: WWW.DSTINTERNATIONAL.COM
Stand No: E04
40 INVESTOR SERVICES JOURNAL
peterevans is a leading independent provider of front
to back office solutions for the financial services sec-
tor. Clearly focused on the securities and investment
market, the company proudly launches its’ new prod-
uct line at SIBOS 2006
This new suite of applications offers a comprehen-
sive, configurable, fully integrated, browser based,
front to back solution that can be either deployed as
a single application or integrated as components into
your existing platform.
CONTACT DETAILS
NEW BROAD STREET HOUSE
35 NEW BROAD STREET
LONDON, EC2M 1NH, UK
TELE - +44 (0)29 20402200
WEB - WWW.PETERVANS.COM
Stand No: E14
As the leading supplier of custody services in the
Nordic and Baltic Region, we at SEB recognise our
responsibility towards our customers.
A blend of personal service, advanced communication
solutions and IT systems means that we can provide
sub-custody services of the highest standards. Our
Pan-Nordic Custody system and Internet Solution give
clients fast and consistent reporting and speed up the
clearing and settlement processes. In addition, we take
pride in keeping our client base fully up-to-date with
any changes or events that could have a bearing in any
of the markets in which we act as sub-custodian.
CONTACT DETAILS
MIKAEL BJORKNERT: MIKAEL.BJORKNERT@SEB.SE
GORAN FORS: GORAN.FORS@SEB.SE
ULF NOREN: ULF.NOREN@SEB.SE
YVONNE SILJELOF: YVONNE.SILJELOF@SEB.SE
CATHARINA BURESTEN: CATHARINA.BURESTEN@SEB.SE
Stand No: B03

The year was 1984, the first IBM PC was
on the market, computer platforms were
accessible to people and specialist sys-
tems could be put onto these platforms at
a fairly low cost.
Peter Evans had the idea for a turnkey
Nominee Accounting system product and
got Mike Foley, in to help on the technical
side of things.
“From my perspective it was a three-
month contract,” says Foley. “I was going
to do this with Peter and go back to my
day job, but it mushroomed and moved
forward and we got some good deals in.”
peterevans’ first client was a small pri-
vate client stockbroker and through that
the company entered into the areas of
nominee accounting and corporate
actions. Recognising this as being part of
the custodial role Evans and Foley cast
their net a bit wider and got involved with
custodians themselves.
Business has blossomed for peterevans,
even through the peaks and troughs of the
financial technology arena. The company
has exploited the outsourcing market by
selling products directly to its potential
customers but also to third parties who
use them to provide outsourcing services.
the tech “With this rise in outsourcing, we are
backing two horses by providing the sys-
tems direct to clients and also providing
touch systems to outsourcers,” explains Foley.
The process works on the insourcing
side too and peterevans was the company
responsible for working with Mellon Trust
to insource their UK Custody. “They could
With a unique blend of see the commercial advantage and cost
front to back office benefit of bringing that operation in-
house,” says Foley. “So we provided them
business solutions fit with a system to support their local cus-
tody with a direct link to Crest.”
for any custodian,
peterevans is proving Regulation
MiFID is currently driving the agenda
itself in the premier from a European perspective and petere-
league of UK software vans has been active in going to Central
and Eastern Europe to look at potential
houses. business there. “Central and Eastern
Europe is definitely going to be a growth
area,” believes Foley. “It may well be that
Alan Duerden speaks you get established banks in the west set-
ting up operations in Eastern Europe and I
to Mike Foley, think there is going to be a lot happening
Managing Director, in that area.”
From a software vendors point of view
about riding the Foley does not deny that regulation is
good news because clients have to buy
peterevans wave and products to be regulation compliant, but
why he couldn’t leave. what he sees with MiFID is the potential
Pre-Sibos 2006 - Technology
to fundamentally change the business,
and rather than having an ‘unhealthy’
patchwork of domestic markets across
Europe he sees the future as Europe being
one domestic market.
Standards
In its 22 years in existence peterevans
has seen many changes in the financial
world, and none more so that the wide
spread adoption of Swift messaging stan-
dards.
“These are great,” says Foley. “If you go
back a few years it felt like you were con-
stantly reinventing the wheel. It’s a very
good way for us to facilitate the delivery of
systems otherwise you are starting with
blank pieces of paper all the time. It has
allowed us to have a very much more
componentised approach to the way in
which we build systems.”
What standards have done for software
houses like peterevans is allow them to
build products in such a way that they can
ring fence different parts of the functional-
ity and design and then drop that piece
into a particular implementation.
Future
One of the challenges for peterevans
moving forward is that a lot of companies
still operate on legacy systems that may
be as many as 20 years old.
With all the regulatory and legislative
change happening, it is a tall order to
expect that these changes can be accom-
modated on systems which are so old.
“Technology is moving all the time and
we will always keep our foot on the gas
with regard to our technology footprint
and by using mechanisms such as ASP we
are able to smooth the process of moving
clients off their old systems,” says Foley.
A lot of companies cite issues to do
with risk and cost as reasons as to why
they still operate on older systems. At
some point however, there is going to be a
rush of companies who want to change
their systems as they realise that to be
regulation compliant and to keep up with
their peers in an intensely competitive
world appropriate changes have to be
made.
The main challenge for peterevans is
how they handle this influx in interest and
make sure that a client migration to new
systems are not only a smooth but cost
efficient process, a task they have risen to
in the past.
Will we have another twenty-two years of
peterevans? I think so!
INVESTOR SERVICES JOURNAL 41
Custody - Nordic Panel

Bente Hoem

Nordic Custody
Panel Debate
Our industry insiders grapple Anne-Lise
with the current issues and Kristiansen
trends in the Nordic region.

Bente Hoem, Head of Global Relations and Support,

DnB NOR. Hoem has 15 years of experience within the
custody business, from Christiania Bank og Kreditkasse,
where she headed up International Securities Services and Christel Leonhard
from SEB where she established and headed up its
Norwegian securities operations.

Anne-Lise Kristiansen, Head of Sub-custody and

Clearing, Nordea. She has worked in finance for 17 years
and joined Nordea's Securities Services in 2003. Preiously,
Kristiansen worked for investment managers and other
major players in the Norwegian securities market.

Christel Leonhard, Head of Sales, Securities Services,

Danske Bank. Leonhard has been head of sales since Neal Meacham
November 2005, but has been with the bank since 1984,
before joining the Securities Services area she held vari-
ous positions in Danske Markets including Sales of
FX/Derivatives and Marketing of Danske e-Markets.

Neal Meacham, Head of Custody, Swedbank. Meacham

has worked in the Swedish securities industry for over 20
years of which the last 8 years have been with Swedbank.
Prior to his current managerial position Neal has primarily
worked with client relations management and client serv- Allan Nedergaard
ices.

Allan Nedergaard, Nordic Business Development,

Northern Trust. Nedergaard joined the European Sales
team in 2005 and is responsible for the sales and market-
ing efforts of Northern Trusts’ global custody and related
products to the Nordic countries. Previously, Nedergaard
worked for Danske Bank, responsible for the Nordic insti-
tutional client base as well as Nordic region sub custody.
Ulf Noren
Ulf Noren, Head of sub-custody Client Relations, SEB.
Nored heads up the sub-custody venture in the 4 Nordic
Markets, Germany, the 3 Baltic Markets and Ukraine. He
has been with SEB for two and a half years and has
worked with Sub- and Global Custody for the past 23
years.

Johan Wennerberg, Head of Relationship Management,

Handelsbanken. She is vice president at Handelsbanken
and has been with the company since 1984. Between 1995
and 1999 he worked as head of the Nordic desk with Johan Wennerberg
Handelsbanken in Asia.

42 INVESTOR SERVICES JOURNAL

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Custody - Nordic Panel
Within the Nordic market there
has been continued consolidation
and alliances how do sub-
custodians best position to
compete successfully?
Hoem: The consolidation has been most-
ly on the trading infrastructure and I
believe there is still a long way to go until
we see consolidation between the post-
trading infrastructures. In addition, many
of the alliances have not really come into
effect as yet. In the long run, consolida-
tion and alliances or not, the best way to
position yourselves to compete success-
fully is to have an efficient organisation
and flexible system that easily can adapt
to changes and new products. It is also
very important to deliver very
good service on all levels “The best providers of custody
Kristiansen: In light of the services in the Nordic markets are
upcoming changes in the Nordic the ones that make solutions and
market infrastructure, we see
increased demand for regionali- services available that meet the
sation of sub-custody services.
On the other hand, it is absolute- needs of investors!”
ly essential to maintain strong
local expertise both regarding infra-
structure and client services. Also, an
integral part of succeeding in this
changing environment is to be actively
involved in the local and Nordic devel-
opments ongoing. Nordea has strong
representation in the market institutions
as well as in the different working
groups, which work towards adapting
the market participants to the future
changes. So, the ability combine the
Nordic and local expertise and adapt-
ability is, to us, the key to success.
Leonhard: The best providers of custody
services in the Nordic markets are the
ones that make solutions and services Nedergaard: Local custodians will need
available that meet the needs of investors! to review their own capabilities to deter-
In order to do that a provider must be mine if they can go it alone in order to
able to adapt the existing setup to future meet the future as well as the current
changes and requirements coming both needs of Nordic investors. These being
from the market and from clients. predominately:
Flexibility is the key answer as investors A: Cost reduction versus increased
have different objectives. efficiency – faster time to market
Our strategy as a sub-custodian is to B: Capital expenditure and develop-
have centralised and highly automated ment of technology to meet intraday
processing of operational core custody information and performance needs
functions, supported by individual C: Complete servicing of a wider and
human services. This enables us to more varied asset classes – property,
provide the right mix of flawless execu- hedge funds, private equity, complex
tion and settlement combined with tai- derivative instruments, currency as
lor-made solutions based on in-depth an asset class, infrastructure etc.
knowledge of the market and highly
professional capabilities. If not, they must consider other options
such as merging or partnering
with other providers in order to
survive in an increasingly com-
petitive and busy market place.
One such example is Northern
Trust’s cooperation with Svenska
Handelsbanken. Not only do our
clients benefit from the global
reach and local expertise offered,
but also the fact that asset servic-
Meacham: Our part of the world is ever- ing is the core business activity for both
changing, even though we sometimes organisations. There are no distractions
think that some changes takes a little too of other business lines such as mortgages
long, it is none the less constantly chang- or credit cards.
ing. Flexibility has to be a key factor for Equally, global custodians must come
operating in a market such as ours. up with innovative approaches in order
Custodians which have flexible to open up opportunities in the Nordic
systems/platform, reporting mechanisms, region. We believe that local knowledge
operating models and client servicing and the ability to listen to client needs is
processes in conjunction with strong paramount in order to provide innova-
market influence and a dedication to deal tive solutions for Nordic clients. For
with constant change and development example:
are going to be most successful.
Understanding client requirements and Northern Trust took up a significant
relating them to our market environment challenge when looking to service the
will be ever increasing asset as our mar- Swedish mutual fund sector. Since
ketplace moves forward. Swedish mutual fund companies are
Flexibility on a solid ground
To keep the customer in Handelsbanken is one bank
focus. That is one of the throughout the region –
cornerstones at with the same organisation,
Handelsbanken. We do not management and culture,
simply sell products, we and one of the highest
provide you with the rated private banks in
services you need and Europe.
want.
As the first bank to provide
Because of a decentralised local in-house custody in all
structure, we ensure a Nordic markets, we have a
flexible and quick decision- set-up that allows the same
making process, and it high level of service
helps us to create tailor-
made services, as well as
throughout the region.
Handelsbanken
new market solutions to We offer flexibility on a solid Nordic Custody Services
meet your expectations. ground.
www.handelsbanken.com/nordic_custody_services
 Custody - Nordic Panel

obliged to work with a local custodian,
we identified a solution to this problem
by partnering with a local player, Svenska
Handelsbanken, allowing one of the
largest insurance and mutual fund com-
panies in the Nordic region (Folksam) to
consolidate all their assets including
funds with a global custodian. Northern
Trust worked closely with the Swedish
regulator who approved our fund model
and the principles of this are now incor-
porated into the Swedish Fund Act. We
have also rolled out a similar mutual
fund solution in Norway. We have since
expanded this model to include the other
Nordic countries as well making this a
true Nordic mutual fund solution.
Secondment of staff to work in our
clients’ offices during peak activity is
another means to gain an in-depth
understanding of our clients’ businesses
and ensure that they are receiving the
service that is right for them. For exam-
ple, we gain an understanding of their
information requirements and how this
data will be used. Our information deliv-
ery can be customised accordingly ensur-
ing we are getting to the heart of our
clients’ requirements.
Noren: Since last year, the infrastructure
consolidation has been slow. The NCSD
project that shall consolidate the Swedish
and Finnish CSD's is ongoing but results
are produced at a slower pace than we
first anticipated. Though, the work is dili-
gent and aims towards finding Nordic
solutions so that other CSD's can work
according to the model to be chosen
when further consolidation comes about.
There is no doubt that this will happen,
the question is when. Another dimension
of consolidation is the growing trend
among clients to consolidate to fewer
providers and benefit from the advan-
tages of using one provider in a multi-
tude of markets. This trend has been
growing stronger and stronger the last
three years and also 2006 has started with
a massive amount of RfP's, RFI's and
exclusive discussions with a limited num-
ber of providers. This will continue for
reasons described in the below and will
eventually lead to a consolidation also
among service providers in this region.
Wennerberg: We believe that that there is
a need for local market presence but with
a set up which is as harmonised as possi-
ble when it comes to systems and report-
ing. The local presence is essential in
order to offer best possible corporate
action, tax reclaim and proxy voting serv-
ices. By building on a harmonised set up,
system changes and market adaptations
can be made more effectively.
How has consolidation affected the
services offered by custody
providers?
Hoem: I do not believe that there has
been so much consolidation in the
Nordic countries, as to have any large

Nordic Excellence

Securities Services is the leading provider of custody and clearing services in the Nordic region.
Business is built on long standing partnerships with our clients.
Our commitments are efficiency, reliability and providing the highest service quality.

For further information please contact: Head of Securities Services: Mikael Björknert,
mikael.bjorknert@seb.se. Custody Services: Göran Fors, goran.fors@seb.se. Global Client
Relations: Ulf Norén, ulf.noren@seb.se.
Custody - Nordic Panel
impact on services offered by sub-
custodians. The consolidation on the
Nordic Stock exchanges infrastructure
may have had an effect on the number
of remote member on the exchanges and
on their increased market share in each
market. This again has, of course, had an
effect on the sub-custodian and the
service they provide for the investment
firms. The merger between the Finnish
and the Swedish CSD has so far not had
any impact on the market and I do
believe it will take time before any
results are evident.
Kristiansen: In our case, as we are a true
Nordic organisation, so offering a
Nordic service is very natural for us.
During the process of integrating four
Nordic banks, which we have gone
through in the past years, we have
actively worked towards a regional prod-
uct mainly by harmonising our products
and services while keeping in mind the
local market restrictions. Our staff is
used to working in Nordic, cross-border
teams and knowledge is actively shared
between the countries. We have true
Nordic experts in our organisation.
Leonhard: Until now, consolidation has
been most visible
on the exchange
side with the
“Consolidation does not yet appear to have
OMX group affected the service offered to global custodians.”
operating the
exchanges in Denmark, Finland, Sweden
and the Baltics. Furthermore, all Nordic
exchanges are using the SAXESS
trading system. The effect has been a
stronger foreign focus on the Nordic
market and has resulted in a growing
number of remote exchange members
and, as a result, the turnover in both
volumes and numbers has increased
significantly. As a result of the growing
activity on the exchanges, broker dealers
have witnessed an increasing demand
for custody services.
Within the CSD community the
initiatives around NCSD, which today
includes Finland and Sweden, are
progressing. However, for the time
being, it has not caused any changes to
the setup of custody services.
Meacham: Exchange consolidation offers
investors an efficient entrance to multi-
ple markets in the region. Unfortunately,
the post-trade environment has not
reached the same level of consolidation,
46 INVESTOR SERVICES JOURNAL
which can be confusing as well as
frustrating for those not familiar with
our regional diversification. Custodians
have reacted by offering regional
services. These services will become
more and more sophisticated and
involve a larger array of products as the
markets continue to consolidate and
client demands increase.
Nedergaard: Consolidation does not yet
appear to have affected the service
offered to global custodians. Work on a
Nordic single platform for clearing, set-
tlement and depository functions in
Finland and Sweden is still in its relative
infancy, with full implementation not
expected in these two markets for up to
five years. This seems to be the first step
towards a full Nordic consolidation
including the Danish and Norwegian
CSD’s longer term. Once this implemen-
tation has been completed, global custo-
dians would expect to see benefits in the
form of improved operational efficien-
cies and lower costs.
Noren: In general the competitive edge
has sharpened. As most business propo-
sitions concerns regional business, the
competitive development is mainly
evident among the two regional players
and the (those) trying to build a regional
platform.
Wennerberg: With a pan-Nordic organi-
sation, providers can offer single pan-
Nordic agreements, structured reporting
and consolidated fee schedule, which all
means less documentation for our
clients. Handelsbanken can also offer an
escalated point of contact for all four
countries, Handelsbanken offer account
managers who take care of the day to
day transactions locally in each country,
but as an escalation point we also offer a
regional client relationship manager for
all markets.
Will it be an advantage being a
Nordic regional provider in the
future Nordic market or will there
be ease of access for non-Nordic
participants?
Hoem: As long as the markets are very
fragmented with different
infrastructures and very different laws
and regulations, I do believe that a
Nordic regional provider will have an
advantage toward non-Nordic partici-
pants, except for the plain vanilla settle-
ment and clearing. However, in the
future with more harmonisation of mar-
kets on all aspects in the Nordics, access
will be easier for all non-Nordic partici-
pants. I believe that it is important to
have a strong domestic client base and
capacity in order to be able to deliver a
more advanced product.
Kristiansen: It will definitely be an
advantage being a Nordic regional
provider. Also, the established foothold
we have in all of the Nordic markets
due to our history is a clear advantage.
The positive effects brought about by a
large clientele on the ability to handle
volume peaks, such as those experienced
during the course of this year, are
undoubtedly great.
The future Nordic market is not
carved in stone. In Sweden today there is
some interest from global players to
establish themselves. In general today’s
framework is too fragmented and the
separate markets are too small for global
players to establish a
full sub-custody serv-
ice themselves. To
develop a true har-
monised Nordic mar-
ket is still far ahead. There will in time
be new global market players in the
region and a consolidation of local and
smaller existing players. Nordea is a
driver for a Nordic harmonisation
Leonhard: New entrants to the Nordic
market are faced with tough competition
from the Nordic regional providers, who
are characterised by holding a major
market share both with domestic and
international clients in their original
home markets and a very strong
foothold in the other markets. Besides
the very competitive situation, the costs
of setting up systems with links to four
individual CSDs and hiring people with
the right skills will be very challenging
for non-Nordic participants.
However, implementation of a fully inte-
grated Nordic CSD, including one sys-
tem and a harmonised set of regulations,
would ease the entry barriers to the
Nordic region significantly.
 Custody - Nordic Panel

Meacham: This depends on the products in those areas previously considered as operating environment and also offer
and services the individual participant is ‘safe’ (such as the mutual fund market). extensive customised reporting capability
looking for. Plain vanilla settlement and With continuing growth in international to cope with the new challenges.
clearing can most likely be done efficient- investment, complex investment strate-
ly on a remote basis. The ability to provide
However, if the “The Nordic market is changing, making ‘value added
participant is looking for services’ is also important
more advanced asset serv- it an increasingly difficult environment in as Nordic clients seek to
icing, reporting, market
influence, etc. then they
which to compete, even in those areas increase their revenues
and improve performance
would most likely go the previously considered as ‘safe’ (such as standards. Securities
route of a Nordic regional lending, commission
provider. Regional service the mutual fund market).” recapture, off balance
capabilities is definitely on sheet cash funds as well as
everyone’s lips right now so yes, being a gies, new investment classes such as alter- investment risk and performance ana-
regional provider with strong domestic native investments and cost pressures, lytical services have all moved closer to
capacity in all markets will continue to be Nordic clients have become more sophis- the top of clients’ agendas.
important. This is regardless as to how ticated - increasing their expectations and
and when the post-trade infrastructure demanding more from their custodian. To cope with these demands and to com-
develops. pete successfully in the market, huge
Technology is a key factor for all investment is required in technology and
Nedergaard: The Nordic market is chang- participants. It must be automated, the right level and quality of resources
ing, making it an increasingly difficult scalable in volume and functionality, flex- such as market knowledge, global services
environment in which to compete, even ible enough to adapt to the ever changing including. tax, global reach. Those

The leading provider of Custody and Clearing Services in Norway

DnB NOR your Nordic Partner

Offering: Commitment, Knowledge, Experience and Excellent Service

For further information please contact:
Head of Securities Services - Jan B. Penne: jan.penne@dnbnor.no
Global Relations and Business Development - Bente Hoem: bente.hoem@dnbnor.no
Securities Finance - Dag Rudiløkken: dag.rudilokken@dnbnor.no
e-mail: custody@dnbnor.no • www.dnbnor.no/custody
Nordic Custody & Clearing Alliance: Swedbank, Sweden – Amagerbanken, Denmark – OKOBank, Finland
Custody - Nordic Panel
providers unable to meet these challenges
on their own have realised the advantages
of forming alliances or involving them-
selves with merger and acquisition activity.
There is considerable potential for fur-
ther consolidation to take place within
the Nordic region.
There is increased pressure on more
established regional or local providers to
reconsider their business strategies if they
are to survive in what is now such a com-
petitive market. Global or larger custodi-
ans may, on the whole, have the advan-
tage with their ability to invest in the
technology and product development
required to support both mar-
ket and individual investor
needs. This is good news for
the Nordic investor. Their
“In a world with more open market
large asset bases are attractive environments, it is inevitable that that
to, and therefore hotly con-
tested by, local and foreign there will be more access for
custodians alike. It also
means they can have access to
non-Nordic participants.”
sophisticated global solutions
to support their growing, global invest-
ment needs.
Noren: We really do not see any access
disadvantages for non-Nordic partici-
pants even now. The advantage of being a
Nordic regional provider lies more in the
local presence:
- Understanding and influencing the
regulatory framework,
- contribute to the efficiency
re-shaping of the CSD's,
- knowing the language,
- having personal relationships with
staff in other parts of the value chain
like issuers and broker dealers to
mitigate and solve risk situations,
- being in dialogue with and
promoting foreign investors interests
in the local environment
..are some of the most evident
contributors to a solid regional service
package. This will be difficult to achieve if
the prime base is Paris, Amsterdam,
Milan or London, just to pick a few
European locations.
Wennerberg: It all depends on the struc-
ture of the future Nordic market, but if it
is a harmonised marketplace on a single
system, it will mean advantages to be a
regional provider as long as you as a
provider operate in one Nordic system.
Today Handelsbanken operates with one
settlement system linked with four differ-
ent depository systems. This means more
48 INVESTOR SERVICES JOURNAL
costs for running the depository systems
and more costs to manage the four differ-
ent links to the depository systems.
In a world with more open market
environments, it is inevitable that that
there will be more access for non-Nordic
participants and in this environment it is
important for local providers to find their
roles and to offer services which require
local market presence. With this comes
also a requirement for providers to be
innovative and review the packaging of
their respective custody products in order
to find new and improved services to
offer to its clients.
The Nordic market was recently
described as "an exciting place
to be and with real enthusiasm
across the board to increase
efficiency and raise client service
levels", is this true?
Hoem: I have not heard this statement
before. However, increased efficiencies
and high client services had been on the
agenda for many years in the Nordic mar-
ket. In addition, competition in the
Nordic market is very high compared to a
lot of other markets, which also have had
an impact on the efficiency and on cost
savings efforts. It is an exciting region and
I believe it has been a trademark for the
Nordic countries to be in the forefront
when it comes to consolidation and effi-
ciencies efforts.
Kristiansen: The Nordic markets are his-
torically very efficient and we have found
a common understanding across the
board to try and work towards making
them even better.
Nordea works actively in local market
groups to drive local market practice
towards Nordic and European market
standards.
Leonhard: Enthusiasm is driven by vari-
ous factors. The main factor is the
stronger focus on investment opportuni-
ties in the Nordic markets and the actual
increase in market activity. As a result of
that, and in order to enhance risk man-
agement and administrative procedures,
the demand for matching tools and serv-
ices is growing all the time.
From a more sub-custody perspective
the Nordic Scene has got a lot of atten-
tion the last years, mostly in relation to
the consolidation within the exchanges
and CSDs, but also by the fact that both
broker dealers and custodian banks are
moving towards regional sub-custody
solutions in order to make the network-
ing management more efficient.
Meacham: The focus on
client service levels is one
of the positive aspects of
the competitive situation
we have here in the Nordic
region. The
domestic/regional
providers are very good at
what we do and the global
providers have added a new
dimension with a somewhat broader
service offering.
It is an exciting region but to achieve
even higher levels of efficiency on a
regional basis we will need a truly region-
al CSD. The NCSD initiative is a strong
step in the right direction but in its cur-
rent form it only covers two of the mar-
kets. This is somewhat of a barrier for
custodians in attempting to provide
increased regional efficiency, something
that is most likely expected by clients and
on most of the custodians’ wish-lists.
Nedergaard: Local custodians have tradi-
tionally been the natural choice for many
Nordic institutions, in particular for their
domestic assets and mutual funds. These
custodian banks are visible in the market
and they provide a broad range of other
financial services to the Nordic client
base. However, the Nordics are proving
to be a fruitful market for global custodi-
ans. We can now compete successfully,
even for local assets, as Nordic clients
continue to recognise the level of service
and added value offered by leading-edge,
global custodians. Today, clients are
interested in consolidation of assets with
one custodian, economies of scale, greater
efficiency and technology services as well
as a wider range of value added services.
Global custodians differentiate them-
selves through greater investment in tech-
nology, global market capabilities and
more value added services. Considerable

capital expenditure is required for provi-
sion of the advanced technology neces-
sary for back, middle, and front office
efficiencies. It also enables flexibility in
service solutions. An example is Northern
Trust’s Trade Services product which
allows investment managers to selectively
outsource components of the post execu-
tion trade process. In addition to offering
state-of the art proprietary systems, it is
also important for global custodians to
be able to interface with proprietary sys-
tems such as SimCorp Dimension, Trema
Finance KIT and Omgeo OASYS Global.
The Nordic region is one of Northern
Trust’s main markets. We know that to
be the custodian of choice, we need to be
innovative in our commitment to devel-
op and expand our service capabilities –
such as our ground-breaking cooperation
with Svenska Handelsbanken in Sweden
to provide custody and trustee services
for mutual funds. Other examples
include improving trade and cash dead-
lines, providing corporate actions in local
language, working with regulators to clar-
ify or change local regulations, for exam-
ple offering stock lending services to
Norwegian insurance companies.
The investment needed to cope with
the increasing challenges and service
demands faced by the indus-
try is a tall order for many
local custodians. For them, “The competition to strive to introduce
continued market consolida-
tion through alliances, merg-
best practice and conformity in 7 markets
ers and acquisitions is the
most likely road ahead.
Noren: It is an exciting and enthusiastic
place to be. The competition to strive to
introduce best practice and conformity in
7 markets is a truly enthralling position.
Taking this seriously and meeting the
challenge of making a regional delivery to
an ever growing client base that either
have, or would want to, regionalise has
delivered general increases in service lev-
els and a much better financial and
administrative proposition. As this will
continue, we really do not see anyone
changing the above description of the
region.
Wennerberg: I agree that we are experi-
encing exciting times in the Nordic
region. All of the Nordic exchanges are
part of the Norex alliance and have
adapted a common trading system. OMX
has taken a strong position with owner-
ship of most of the Nordic exchanges
except Oslo Børs and is now in the fore-
front of a harmonisation with a Nordic
list of securities and harmonisation of
listing requirements.
On a depository level, VPC in Sweden
and APK in Finland have joined together
under the NCSD name and is now look-
ing at finding a harmonised solution with
one system for the two markets. The pur-
pose is of course to offer a single
Swedish/Finnish market and the cost for
the depository, as well as for the custody
providers, to run one market rather than
two should be much lower which should
mean possibilities to reduce costs even
further.
However in order to optimise, also the
depositories in Norway (VPS), and in
Denmark (VP) should take part in the
discussions and we think that there
unfortunately is some way to go before
VP, VPS and NCSD have found a model
on how to co-operate which can be
accepted by all parties.
Will 2006-2007 see a major spend
on technology or are most systems
up to speed with the changing
demands facing the industry?
Hoem: It is hard to speak for the whole
market but I do believe that most of the
is a truly enthralling.”
players need to make major investment
during 2006-7. DnB NOR are in the
process of assessing as to whether the
securities services areas should invest in a
completely new custody system or if we
should continue investing in the existing
one. I also believe that MIFID will have
an additional impact on this year's invest-
ments as well as next year's. Future con-
solidation will also create a need for
investment and technology.
Kristiansen: There is continuous develop-
ment of systems to live up to market
changes regarding ISO standards and
client demands. Even though the systems
are up to speed today, new demands will
follow.
Leonhard: In 2005, Danske Bank
launched a new custody setup based on
the concept that all operational process-
ing, including direct links to the Nordic
Custody - Nordic Panel
CSDs and exchanges, is centralised in
Copenhagen. It means that even if the
CSDs are still operating on four different
systems, we can supply our clients with
similar solutions covering all Nordic mar-
kets.
However, being a supplier of sub-cus-
tody also means that in order to match
new initiatives and improve efficiency
and quality, the underlying technology
has to be continuously expanded. In
2006, functionalities within Corporate
Actions and reporting have been upgrad-
ed and this will continue in 2007 with
special focus on STP improvements.
Nedergaard: Substantial and ongoing
investment in the most sophisticated
technology to meet the continuing drive
towards STP and the increasingly diverse
portfolio requirements of Nordic
investors are essential. Automation is an
expectation and vital to help investors
become more operationally efficient.
To achieve the above, custodians will
need to be flexible in their approach. In
this respect, technology is a key factor in
being able to meet client demands –
Northern Trust, for example, has been
consistently investing in excess of USD 1
billion over a three year period to meet
this demand.
Noren: Of course,
Investment levels will
continue to be high
and even if their would
be no mandatory
investments (which the regulatory
changes most likely will require) they
would still be high. The reason is of
course that demands for further refine-
ment and customisation will continue to
be on the rise. New or immature prod-
ucts will surface/develop and that will
require automisation of processes that
today might be manual or only partly
automated. Typical such areas will be
Issuing and Paying Agent services,
Liquidity Support Products, client specif-
ic sweeping to/from Master account solu-
tions and assimilations between
Securities and Cash products. The key
requirement for a supplier is to have a
platform that allows as little as possible
duplication of such investments in order
to cover multi-markets.
Wennerberg: In Sweden and Finland, we
follow closely the decisions of NCSD
regarding what system the depository will
INVESTOR SERVICES JOURNAL 49
Custody - Nordic Panel
use in the two markets. When a decision
has been made, we will start the adapta-
tion of our system to the new system, and
in connection with this we will also build
functions that will allow maximum bene-
fit of any new opportunities that the new
NCSD system may offer.
We also follow with interest the develop-
ment of VP's new electronic voting prod-
uct in Denmark.
What do you see as the major chal-
lenges facing the industry in the
near future?
Hoem: The major challenges facing the
industry in the near future will be to
adopt to new regulations such as MIDIF,
Basel 2 in addition to local changes in
legislations, laws and infrastructure.
Increased competition in the Nordic
countries and over capacity will also be a
big challenge for the market players. The
industry needs a higher level of standard-
“The major challenges facing the industry in
the near future will be to adopt to new
regulations such as MIDIF and Basel 2.”
isation in order to reduce the risk level in
many markets.
Kristiansen: In developing the NCSD the
major challenge is to develop a common
framework and develop a true efficient
market for the whole Nordic region. The
challenge is to involve all Nordic markets
and not just adding another layer and
additional costs in the securities process.
Leonhard: The prime objective is to
deliver high-quality cost-efficient services,
but as mentioned above, more regula-
tions and advanced risk management sys-
tems mean that data capture, reporting
and control functions are areas which will
require more attention in future.
Meacham: Keeping cost at an acceptable
level and at the same time retaining a
high level of service. Regulatory issues are
and will continue to be challenging as
well as the ever increasing focus on AML
and anti-terrorist activities. Another
major challenge is the inefficiencies relat-
ed to the settlement and clearing of
funds. I feel the fund industry needs a
much higher degree of standardization
and that the risk level in this arena is far
from acceptable today.
50 INVESTOR SERVICES JOURNAL
Nedergaard: As an innovator and key
influence in the development of global
securities services Northern Trust serves
on many global asset servicing and tech-
nology advisory boards and working
groups such as CLS, SWIFT, ISITC to
name a few. We are thus well positioned
to ensure our clients’ business interests
will be actively promoted within the
industry, both in the Nordic region and
around the world.
Below are a few of the challenges we see
facing the industry in the near future:
- the continuing trend towards alliances
in the region increases the opportunity
for clients to access a greater range of
services and improve on operational
efficiency
- the gradual relaxation in cross border
complexities reduces investment
challenges.
More diverse investment strategies, with
increased use of alternative asset classes
and derivatives
- improved interest in securities
lending programmes as Nordic clients
increasingly realise the potential
revenue that can be generated from their
portfolios, and the individual Nordic
countries clarify regulation on this issue
- regulatory reporting, complexity of
individual tax structures and supporting
new vehicles that help efficiency around
this such as pooling. Northern Trust has
implemented tax-transparent cross-bor-
der pooling solutions for our clients –
both for distributive and
non-distributive clients
- increasing performance by having the
information to make decisions sooner,
reducing cost and focusing on what
really matters.
Noren: Keeping up with regulatory
changes and managing to run consolida-
tion cases under such regulatory pressure.
Finding an attractive business
proposition in times of fee pressure and
increased investment/development needs
and finally the managing of reciprocal
expectations.
Wennerberg: The key for a continued
market harmonisation in Europe and the
Nordic region is harmonisation of laws
and tax regulation, and we believe this
will be a major challenge.
ISJ: Thank you
 business decisions and their impact on
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low
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financial partner financial partner Tai Chi Master

The people you work with can either be a source of comfort, or frustration. Which is why so many choose to work
with Northern Trust. We’re known for exceptional client service. We also have some of the most sophisticated
technology in the business, and an array of innovative products. All delivered in a way that’s convenient for you.
Because it’s our job to provide solutions that decrease your anxiety. Not add to it. If you’d like to know how we can help
you, call Allan Nedergaard at +44 (0) 207-982-2236 or e-mail allan_nedergaard@ntrs.com.

Asset Management | Asset Servicing | Wealth Management

northerntrust.com
Analyse this... Securities Lending Systems
ISJ invites technology providers and fund managers to comment
on the latest developments in Securities Lending Systems.
Rob Sammons
WHICH VENDOR OFFERS THE BEST SYSTEM FOR
SECURITIES LENDING AS IT RELATES TO ALL ASPECTS
OF MY BUSINESS?
Rob Sammons, Director, Anetics
Recently, while visiting with a broker/dealer client in New
York who manages securities lending along with a suite of
other products for a major European bank, the inevitable
question came up, “So Rob, who’s got the best overall sys-
tem for my business?” He explained that his business had
expanded from just Securities Finance to facilitate settle-
ment and raise capital, to include a conduit book and other
products like Fixed-Income Repo, Contracts-for-Difference,
and certain other derivatives.
As a director at a consultancy that does system integration
across multiple vendor products it is a question that comes
up regularly. The answer, as you might expect, was, “It
depends.”
As it stands, there are many fine systems available for our
industry, each represented by a sales force capable of
demonstrating how their system does things no other sys-
tem can do.
The point is that consideration of a move to a new system
can appear the solution to a problem in the same way that
the grass across the fence looks finer than your own grass
close at hand. You don’t see the bare spots until you’re liv-
ing with them. Every lawn has at least a few. The result is,
you may not need to move house to place your own shop in
verdant splendor - though you will need to do some cultivat-
ing.
In the course of this client meeting I discovered issues to
include, a) a need to better track the marketplace (available
supply and demand, offers and needs, counterparty bal-
ances, P/L), b) problems with income and expense alloca-
tion across the trading desks supported, c) ever more time
devoted to regulatory reporting, and d) problems adapting
to Agency Lending Disclosure with US Domestic lenders.
Then, to top it off, my client indicated that his personnel had
been grousing about not having access to basic tools avail-
able to peers at other firms.
So, how did the meeting end? We reviewed the issues
(some of which are not adequately addressed by any vendor
system), and weighed the pro and con of solutions that my
firm might provide versus developing solutions in-house.
In conclusion, the best system for Securities Lending is
likely the system you are currently using. Anticipate gaps in
functionality and fill them in with the specific tools and utili-
ties you need. Outside vendors are ready to help.
52 INVESTOR SERVICES JOURNAL
Malcolm Clark
WHAT IMPACT DOES THE TRED OF FINANCIAL
INSTITUTIONS MERGING THEIR REPO AND SECURITIES
FINANCE LINES HAVE ON TECHNOLOGY?
Malcolm Clark, Anvil Software
In the last few years technological requirements of financial
institutions have progressed. The multitude of disparate sys-
tems that ‘do the job’ for different desks is no longer good
enough. Financial institutions now need a global, multi-
asset, multi-function solution. Communication and sharing
of information between business areas and regions is key.
In many firms, Repo and Securities Lending, traditionally
separate areas of the business, are now coming together
and a single technology solution makes sense.
This business strategy is driving technological changes.
Our recent projects with clients in Europe and North
America reflect a strong trend for firms to implement a sin-
gle system for both securities finance and repo. There is
much overlap between both businesses on an operational
and technology basis. Combining the securities-lending and
repo business lines onto a single platform reduces system
support costs and generates operational efficiencies from
consolidated collateral management. Even if the desks them-
selves aren’t integrated, the benefits of running them on the
same platform can still be achieved.
Other organisations realise benefits from combining their
two businesses explicitly onto a single trading desk. Apart
from the logistical benefits of a single platform in terms of
economies of scale, reduced support costs and having a sin-
gle vendor relationship to manage, there are a number of
real business benefits as well – most significantly having the
ability to price portfolios efficiently, and combined collateral
management across the two different product lines.
A recent global client rejected the option of an in-house
rebuild and came down heavily in favour of a vendor solu-
tion. They found that in-house development can be lengthy,
expensive due to no economy of scale, and is not able to
evolve with the end users' needs and market requirements
the way that a specialist supplier's solution can.
Other Anvil clients have recouped the costs of a new system
in under a year on operational savings alone.
This trend is leading to a progression of the role of vendor
as partners. Securities finance and repo can often be differ-
ent areas politically within the banks. Getting them to work
together is essential to creating a system that meets the
need of both, not just today but in the future. Increasingly
there is a direct relationship between the vendor and traders,
which helps cement buy-in and ongoing feedback as to
changing requirements.
 Analyse this... Securities Lending Systems
Darren Crowther
WHAT ARE THE KEY ISSUES INVOLVED WITH INTEGRATING
SECURITIES LENDING TECHNOLOGY SYSTEMS?
Darren Crowther, Director, 4sight Financial Software Ltd.
Whilst a Securities Lending system provides significant busi-
ness benefits in its own rights, it is only when it is integrated
into an organisation’s infrastructure that key benefits such as
STP, trade automation and data consolidation can be realised.
Every integration project will impact many business and techni-
cal processes so it is therefore important, from the outset, to
have a knowledge of what you have today and what you would
like to do going forward.
An initial analysis of static data and transactional data feeds
will take place which will map out the key data flows and sys-
tem requirements. To minimise the time spent during the cre-
ation of these interfaces any suitable feeds which already exist
should be reused and streamlined wherever possible to avoid
duplication of effort. System replacement should not entail a
complete change to interfacing processes but should involve a
more gradual evolution, incorporating the latest technology
and the new functionality available to the user.
The speed of this re-integration process needs to be consid-
ered carefully, and must not only determine how the migration
of the existing current feeds and processes will occur but how
new interfaces can be quickly and easily plugged in as future
integration requirements are identified. The Securities Lending
system should come with the toolkits to help you do this as
quickly and easily as possible.
A wide variety of data suppliers can be used to provide
inbound market data feeds relating to pricing and securities
data (for example). The receiving system needs to be suffi-
ciently flexible to cater for different formats and delivery mech-
anisms while ensuring data integrity is maintained. Outbound
data feeds enable connectivity with a large number of external
systems including Accounting, Custody & Settlement, and Risk
Management solutions amongst others. Unless the business is
a start up, the requirements for these feeds will normally be
already set. The new system will be required to, at a minimum,
provide you with your current output options whilst providing
options to enhance and change the feeds as the receiving sys-
tem requires.
Finally, standardisation is another important aspect of the
integration process, particularly in a message orientated envi-
ronment, and communication with external systems should
utilize a standard approach to ensure custom processes are
not required and data is in a widely accepted format. The intro-
duction of XML Messaging and the continued use of the
SWIFT standards will help to improve this process and make it
easier when replacing other systems. Additionally, where mes-
sage formats do not change the need to perform detailed inte-
gration testing will be reduced.
Alan Matson
WHAT ARE SOME OF THE CONSIDERATIONS THAT
SHOULD BE GIVEN TO REPORTING WHEN A LENDER USES
MULTIPLE SECURITIES LENDING PROVIDERS?
Alan Matson, Managing Director, Chief Technology Officer,
eSecLending
Recently there has been a strong trend among beneficial owners
to apply investment management techniques to securities lend-
ing programs. This has led to more multi-lender programs as
beneficial owners split their lending assets among several
lenders and/or hire specialist lending agents for specific asset
classes. With these multi-manager programs, though, have
come new challenges in reporting. Beneficial owners often need
to consolidate their various performance, risk and compliance
reports into a format that spans their entire program. While
most securities lending providers have deep and flexible report-
ing systems for their own programs, it has been left to the
beneficial owner to handle this consolidated reporting.
Whether developing consolidated reporting in-house or
through outsourcing, the first step for any beneficial owner is to
standardize the data from the various providers. The ideal way to
do this is to specify standard data formats and electronic deliv-
ery methods to the lenders. Once all the required data fields
have been covered in the specification, it should be straightfor-
ward to consolidate these standard feeds into usable reports.
Lenders often have pre-developed electronic data feeds that
don’t match the specification provided by the beneficial owners.
However, it can be a straightforward exercise to map the various
different data feeds to a standard format as long as the required
data fields are present.
Hidden in the discussion above of standardizing the data is
the deceptively complicated phrase, “required data fields.”
Beneficial owners should be careful when specifying what data
they need so as to make sure that they can do all of the required
reporting.
For the three general types of reporting, there are also some
considerations that should be given to consolidating the infor-
mation.
Performance reporting – It is important to consider how
income is broken down and how providers measure metrics
such as fees and utilization.
Risk reporting – Risk management reporting should incorpo-
rate program-wide data for both sides of the transaction, lending
and collateral. Counterparty exposure should be aggregated so
that balances with repo counterparties are combined with the
balances of the same counterparties as borrowers.
Compliance reporting – Compliance also needs to be
monitored at the program level for most beneficial owners.
In summation, the two keys to improving consolidated
reporting across a multiple provider program are obtaining
consistent and well-specified data.
INVESTOR SERVICES JOURNAL 53
Analyse this... Securities Lending Systems
Rupert Perry
ARE AUTOMATED RECONCILIATIONS CONTROLLING
OPERATIONAL RISK EFFECTIVELY?
Rupert Perry, Director, Pirum Systems Ltd
The most obvious benefit of automating existing monthly or
bi-weekly manual reconciliations is the reduction in manual
effort required to produce a reconciliation. Less well recog-
nised is the need to change existing operational procedures
to actually review and investigate breaks every day, if the
maximum possible reduction in operational risk is to be
achieved.
Whilst putting automated reconciliation in place has prob-
ably been the key operational issue for most market partici-
pants over the last 5 years, a new concern is gaining promi-
nence for those with automation: Reconciliations are not
being reviewed as part of a daily routine and as a result,
breaks are not being investigated and resolved on a timely
basis.
When reconciliations are reviewed every day, differences
can be resolved more quickly, as the details of the trade are
still fresh. This ensures books and records will be more
accurate and enables all of the other downstream processes
(e.g. mark to market, dividend claims, P&L reporting and
monthly billing) to work more efficiently.
Larger market participants have been working on the
“usage issue” for some time, both by speaking directly with
their counterparties and also through the industry’s repre-
sentative bodies. The International Securities Lending
Association will shortly be issuing a new “Best Practice”
guideline which recommends all contracts (settled & pend-
ing, trades & collateral) are compared daily and covers
usage by stating:
“Lenders and borrowers will work to resolve contract com-
pare breaks the same day that they are identified such that
no breaks are outstanding more than one day.”
With increasing volumes and shrinking margins, counter-
parties who are unable / unwilling to use automation effec-
tively are starting to be seen as being too risky and expen-
sive to deal with. The higher volume / lower margin busi-
ness will therefore be directed away from such clients.
54 INVESTOR SERVICES JOURNAL
Pauline Parker
THE NEED FOR TECHNOLOGY IN AGENCY LENDING
Pauline Parker, Sungard
It is no news to say that lenders recognise that they are
under pressure. Their clients are increasingly sophisticated
requiring greater transparency leading to the services offered
having to spell out the risks and rewards of their program,
this means that provision of more flexibility is a given.
Added to this is increased pressure of competition, reduced
margins and increased regulation. The good news is that the
explosion in the hedge fund market has increased borrowing
demand and funds are able to increase performance through
lending.
The dichotomy is that to gain the real benefits from
agency lending there is investment required in order to
achieve the requisite efficiencies and the resultant extraction
of performance in the programs offered. There are clear
interdependencies of business activity growth and trading
volume driving revenue; however this requires technology to
achieve it which in turn requires investment. All three (rev-
enue, business growth, technology) are interdependent; the
trick is to invest where the case is clearly going to give bene-
fit to the client. According to one lender, the main issue still
seems to be that there is a lack of efficiency in the lending
market due to lack of funding in technology infrastructure
and the necessary understanding in that technology.
Beneficial owners are becoming more aware of the lending
market and are looking to incorporate it as part of their
asset management practice; however they will be asking
questions and want flexible and personalised reporting,
delivered by e-mail or over the web, potentially on demand.
Trading of general collateral is now increasing expected to be
carried over automated systems; the large brokers are
increasingly reluctant to trade this type of security other than
automatically as the trades carry very little value. One broker
confided that this type of transaction is often offered for free
to their client.
The technology suppliers are working hard to ensure that
the controls required to manage risks are provided. They are
also well aware of the need for easy interfacing to down-
stream and 3rd party systems. The provision of automated
tools to aid efficiencies in operations has also been
increased markedly over recent times.
The lending market is growing up, the market and the tech-
nology to support it is moving, what is needed is the agent
lender to engage in utilisation of this technology to make a
real difference to their bottom line.

Brain Lamb
AS ELECTRONIC TRADING SYSTEMS BECOME MORE PRO-
LIFIC IN SECURITIES FINANCE, WHAT WILL BE THE IMPACT
ON THE ROLE OF THE TRADER IN THE NEAR TERM?
Brian Lamb, CEO, Equilend
Often discussions around advancements in technology are
positioned as “man vs. machine”. In some ways, this is a false
dichotomy. To properly asses the effect of technology on the
role of the trader it is important to recognise that technology
and jobs are not mutually exclusive.
Over the years I have seen the proliferation of technology in
the securities finance space from several perspectives: as a
user of technology, as a trader in the securities finance and
fixed income business and now, as a provider of technology.
Given my experiences on both sides of the fence, I am confi-
dent that there will always be a role for traders in the securities
finance industry.
That is not to say that there isn’t a Darwinian evolution at
play. In future, in spite of, or perhaps with the aid of, advanced
technology, the best traders will continue to rise to the top. In
my experience, having helped to design many trading systems,
I have seen technology create opportunities for traders to man-
age greater volume and focus on their core competences -
without increasing headcount costs - rather than technology
prove itself to be a reason for displacements.
Trading in general is a highly specialised and complicated
function, which is one of the reasons why, to date, technology
has been able to add so much value. In many ways securities
finance is even more complex and certainly more data inten-
sive, with a comparatively large amount of information, all
requiring processing, attached to each transaction. Due to this
complexity, trading technology has been slower to take hold in
this space, but, particularly in its ability to automate labor
intensive tasks and deliver more information in real-time, it is
certainly poised to add some real value in the coming few
years. In the end though, what will be the real impact of
advanced technology on traders in securities finance in the
near term? Well, those who can grab and use the newest and
most efficient technology will prevail.
Tools and Utilities
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Analyse this... Securities Lending Systems
NEWSFLASH: SIFMA
SIA & BMA Boards Approve Merger to the Securities
Industry and Financial Markets Association
Washington - The boards of directors of the Securities
Industry Association and the Bond Market Association
today voted to merge the two organizations, creating
the Securities Industry and Financial Markets
Association, or SIFMA.
The new organization will encompass almost the
entire diversity of firms in the financial markets and
create a single, powerful voice on legislative, regulatory
and market practice issues.
“Combining these organizations into one broader, yet
unified, association positions us to better represent our
member firms and accomplish our mission of helping
them, the securities industry and the financial markets
grow and prosper, while also continuing to enhance
public trust and confidence,” said James Gorman,
Chairman of the SIA and President and Chief Operating
Officer of the Global Wealth Management Group at
Morgan Stanley.
“SIFMA will aggressively promote efficient global
capital markets, foster the development of new prod-
ucts and services and advance responsible market
practices which benefit all financial market partici-
pants,” added Edward Forst, Chairman of TBMA and
Chief Administrative Officer of Goldman Sachs.
The new organization will also enhance its member
services and provide access to a larger network of
members. The Association will benefit from a stronger
member and staff organization and will have an
increased capacity to achieve results. Further, the
Association will have a strengthened research capacity
and more opportunity for member firm professional
development, training and advancement.
At the same time, the merger is also expected to gen-
erate efficiencies both in terms of cost savings and the
amount of volunteer time members contribute. The
Association should benefit from economies of scale
and the elimination of duplications and redundancies,
such as real estate. Duplicate member committees will
also be combined, which will allow members to more
efficiently manage the amount of time they spend on
association activities.
info@anetics.com
Legal & Compliance - Class Actions
Stand and Deliver...
The total value of securities class
actions settlements is on the
increase. Rekha Menon speaks
to key figures in the litigation
business about why class actions
are becoming more successful.
in a Class of
their Own
With several high profile cases and
unprecedented settlement amounts, the
securities litigation market in the US has
been in the spotlight in recent years,
more notably the class actions arena
where lawsuits are brought on behalf of a
group of investors who have suffered an
economic loss in a particular stock or
security as a result of fraudulent stock
manipulation or other violations.
According to a recent report released by
Cornerstone Research, a provider of
“More than 35 per cent of all 2005 settlements were
associated with an institutional investor lead plaintiff.”
financial and economic analysis in civil
litigation and regulatory proceedings,
2005 was a remarkable year for securities
class action settlements. Nine cases
including WorldCom and Enron experi-
enced ‘mega’ settlements of over USD100
million and half of all settlements exceed-
ed USD7.5 million in 2005, whereas his-
torically, between 1995 and 2004, the
median settlement amount has been only
56 INVESTOR SERVICES JOURNAL
USD6.3 million – a 19 per cent increase.
Even excluding WorldCom’s over USD6.1
billion settlement and Enron’s USD7.1
billion (and counting) settlement, the
total value of cases settled during 2005
grew to an all time high of USD3.5 bil-
lion, surpassing 2004’s over USD2.9 bil-
lion tally by more than 17 percent states
the report.
It would appear that a growing fre-
quency of cases involving accounting-
related allegations, as well as institutional
investors serving as lead plaintiffs has
contributed to this increase in settlement
amounts. More than 35 per cent of all
2005 settlements were associated with an
institutional investor lead plaintiff, com-
pared to only 20 per cent for the prior
year. Moreover, median settlements in all
cases with an institution as lead plaintiff
are USD10.7 million compared to only
USD5.0 million for cases without an
institutional lead plaintiff.
“The association between institutional
investor lead plaintiffs and higher settle-
ments may partially be attributable to
institutions choosing to participate in
stronger cases rather than a causal effect
on settlement amounts, though in at least
one case this year an institutional lead
plaintiff had a significant influence on the
settlement outcome,” noted Dr. Laura
Simmons, a principal in Cornerstone
Research’s Washington, DC office and an
author of the study, which is an annual
effort, comparing settlements in 2005
against earlier settlements of cases filed
since the passage of the Private Securities
Litigation Reform Act (PSLRA) in
December 1995.
Tony Gelderman, senior partner at
plaintiffs' law firm Bernstein Litowitz
Berger & Grossmann LLP (BLB&G) agrees
with Simmons. BLB&G, which has helped
win the largest securities litigation settle-
ments in
the past
twelve
months
including
the his-
toric USD6.2 billion WorldCom class
action recovery, says Gelderman, focuses
primarily on institutional clients. In the
WorldCom case, he points out, outside
directors contributed funds from their
personal assets to the settlement fund, at
the demand of the lead plaintiff, the New
York State Common Retirement Fund.
The Private Securities Litigation
Reform Act (PSLRA) of 1995 is widely
 Legal & Compliance - Class Actions

regarded as the turning point in the US support its claims. Moreover, the high helped improve the outcome of cases and
securities class actions space. PSLRA was costs of litigation were a powerful explains the increase in settlement val-
designed to curtail class action lawsuits weapon with which to coerce companies ues,” remarks Gelderman. However, he
by the plaintiffs’ bar. In particular, the to settle claims. notes that while the settlement amounts
high technology have been increas-
industry, “While class actions remains a predominantly ing, the number of
accountants, and cases have actually
investment American phenomenon, activity in other parts of been going down,
bankers felt that
they had been
the world appears to be picking up.” an observation that
is corroborated by
unjustly victimized by class action law- “PSLRA helped remove the race to the a report recently issued by the Stanford
suits based on little more than declines in courthouse and has ensured that only the Law School Securities Class Action
a company’s stock price. Prior to 1995, more meritorious claims are being Clearinghouse in cooperation with
the plaintiffs’ bar had free rein to use the brought forward by highly qualified Cornerstone Research.
discovery process to troll for evidence to plaintiffs with good counsel. This has The report found decreases in 2005 in

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Legal & Compliance - Class Actions
both the number of case filings, as well as
the amount of investor losses associated
with case filings. The number of securi-
ties class action suits filed in 2005 repre-
sented a 17 per cent decrease from the
213 cases filed in 2004 and a 10 percent
decrease from the 1996–2004 average of
195. Gelderman suggests that, the
improvements in corporate governance
following high publicity cases such as
Enron and WorldCom and the Sarbanes
Oxley (SOX) Act of 2002, have influenced
the number of filings. This reduced level
of litigation activity, can also be attrib-
uted to the fact that the dramatic boom
and bust of U.S. equities in the late
1990s–early 2000s is now sufficiently
past, notes the Stanford-Cornerstone
report, so that the large
majority of lawsuits “The next explosion of securities class
relating to fraud during that
period have been concluded. actions will take place in China
To date, while class actions
remains a predominantly
because many companies
American phenomenon, activ- file misleading accounts.”
ity in other parts of the world
appears to be picking up, albeit at an
extremely slow pace. The main barrier
say experts, is legal in nature, with several
countries not yet allowing for groups of
individuals with a common complaint to
join together in a single action.
Commenting on the UK, Paul Lomas,
Partner at the UK office of international
law firm, Freshfields Bruckhaus Deringer
says, “The reality is that we do not have
the same securities litigation market like
in the US because of differences in law.”
For instance, Lomas says, the UK has an
‘opt in’ rather than an ‘opt out’ class
actions structure like the US. In the US,
the court decides upon the class of enti-
ties that are affected by a corporate
wrong doing and an entity can easily opt
out of the law suit if it so desires. In the
UK on the other hand, entities have to
opt in to a class if they want to partici-
pate in the lawsuit which is much more
difficult. “Inertia being what it is, it is
very easy to create opt-out class actions
but very difficult to create an opt-in class
actions because of risk related concerns,”
states Lomas. Further, once a team has
been created, unlike in the US where the
court administers the class, in the UK,
entities establishing the class have to set
rules regarding lawyer fees and liability
among others. Moreover, in the UK, the
law dictates that shareholders cannot sue
the company, since shareholders are
themselves regarded as the company.
58 INVESTOR SERVICES JOURNAL
“There have been a few class action
cases, but it needs a very strong case to
give an impetus to form a group. Not
only are the laws in relation to creating a
class very different between the two
countries, substantive law to bring a cor-
porate to be sued are very different as
well,” Lomas points out. But he says that
the new UK Companies Law which is
likely to go into statute books in the
autumn will help improve the situation
by increasing shareholder rights.
Many other countries are considered
ahead of the UK in this respect such as
Canada, Australia, Netherlands and
Spain. S. Korea introduced the Korean
Securities-Related Class Action Act based
on US federal legislation at the beginning
of 2005. In Norway and Sweden too legis-
lation facilitating class actions already
exist and in November last year,
Germany, introduced the KapMuG law
which introduces a mechanism for group
actions in the context of securities litiga-
tion. In France, on the other hand, dis-
cussions are on to introduce a class action
mechanism.
Despite these ongoing legislative efforts,
US style lawsuits are extremely rare. In
Australia, for instance, class-action law-
suits have been permitted since 1992, but
a review by SCAS (Securities Class
Actions Services) Alert, a newsletter by
ISS, a US based provider of proxy voting
and corporate governance services,
found just one significant securities class
settlement, an A$ 97 million settlement
obtained by more than 22,000 investors
of GIO Australia Holdings in 2003.
Investors claimed that GIO executives
made misleading and negligent state-
ments in 1998 while defending against a
hostile takeover bid by AMP Ltd. The set-
tlement, the largest in Australian history,
was approved by an Australian federal
court in August 2003 and shareholders
recovered an estimated 60 percent of
their losses.
The market for non-US securities class
actions will grow, but slowly, states
David Monks, managing director of
Magenta One, the class action recovery
specialist, pointing out to sporadic
instances of class action lawsuits that are
taking place in countries like Japan,
Netherlands, Finland and Sweden.
However, he contends that the next big
market to watch out for is China. “The
next explosion of securities class actions
will take place in China because many-
companies file misleading accounts,”
says Monks.
As the phenomenon of securities class
actions slowly migrates to countries out-
side the US, the main challenge in front
of lawmakers and advisers should be
strike the right balance between access to
justice and prevent US style lawsuits,
cautions Lomas. There are several
negative aspects of the US system that
lawmakers in other jurisdictions need to
beware of, he says. “In the
current climate in the US, it
is very easy to start a class
action on very frivolous
grounds. Many corporates
regard the system as being
misused,” explains Lomas.
“While there are several posi-
tives of the US securities class actions sys-
tem, there are many negative aspects to it
as well. It is a bonanza for plaintiff bars
who have made a lot of money over the
years through these lawsuits. Companies
have often had to pay out large sums of
money for minor accounting errors. In
fact, the balance of power is skewed
towards these law firms rather than
shareholders,” adds Lomas pointing
towards the case of Milberg Weiss
Bershad Hynes & Lerach LLP, the most
prominent class-action securities law
firm, which has won more than $45
billion in its suits against corporations.
Recently, the firm was indicted by a
federal grand jury on fraud, conspiracy
and other charges related to an alleged
kickback scheme. A Los Angeles grand
jury handed up a 20-count indictment
against the firm and partners David
Bershad and Steven Schulman.
Prosecutors accused them of illegally
paying part of nearly $250 million in fees
over a 20-year period to clients who
agreed to act as plaintiffs.
Indeed, in the US, the current system
distorts market behaviour, while in coun-
tries like the UK, there is room for more
channelled activism. For a successful,
positive securities litigation environment,
the key is for regulators to find the right
balance so that both shareholders inter-
ests and corporate interests are preserved.
ISJ
Essay Award 2006
INVESTOR SERVICES JOURNAL
TOMORROW’S PEOPLE
ESSAY AWARD 2006
Sponsored by
As sponsors of Investor Services Journal’s 2006 essay competi-
tion, Citigroup’s Giulio di Cerbo and ABN AMRO Mellon GSS – in
the shape of Nigel Taylorson, thier guests, and members of their
teams – were on hand to present the award and a cheque fof
USD2,000 from ISJ to winning entrant Nathalie Aubry at a dinner
held at London,s Dorchester hotel. Topics covered in the submit-
ted essays spanned many different aspects of the securities
industry, including legal, risk, compliance and securities industry
infrastructure. All the essays were of an extremely high standard,
and – in keeping with the growing globalisation of the business –
their authors were drawn from all corners of the world.
Aubry, a PhD student and UACES scholar at Robert Green
University in Aberdeen, focused on regulation of post-trade
securities services within Europe, an extremely topical issue at this
time. As Aubry highlighted, post-trade processing may generally
be viewed as a somewhat obscure activity, but it is nonetheless
central to the healthy functioning of global capital markets.
WINNING ESSAY: THE IMPACT OF COMPLIANCE
AND REGULATION ON SECURITIES SERVICES by Nathalie Aubry.
Due to its limited length this paper will only focus on European reg-
ulation regarding ‘post-trade’ securities services – the process that
results in securities transactions becoming final and irrevocable and
that also enables the safekeeping of securities. Though invisible to
the final investor, these operations are nonetheless at the core of a
proper and secure functioning of financial markets. They are also
concomitant to key issues such as investor protection, financial mar-
ket stability, the distribution of financial risk, and the competitive-
ness of the European single market.
The European Parliament’s Resolution of 2003 underlined that
existing clearing and settlement barriers do not enable cross-boder
transactions to be processed efficiently. Accordingly it is impossible
to exploit to the full an internal market in financial services.
Financial services have recently been scrutinised, and a battery of
European directives and other pieces of legislation were designed to
support the realisation of a ‘truly integrated financial market’ – as
envisaged in the Financial Services Action Plan (hereafter ‘FSAP’),
60 INVESTOR SERVICES JOURNAL
The Industry Judging Panel
Giulio di Cerbo, Managing Director,
EMEA, Citigroup Global Transaction
Services. He is well-known within the
financial industry, and is an active
participant in forums, roundtable dis-
cussions, conferences and seminars.
Nigel Taylorson, Head of Relationship
Management, ABN AMRO Mellon. He
is a seasoned commentator on industry
trends, issues and developments.
Paul Stillabower, Head of Business
Development, HSBC. He is responsi-
ble for sales, relationship management,
marketing and market strategy in
Europe, the Middle East and Africa.
Photos: 1 - Giulio di Cerbo & Nathalie Aubry; 2- Justin Lawson, Elizabeth
Coleman & Harvey Colborne; 3 - Guilio, Nathalie, Nigel Taylorson, Mark Latham.
endorsed at the Lisbon European Council of March 2000.
In the midst of this regulatory euphoria, a possible clearing and
settlement framework directive is on the discussion table.
Interestingly this is an addition to the origical FSAP. As the need for
a directive is being discussed, the paper can only show what is
expected to be happening and what needs to happen. Therefore it
focuses on ‘impact’. The question stands: What would be the impact
of a clearing & settlement directive on securities services?
This paper does not attempt to take sides as far as the need for a
directive is concerned, but hopes to contribute to the debate. It is
only concerned with the potential impact regulation in this area
could have. In such a highly technical area has really politics and reg-
ulation its place?
Where are we today and what is clearing & settlement anyway?
All stakeholders readily admit that, on the one hand, national mar-
kets are secure and highly efficient, but, on the other, the European
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market deeply fragmented due to the diver-
sity in market practices, legal frameworks
and tax regimes. Indeed Securities Clearing
and Settlement Systems in the EU have
historically developed on a purely domestic
basis, as cross-border trading activity has
been, in the past, very limited. Given the
large economies of scale and scope that
characterise Securities Settlement Systems
and Central Counterparties (CCPs),
domestic systems have experienced a
process of consolidation leading to the
creation of domestic monopolies or quasi-
monopolies operating under uniform
technical, regulatory and legal frameworks.
National Central Securities Depositories
(CSDs) were developed to comply with the
national central bank, stock exchange and
banks demands . Yet one element remains
identical: the existence, on the one hand, of
a risk free central infrastructure, and on the
other, the presence of financial intermedi-
aries – operating in a highly competitive
market – that provide operational and
financing services.
The performance of clearing and settle-
ment functions has been entrusted mainly
to institutions such as CSDs and CCPs. The
former mainly perform functions relating
to settlement and custody, while the latter
typically perform functions relating to
clearing. CSDs and CCPs do not usually
deal with retail investors. Access to these
institutions is offered by other entities –
namely, Custodians and Clearing Members
– which act as Intermediaries for clearing
and settlement activities. However, certain
Intermediaries may not wish to access
directly these institutions; they use other
Intermediairies instead. Therefore, a multi-
tier intermediary structure is possible.
Cross border transactions can be settled
through the following channels: 1/ direct
remote access to the foreign Securities
Settlement System; 2/ use of custodian hav-
ing direct or indirect access – typically
through a local participant – to the foreign
Securities Settlement Systems; 3/ use, as an
Intermediary, of a CDSs or International
CSD that has direct or indirect access to
the foreign Securities Settlement System.
Today risk free CSDs process 90% of EU
securities transactions and 70% of the
monetary value of transactions settled in
the EU: over 250 million transactions worth
EUR 300 trillion per year. Yet the current
heterogeneuous nature of the European
clearing and settlement arena gives rise to
increased direct and indirect operating
costs as they grapple with the complexities
of cross-border clearing and settlement.
Although these costs and complexities have
only a marginal impact on the decision to
invest in a particular cross-border security
62 INVESTOR SERVICES JOURNAL
or not. Pan-European clearing and settle-
ment practices would simplify current
operations.
Clearing and settlement is a condition for
the smooth operation of securities markets
which is still far from being met. The basic
problem here seems to be the existence of
too many clearing enterprises, some of
them working only on a national scale, and
the consequent absence of the economies of
scale which are usually obtained in the
United States in the clearing and settlement
of securities trade . Consolidation is com-
plicated by conflicts of interest since each
part of the clearing and settlement system
wants to secure its own survival.
“The inefficiences of
cross-border arrangements
in the EU are due to
a lack of global
technical standards.”
What is needed?
There are areas that could benefit from
Commission action – even according to the
challengers of an EU directive: the removal
of obstacles to the introduction of a har-
monised law of securities transfer and hold-
ing; the promotion of harmonisation of the
reporting of tax file information; the appli-
cation of competition policy. The ineffi-
ciences of cross-border arrangements in the
EU are due to a lack of global technical
standards, the existing of differing business
practices and inconsistent fiscal, legal and
regulatory underpinnings. As a result, cross
border clearing and settlement in the EU is
much more costly and complex that at
purely domestic level and, potentially, less
safe. This fragmented market structure is
no longer acceptable at a time when invest-
ing strategies are increasingly based on pan-
European, sector-based considerations and
a single EU financial market is being creat-
ed. Without clearing and settlement
arrangements, the ability and willingness of
participants to trade in EU securities will be
sub-optimal; the liquidity of financial mar-
kets will be affected and the cost of capital
will be higher than it need be.
Against this background market forces are
driving the demand for far greater pan-
European efficiency. The introduction of
the single currency, the emergence of an
equity culture on continental Europe, and
the improvements in information technolo-
gy have contributed to the increase in num-
ber of relatively important cross-border
transactions. As a result, the strains on and
the expectations from cross-border clearing
and settlement arrangements have
increased considerably. Clearing and settle-
ment service providers are seeking to
enhance performance, reduce costs and
establish a pan-European presence, in their
own or through mergers and alliances,
which is beginning to lead to significant
restructuring. At the same time, regulators,
supervisors and overseers are taking steps in
order to increase the clarity and homogene-
ity of standards applicable to securities
clearing and settlement systems, to update
their supervisory methods in order to meet
the challenges posed by market develop-
ments, and to enhance safety.
The need for a directive…
The Risk argument
Regulatory binding measures in the form
of a Directive should be introduced to con-
strain any undue risk imposed upon market
participants, financial stability or investors
and issuers. The current legal differences
between the Member States are such that it
would be impossible to address certain
objectives (as set by the second Giovanni
report, i.e. cost-efficiency, fair competition
and avoidance of systemic risk) with non-
regulatory means while ensuring a consis-
tent overall framework for the Single
Market. The effectiveness of transfers and
the finality of transfers as a result of book-
entry debits and credits made within sys-
tems are crucial to reduce uncertainty and
systemic risk. It is fundamental to the func-
tioning and creation of a safe, efficient and
integrated EU clearing and settlement
infrastructure to have clear rules regarding
transfer of ownership in the context of
securities clearing and settlement systems,
applicable to financial instruments held
with CSDs.
It is worth paying special attention to
containing systemic risk in the one hand
and assuring a level playing field for all par-
ticipants in the clearing and settlement
market on the other. On systemic risk, cor-
porate consolidation will inevitably concen-
trate risks, which are today diffused among
many settlement systems. Nevertheless, it
could prove reductive to rely solely on
enhancing the risk management instru-
ments of clearing and settlement
Infrastructures, especially if we consider the
profit-seeking nature of the settlement sys-
tem operators. The need to maximise share-
holders dividend could conflict with the
need to run the companies, in keeping not
only with the obvious supervisory requisites
but also in keeping with sound and prudent
management.
It is unavoidably a contentious issue.
Chief among the bones of contention is the
proper position of central securities deposi-
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Winner - Essay Award 2006
tories, particularly the ICSDs Euroclear,
Clearstream and SIS Sega Intersettle. A
group of agent banks have argued that
CSDs should not be allowed to offer bank-
ing services and other value added services,
because of the systemic risk implications
and the problems of cross-subsidisation
between monopoly functions and competi-
tive banking functions.
Improved regulatory co-ordination
A directive for securities would be consis-
tent with the approach adopted by the
Commission to achieve a genuine Single
Market for Financial services, based on the
definition of a common regulatory and
supervisory framework and the application
of mutual recognition principle. Together
with the directive relating to the taking up
and pursuit of the business of credit insitu-
tions (Consolidated Credit Institutions
Directive) and the Markets in Financial
Instruments Directive (MiFID), it would
form a global set of consistent legislative
rules governing all stages of the securities
transaction processes and market partici-
pants and institutions involved.
Rights of access and choice
The achievement of an integrated
Securities Clearing and Settlement System
will largely depend upon Clearing and
Settlement service providers’ enjoying effec-
tive freedom of access to, and choice of,
their preferred clearing and settlement loca-
tion on non-discriminatory terms. Clearly
certain access and choice restrictions still
remain today. A directive should clearly
define different functions. Infrastructures
and Intermediaries do not have the same
vocation . In many cases, these stem from
national law provisions or their interpreta-
tion. The most efficient way to remove
these or similar direct or indirect restric-
tion, incorporated in a multitude of nation-
al legal instruments, is likely to be the adop-
tion of a framework Directive, introducing
comperehensive rights if acces and choice
and the conditions for their exercise. The
central tenet of the Commission's approach
to clearing and settlement regulation is that
"Securities Settlement Systems should have
right of access to Securities Settlement
Systems in other member states." The
alternative, namely to rely on voluntary
action by the national legislators or regula-
tors, would be much less certain and might
not guarantee EU-wide liberalisation for a
long period of time .
The lack of a European regulatory and
supervisory framework for clearing and set-
tlement, which raises problems of equal
treatment for all parties offering clearing
and guarantee services, is problematic in
64 INVESTOR SERVICES JOURNAL
terms of the right to provide services on the
one hand and capital adequacy require-
ments on the other. Very few securities are
placed in multiple CSDs, making CSDs nat-
ural monopolies. Should they, as monopo-
lies, be allowed to compete with institutions
that don't have that monopoly? On the
other hand, the CSDs ask why they should
be prevented from competing. The compe-
tition issue is important here.
“The current legal
differences between
the Member States are
such that it would be
impossible to address
certain objectives.”
… but is it really needed?
A risky and costly venture
The benefits of a directive would be out-
weighed by the risks and costs. In a debate
where there is a risk that there will be many
voices calling for additional regulation, it is
important to recall that additional regual-
tion comes at a price. Additional prudential
regulation of participants in the prost trade
processing chain can also developed using
the tools of convergent supervisory practice
rather than new high level measures.
A period of regulatory uncertainty during
which the developmeent of the industry is
held back could arise. This is particularly
important at a time when the consequences
of market-fuelled change are being digested
and infrastructure providers are engaged in
significant investment programmes based
on a broad consensus about appropriate
technologies.
Plus the risk linked to compromising
inappropriatedly in a highly technical area.
The costs of compliance are to be high,
especially in the case of inappropriate regu-
lation. An example of this risk is the current
debate on the ESCB-CESR standards, where
the industry had to work hard to explain
why it should not be mandatory to collater-
alise credit exposure.
Too much regulation already
It is important to recall that all partici-
pants in the securities processing chain,
with the exception of some individual
investors, are subject to a degree of regula-
tion. Companies are subject to an obliga-
tion to keep proper accounts; banks are
subject to solvency standards and (in some
cases) conduct of business rules; investment
firms are subject to capital adequacy rules,
conduct of business rules and client money
rules requiring segregation of client money
and assets.
Market forces
The removal of the remaining Giovanni
barriers should naturally lead to further
European integration, and cross-border set-
tlement costs will in turn be reduced even
in an environment where multiple settle-
ment infrastructures prevail. However, in a
harmonised Europe, market forces should
be able to further progress consolidation of
clearing and settlement, and there should
be no need for regulatory intervention
towards the creation of a single, pan-
European clearing and settlement market
infrastructure.
Conclusion
Clearing & Settlement proved to be a
much-debated question at the European
level. It is an issue at core of the integration
of the European financial market – politi-
cally sensitive and highly technical. Would
the Commission leave it up to market
forces or put in place a framework? Despite
European and American differences, are the
models converging?
The cheapest and easiest version of clear-
ing and settlement would be to have one
global CSD. But is that a realistic goal? Is
there one model of clearing and settlement
that is going to emerge as a consensus view?
It is doubtful. The laws and local practices
are different in each country. It is some-
times said that these differences could be
removed, but I think you have to ask
whether it would be in the interests of all
the economies to put these capital markets
together. A CSD is a crucial part of a
domestic capital market, and that domestic
capital market in turn is very important to
the domestic economy. I think there will
always be regions in Europe. Even within
countries there are already regions, and
they will want to retain their own capital
markets. If there are regional service
requirements, then someone will provide to
meet those requirements, even if it is at a
slightly higher price.
With a directive or without one the
European Commission, because it has
engaged a public debate about clearing &
settlement, has generated regulation – this
could be self regulation or legal regulation.
Yet, the issue of definitions between the dif-
ferent functions performed by market par-
ticipants is crucial to future developments.
Should they be separated? In a market driv-
en by profit making organisations at all
value chain levels it remains to be seen
there will be winners and losers.
Nathalie Aubry
 GLOBAL ORGANISERS OF INSTITUTIONAL FINANCE & INVESTMENT CONFERENCES

The Premier Gathering Of Beneficial Owners In Europe

IMN’S ELEVENTH ANNUAL

EUROPEAN
BENEFICIAL OWNERS’
SECURITIES LENDING
& GLOBAL CUSTODY SUMMIT
12-13 September 2006
Grand Marina Hotel
Barcelona, Spain
www.imn.org/isl/isjm

Over 80 Investors Including Most Italian SGR FOFs Attended In 2005

THE FOURTH ANNUAL

ITALIAN
HEDGE FUND
INVESTORS’ SUMMIT
14-15 September 2006
Hotel Principe di Savoia
Milan, Italy
www.imn.org/milan/isjm

Te l : + 1 - 2 1 2 - 7 6 8 - 2 8 0 0 E x t . 1 • F a x : + 1 - 2 1 2 - 7 6 8 - 2 4 8 4 • E m a i l : m a i l @ i m n . o r g
Diary & Snapshots
Dating
Global Securities
Services events
24 July 2006, 3 days
Alternative Investment Summit
2006 Australia
Rydges Jamison Hotel, Sydney,
Australia
Terrapinn
Tel: +44 (0)20 7827 4171
Web: http://www.terrapinn.com/
12 September 2006, 3 days
Hedge Funds World Asia
Hong Kong Convention Centre,
Hong Kong
Terrapinn
Tel: +44 (0)20 7827 4171
Web: http://www.terrapinn.com/
19 September 2006, 3 days
Private Equity World Middle East
2006
The Jumeirah Beach Hotel, Dubai,
UAE - United Arab Emirates
Tel + 44 (0)20 7827 5989
http://www.terrapinn.com/2006/pe
me
26 September 2006, 2 days
The 15th ALFI & NICSA
Investment Funds Forum
Luxembourg
Tel: (+352) 22 30 26-1
Web: www.alfi.lu / www.nicsa.org
26 September 2006, 3 days
Portable Alpha 2006
TBC, London, United Kingdom
Tel: +44 20 7539 4325
Web:
http://www.terrapinn.com/2006/alp 19 November 2006, 3 days
ha/
9 October 2006, 5 days
Sibos 2006
Sydney, Australia
SWIFT
Tel: +32 2 655 31 11
Web: www.swift.com
http://www.terrapinn.com/2006/zur Tel: +44 (0)20 7827 5995
ich/
16 October 2006, 3 days
Hedge Funds World LatAm 2006
Four Seasons Hotel - Miami
Terrapinn
Tel: +44 (0)20 7242 2324
www.hedgefundsworld.com/2006/l Tokyo
atam/
17 October, 2 days
Hedge 2006
Victoria Park Plaza - London
Terrapin
Tel: +44 (0) 20 7539 4320
www.hedgefundsworld.com/2006/h www.terrapinn.com/2006/hs%5Fau
edge/
66 INVESTOR SERVICES JOURNAL
Snapshots...
23 October 2006, 3 days Derivatives & Securities World
Hybrid Securities Europe 2006
London
terrapin
Tel: +44 (0)20 7827 4161
www.terrapinn.com/2006/hseu-
rope/
6 November 2006, 4 days
Energy Investment Trading Asia
2006
Singapore
Tel: +65 6322 2705
www.terrapinn.com/2006/eita%5Fs
g/
7 November 2006, 2 days
Asset Allocation Asia 2006 Kevin Green, Mizuho & Rob Lowry, Exchange Systems
The Conrad Hotel - Hong Kong
terrapin
Tel: +65 63222 721
www.terrapinn.com/2006/aaa/
8 November 2006, 3 days
Ethanol & Biofuels Asia 2006
Singapore
Tel: +65 6322 2726
www.terrapinn.com/2006/eba/
14 November 2006, 4 days
Hedge Funds World Africa 2006
Cape Town International
Convention Centre - Cape Town,
South Africa
Tel: +27 (0) 11 516 4054 Clive Lambert, FuturesTechs & Alec Baughen, Triscar
www.hedgefundsworld.com/2006/h
fwza/
Cognito Pub Quiz
Trade Finance MENA 2006
Al Bustan Rotana Hotel - Dubai
Tel: +44 (0)20 7092 1267
www.terrapinn.com/2006/tfme/
28 November 2006, 3 days
Hedge Funds World Zurich 2006
Swissotel, Zurich
www.hedgefundsworld.com/2006/z
urich
28 November 2006, 3 days
Real Estate Investment World
Japan The losing team proving that its the taking part that counts!!
Four Seasons Hotel, Chinzan-so,
Tel: +65 6322 2309
www.terrapinn.com/2006/reiwjp
5 December 2006, 3 days
Hybrid Securities World Australia
Rydges Jamison Hotel, Sydney
Tel: +61 2 9005 0724
Let’s go that way... Joy MacKnight and Dan Barnes

All In
daily task was to liaise with 28
broker/dealers, most of which were
located in New York. When talking
about her role she comments “I enjoyed
A Days
working at Northern, but I started to
wonder what it would be like to cross
over to the sell-side of the business and
work on Wall St. I decided that if I was
ever going to make a move to New
Work
York, that there was no better time in
my life to do it…while I was still young
and able to relocate with relative ease”.
In a spontaneous move, Biddle hopped
on a plane to New York to meet with the
broker/dealers she had built relation-
ships with during her time in Securities
Lending. Having a series of interviews,
she noted “I was most impressed with
the entrepreneurial nature and growth
of Cantor’s newly-formed Debt Capital
Markets division”.
Since being hired in June 2006, Biddle
has been working hard to build her own
book of business as a salesperson on
the Repo Desk. Her networking at con-
ferences was certainly noticed by us
here at ISJ!
What do you like most about your cur-
rent position at Cantor Fitzgerald?
I like that I am part of a group that was
only created a few years ago because it
ElizabethBiddle provides me with an enormous oppor-
tunity to grow with the division. I also
ISJ speaks to Elizabeth consider the people in Debt Capital
Markets a huge resource. All of the
Biddle of Cantor Fitzgerald, individuals who joined this division hail
continuing the series of from various shops on Wall St; and they
provide our team with a diverse base of
“Meet the future” profiles. knowledge and idea generation.
Who are your Mentors/Role models?
Having graduated from the
University of Texas in Finance, Biddle
knew banking was where her heart lay. I consider Rony Saba, my previous part-
ner at Northern Trust, a role model. I
In 2002 she joined Northern Trust as truly admire his ability to keep a con-
part of the C&IS DIAMOND Program, a stant (and grounded) perspective on
12-24 month rotational training pro- what matters most in life. It’s too easy
gram geared towards management to get hung up on insignificant details
development. This is a hard fought in life that you shouldn’t waste your
course to get onto and after completing time worrying about.
six rotations through various divisions
she accepted a permanent position in We at ISJ work hard, however, we did
hear you work long hours too?
the Securities Lending Group. Working
on the Fixed Income Lending desk, with
Not as long as some people in this
primary responsibilities covering the
Government Securities Lending book. industry. My hours are typically 7:00
While working in Securities Lending, her am – 5:00 pm.
Meet the Future
If you were named Cantor employee
of the year how and where would you
celebrate?
I would probably opt to celebrate with a
huge happy hour after work at a local bar,
followed by dinner at an awesome restau-
rant in the city.
Where do you see yourself in five years
time?
I am working towards the opportunity to
gain international experience in the
industry. I would love to be in London or
Hong Kong in five years.
Outside of work, what are your vices?
Sushi and chocolate – But not together!
What are your goals for the future?
Travelling to as many places possible,
buying a home, taking care of my existing
family, starting a family of my own, and
always keeping in touch with the people
in my life who are most important to me.
– So many!
THE ISJ MINUTE
CD or MP3?: MP3
Music or films: music, especially 80’s!
Beer or wine: both....depends on my mood
Beach or ski: 100% beach
Car or bicycle: neither....I like to walk
Sport or Shopping: shopping
Watcching or playing?: playing
Shoes or bags: do I have to pick?!
Night in or night out: a night in BEFORE a
night out
Elizabeth C. Biddle, 26
Title: Associate, Repo Sales, Debt Capital
Markets
Education: BBA Finance (University of Texas
at Austin )
Employment: 1998 – 2000 UBS Warburg,
French M&A, 2002-2005, The Northern Trust
Company, C&IS DIAMOND Program then
Fixed Income Securities Lending, 2005 to
present, Cantor Fitzgerald, Repo Sales, Debt
Capital Markets
INVESTOR SERVICES JOURNAL 67
Mandates

MANDATES TABLE
2006
Month Winner Client Location Assignment Mandate Size

July AA Mellon North Yorkshire UK Custody & Accounting GBP 1 bn

June JPMorgan WSS Royal Mail UK Custody GBP 2.2bn
June AA Mellon Merchant Navy UK Custody & Accounting GBP 3.2bn
June BNP Paribas Istituto Nazionale Italy Depot bank EUR 0.6bn
May HSBC RLAM UK Securities Servcies USD 40bn
May AA Mellon Railpen UK Custody GBP 17bn
May Northern Trust SFP Netherlands Asset Servicing EUR 330m
April Northern Trust Prince Street USA Global Custody USD 160m
April HSBC Karstadt H. Germany Depot bank & Custody EUR 400m
April BNP Paribas Avance Madrid Outsourcing EURO
April AXA Rosenberg AP7 Sweden Equities EURO 320m
April AA Mellon DEPFA Bank Netherlands Custody & Securities EUR0 115bn
March State Street AXA IM UK Outsourcing mandate EURO 20bn
March State Street Stagecoach UK Custody USD 900m
March Northern Trust SBB Netherlands Custody EUR 7.5bn
March SG SS ESCA Austria Custody EUR 600m

And Relax.......
The holiday season is upon us. But those of us who haven’t enjoyed the
scorching sun yet have been doing some work!
After some stirling performances and crushing of French dreams, the Italians returned home with football’s most desired
accolade, the World Cup. It is fitting then, that this month’s mandates review kicks-off with more of that inspired Italian tal-
ent..........only this time, no French hearts will be broken along the way!

Istituto Nazionale di Previdenza dei Giornalisti Italiani (INPGI), the national pension fund for Italian journalists, has appoint-
ed BNP Paribas Securities Services (BNP Paribas) as Depositary Bank for its securities assets, with a value of EUR 0.6bn. The
range of services offered as part of this deal includes global custody, investment compliance and investment accounting.
Commenting on the mandate win, Stefano Catanzaro, Head of Sales and Relationship Management for Institutional
Investors in Italy said: “Following our recent successful mandate win from ENASARCO, BNP Paribas continues to strengthen
its market position and visibility in the Italian pension fund market. The quality and breadth of our service and product
proposition entirely met with INGPI’s requirements and we look forward to working closely with them going forward.”

JPMorgan Worldwide Securities Services (WSS) has announced that Nordea Bank S.A. in Luxembourg, has consolidated
global custody for $28 billion of the group’s international fund and private client assets with JPMorgan WSS. Conrad Kozak,
Securities Company Executive at JPMorgan WSS, said: “This extension of the services we already provide for Nordea
Luxembourg is a testament to the business we have built in Luxembourg, which was the first to reach $250 billion of assets
under custody.”

ABN AMRO Mellon Global Securities Services B.V. has been selected by The North Yorkshire Pension Fund to provide cus-
tody, investment accounting (SORP) and performance measurement services for assets totalling £1 bn (EUR 1.45 bn). The
decision was taken following a six-month selection process conducted by Thomas Murray. Nadine Chakar, CEO of ABN
AMRO Mellon, said: “We are delighted that another major UK local authority has selected us as their custodian. The combi-
nation of our dedicated, high quality staff with our leading edge technology has been central to ABN AMRO Mellon’s suc-
cess since our inception, and this appointment confirms those strengths once again.”

68 INVESTOR SERVICES JOURNAL


Fever Pitch
The World Cup spread
like wild fire,
consuming our hearts
and minds.
Our (now not so
anonymous)
disaster recovery
expert, Keith Ford just
wants to watch a
match.
Well a big hello from continuity towers!
What a massive treat for us! No sooner
are we finished supporting the Global
Disaster Recovery Industry Conference
Season than we are back into a pan
European macho football and lagerfest
holiday. Thank you to Kirsten for getting
us all back on time from the US on a
direct flight.
Of course we now have the world cup
to contend with, talk about disaster plan-
ning! A simple note we received read;
The World Cup
It happens every four years and is set to
rule many hearts again for the coming
weeks The FIFA World Cup tournament
kicks off on June 9. For many of us the
event will be an interesting and emotional
time as we follow the progress of our
national teams. Some games will be
played during normal business hours and
we know that you will want to be kept up-
to-date on how your team is performing in
‘real time’.
At Megabank we want our employees to
be able to participate and enjoy the tour-
nament so have asked front-line leaders to
help enable you to watch or listen to
games where this does not cause any dis-
ruption to client service. We do, however,
ask you not to download live video or
commentary from the Internet as this
could cause network performance issues.
So talk to your business leader in the
first instance to understand what arrange-
ments have been made locally. If neces-
sary, offer to help out by setting up viewing
facilities for your team or site.
“What a fine state
of affairs, the content
provider offering
advice to customers
on how to not receive
the service.”
Don’t make me laugh! There is no-one
in our office. This week after four o’clock
in the afternoon I have only managed to
spot Roger our paranoid manager from
the facilities company and he has only
been running around posting up photo-
copies of our brand new TV License. Oh,
and a couple of techies from hosting serv-
ices that have been in to read the BBC
web site to attempt to block all the live
feeds into the local area network. What a
fine state of affairs, the content provider
offering advice to customers on how to
not receive the service. We can only
assume that they were doing this master
class of sales prevention to possible miti-
gate against an unpredictable rise in the
hits they may receive?
We hope you all spotted the an almost
classic denial of service delivered up the
FIFA. Allegedly there was a rather dubi-
ous call by a referee in their game against
Switzerland. Some wag in Korea decided
that it might be fun to start a viral cam-
paign whereby he suggested that if FIFA
were to receive a petition with over a mil-
lion names then they would replay the
match. A fairly obvious hoax but believed
by millions of Koreans, luckily FIFA were
able to simply switch off the feed from
Korea and keep service as usual.
Disaster Recovery
In addition to this note our ever grate-
ful management were here to welcome
us, with some interesting “research” that
they had been fed by the directors, it con-
cerned the significance of certain sport-
ing events, specifically World Cup foot-
ball games and what else might be con-
flicting with that in our world of finance.
Apparently there is a US based compa-
ny that plots such minor details as US
base lending rate announcements against
important global events such as the
England squads first round game.
Honestly, I don’t really think here in the
UK we need a calendar that identifies to
find out who is swinging the lead. We just
need to look around the office!
What can realistically be done to try
and mitigate against the problems that
may present themselves to office manage-
ment during such a large sporting event?
Well perhaps the first thing we can do is
identify just who is and who is not really
interested. In our office there are a num-
ber of staff who have no interest on foot-
ball at all. We don’t want to be too sexist
here but it seems that a good number of
the young ladies here in the office could-
n’t care less out football, thats you and
Karen, Hannah! this together with sensi-
ble and firm holiday planning let’s us put
together a core team of staff who we can
rely to be in the office throughout the
series, this ensure continuity of service
for our customers.
We also make as much use of flexitime
at these times as possible, many of our
staff can easily come in early and start
early, this gesture tends to encourage staff
to work with us to cover the incidents
If you have the luxury of not needing to
provide a constant service then the most
sensible solution is to provide a screening
room in the office, rent a large screen and
put on a few soft drink. This means that
staff can work right up to the beginning
of a game and then be back minutes after
the match.
So instead of you having members of
staff taking a whole day off “sick” to
watch a match that lasts for just an hour
and a half you will have them taking an
hour and a half out. You may find staff
being more productive when they go
back to there desks because they’re happy
to have seen the game and pleased that
you have managed to take care of the.
And me, I am just waiting for all the
games to finish and will be off on holiday
~ with Hannah and Karen!
ISJ
INVESTOR SERVICES JOURNAL 69
Moving & Shaking
Moving
& 2006 and responsible for leading the
Shaking
A selection of the
appointments
updated daily at
WWW.ISJFORUM.COM
ABN AMRO has announced that the
Supervisory Board of the bank has
decided to appoint Andre Olijslager as
its vice-chairman. Olijslager has been a
member of the Supervisory Board since
April 2004. In his new role he succeeds
Arthur Martinez, who was appointed
chairman of the Supervisory Board at
the Annual General Shareholders
Meetings on 27 April 2006. The
Supervisory Board of ABN AMRO con-
sists of the following 12 members;
Arthur Martinez (chairman), André
Olijslager (vice-chairman), Louise
Groenman, Baron David de Rothschild,
Trude Maas-De Brouwer, Marcus
Vinicius Pratini de Moraes, Paolo
Scaroni, Lord Sharman of Redlynch,
Rob van den Bergh, Anthony Ruys, Gert-
Jan Kramer and Gerhard Randa.
70 INVESTOR SERVICES JOURNAL
Lars Gustavsson has also been appoint-
ed as Global Head of Services and Senior
Executive Vice President, effective 01 July
Services organisation delivering the com-
mitments to improve service quality,
reduce cost and manage risks while
increasing the agility of the Services
organisation world-wide. Currently
Gustavsson is Chief Information Officer
(CIO) for the Group.
In addition, Tim Steele has been
appointed as Head of PR & Media
Relations, to succeed Robert White, with
immediate effect. A journalist with
almost 20 years experience, Steele has
covered the global asset servicing busi-
ness for the past decade, launching
International Custody & Fund
Administration (ICFA) magazine before
moving on to edit Global Investment
Services. Based in London, Steele
reports to ABN AMRO Mellon’s Silvia
Maulini, Head of Marketing &
Communications, with a focus to fur-
ther ABN AMRO Mellon’s strategic
goals across its markets.
Butterfield Bank has announced that Ian
Fair has joined the Group and takes on
the newly created role of Vice Chairman
of Butterfield Bank (Bahamas) Limited.
Reporting to Graham Brooks, Executive
Vice President, International, Fair will
help the Group continue to expand its
international Private Banking and
Wealth Management business. “We are
very pleased to welcome a person of
Ian’s eminence to the Butterfield Bank
Group,” said Brooks. “Ian brings with
him an unparalleled depth of knowl-
edge, particularly on the international
aspects of wealth management and
planning. His proven abilities and skills
are a very positive addition to the
Butterfield Bank Group, and to our sen-
ior management team.”
GlobeOp Financial Services has
announced the appointment of Andrea
Dulberg as general counsel. Dulberg
succeeds Alison Gregory, who will
assume a new role within GlobeOp
leading Enterprise Risk Management.
Additionally, Dulberg has been named
to GlobeOp’s management committee.
“Andrea’s extensive background with
the securities industry will be extremely
valuable as we continue to grow the
breadth of GlobeOp’s financial, report-
ing and administrative services for our
clients,” said Hans Hufschmid, GFS
chairman and chief executive officer.
Catalyst has announced the appoint-
ment of Paul Collins to its Board of
Directors to provide support and guid-
ance to Catalyst’s corporate strategy
and marketing processes. Speaking on
his appointment, Paul commented: “I
am delighted to have the opportunity to
support Catalyst’s growth plans.
Catalyst is one of the few firms in the
consulting market which really under-
stands how to effect change and, more
importantly, make it stick. Catalyst’s
skills in the financial services market are
in great demand and these skills will
continue to strengthen as the sector
undergoes rapid structural, regulatory
and technological changes. I look for-
ward to exciting developments over the
coming years.”
RBC Dexia Investor Services has
announced the appointment of Brent
Wilkins to the role of Head, Sales and
Relationship Management, Americas.
Previously, Wilkins served as Regional
Head, Central
Canada, Sales &
Relationship
Management for
RBC Dexia
Investor Services,
where he oversaw
the development
and implementa-
tion of the compa-
ny’s sales strategy
in central Canada.
Brent Wilkins He will succeed
Robert Baillie, who
is departing the organization to accept a
leadership role with another organiza-
tion. “On behalf of RBC Dexia Investor
Services, I congratulate Brent Wilkins
on his much-deserved appointment to
this key strategic role within our organi-
zation,” said José Placido, Chief
Executive Officer of RBC Dexia Investor
Services. “I am confident that Brent’s
track record of professionalism, success
and strong leadership will serve our
organization extremely well as he
expands on RBC Dexia Investor
Services’ accomplishments in the
Americas.”
HSBC has announced the appointment
of Rhydian Cox as Head of Corporate,

Investment Banking and Markets
(CIBM), Asia- Pacific, effective July 17th.
Cox has been Head of CIBM, HSBC
Mexico for the past three years, where
he played a key role in the successful
build out and growth of CIBM's busi-
nesses in Mexico. Cox joined the HSBC
Group as a management trainee in 1984
and during his career has worked on
three different occasions in Hong Kong
and has spent time in Malaysia, South
Korea, France and the United Kingdom.
Also, Anna Shill has been appointed as
deputy head of IFS Tax Services,
Europe, reporting to John Everett, head
of tax. In this role, Everett said: “Anna
will lead the Tax Product team to help
maintain the ability to satisfy the
demands and enquiries of our expand-
ing client base. She has joined us as the
scope of the business increases and as
the tax environment becomes ever more
complex.” Shill previously spent nine
years at JP Morgan, most recently serv-
ing as vice president for global tax cus-
tody for bank’s Europe, Middle East and
Africa regions. Her responsibilities
included tax technical work, client liai-
son and training and internal tax train-
ing to all levels.
BNP Paribas has announced the
appointment of Jason Nabi as Head of
Financial Intermediaries UK. Based in
London, Nabi will be a member of the
UK Management Team, reporting to
Tony Solway, Head of BNP Paribas
Securities Services in the UK with addi-
tional reporting to Steve Chew, Global
Head of Financial Intermediaries
Coverage. Commenting on the appoint-
ment, Solway said: “The growth of both
local and international business derived
from UK broker dealers is gathering
pace. Jason’s appointment underscores
our commitment to the market and our
determination to build a world class
service for our clients.”
Fidelity International has announced the
appointment of Paul Williams as
Business Development Director within
its UK DB business. Reporting to Mark
Miller, Head of UK DB Business
Development, Williams joins Fidelity
after 12 years at F&C Management,
most recently holding the position of
Director of International Business
where he was responsible for
International new business and client
service activity. Commenting on Paul’s
appointment Miller said: “I am delight-
ed that Paul has joined the UK DB
Business Development team. Paul’s
experience and knowledge will be
important in helping us further develop
our relationships with prospective
clients and their consultants over the
next few years.”
Citigroup has announced that Darren
Ansell has been appointed as Regional
Sales, Director for Securities Finance
(GTS) responsible for the sales efforts
in UK, Ireland, Channel Islands, Eastern
Europe (Balkans),
Middle East and
Africa. In this role
Ansell’s focus will
be to introduce
new clients into
the Securities
Finance Lending
Program. These
clients may cur-
rently hold their
Fixed Income /
Darren Ansell Equity assets in
custody with
Citigroup or on a Third Party Basis.
Ansell has spent his entire career spe-
cializing in International Securities
Finance, acting as a Direct Lender,
Borrower and currently an Agent Lender
and has over 20 years experience in the
Securities Finance Industry.
Fortis has announced that Johannah
Ladd has been appointed as Account
Manager Energy Products as part of a
strategic expansion of its Third Party
Clearing and Custodian services in
Energy Products. Based in Amsterdam,
Ladd joins Fortis from the carbon mar-
ket's European Climate Exchange.
Before that, she reported on the
European energy markets as a journalist
for Dow Jones Newswires. “We are very
pleased that Johannah joins our team,”
said Jan Bart de Boer, Global Director of
sales and account management for
Fortis Clearing. “Her professional expe-
rience will help expand our services in
Energy Products, which is part of
Fortis’s global strategy of reaching 10%
market share for third-party clearing.”
Rosemary Leahy has been appointed
Head of Securities Services, Ireland, for
HSBC Securities Services (HSS), with
effect from 1 September 2006. Leahy
Moving & Shaking
takes over from Ian Stephenson, current
Head of Fund Administration and
Trustee Services, Institutional Fund
Services, Europe.
She joins HSS
from ABN AMRO
where she has
spent the last
three years manag-
ing regional and
product business-
es for transaction
banking, including
Central and
Eastern Europe,
Rosemary Leahy the Middle East
and Africa. Prior to
joining ABN AMRO, Leahy spent 10
years with Citigroup in the transaction
banking business in both Europe and
North America.
The Bank of New York has appointed
Chong Jin Leow as managing director
and head of investor services in Asia.
Leow, who will be based in Singapore,
will be responsible for managing the
Bank’s investor services business in the
Asia-Pacific region. He joins The Bank
of New York from State Street Bank &
Trust, Singapore, where he was respon-
sible for the combined State Street and
Deutsche Bank investor services busi-
ness in all Asian countries excluding
Japan and Australia.
Gresham Computing plc has appointed
Dave Deller as Managing Director of its
EMEA (Europe, Middle East and Africa)
operations. Deller assumes
responsibility for the company's
European business and will promote
the global uptake of Gresham's suite of
real time information solutions,
including Real Time Nostro (RTN).
Deller has extensive knowledge of the
issues that banks face today, and has
witnessed first hand the benefits of real-
time information in the payments arena.
Prior to taking the role at Gresham,
Deller held senior sales and manage-
ment roles at Fundtech, Compaq,
Tandem and ICL. “We are delighted to
welcome Dave to Gresham,” said
Andrew Walton-Green, Chief Executive
Officer at Gresham Computing plc. “His
extensive experience and proven track
record in global financial services makes
him an excellent strategic addition to
our high-calibre executive team.”
ISJ
INVESTOR SERVICES JOURNAL 71
 ISJ Directory of Services

Consultants
C: Professor Michael Mainelli,
Z/Yen helps organisations make better choices. Our name combines Zen and Yen -
Executive Chairman
“a philosophical desire to succeed” - in a ratio, recognising that all decisions are
E: michael_mainelli@zyen.com
trade-offs. Z/Yen’s mission is to be the foremost risk/reward management firm.
In the financial markets Z/Yen conducts numerous research projects on a variety of C: (Disaster Recovery and Project
wholesale and retail issues, as well as providing technical strategy, support and Management): Keith Ford,
prediction systems. Z/Yen’s renowned annual studies include: Senior Consultant
i. Global cost per trade benchmarks on equities, money markets and foreign E: keith_ford@zyen.com
exchange;
T: +44 207-562-9562
ii. Operational performance of broker ratings;
F: +44 207-628-6786
iii. Operational performance of client (buy-side) ratings.
W: www.zyen.com

Custody, Clearing & Settlement

Australia and New Zealand Banking Group Limited (ANZ) is one of the leading finan-
cial institutions in the Australian and New Zealand markets. We provide an extensive
range of Retail, Corporate, Institutional and Private Banking services in addition to a T: +61 03 92733563
range of specialised functions including Custody Services through ANZ Custodian F: +61 03 92732650
Services. ANZ Custodian Services is committed to our home markets and continu- C: Philip Dowman
ously seeks to provide our clients with highly competitive service through our cus- E: dowmanp@anz.com
tomer-focused and experienced teams, extended business hours and ongoing invest- A: Level 25, 530 Collins Street
ment in technology. Our capabilities incorporate core Custody and Clearing of securi- Melbourne Victoria VIC 3000
ties, Investment Administration Services, Cash, Foreign Exchange and Securities Australia
Lending. W: www.anz.com
Assets under Custody: AUD$90 billion

BHF-BANK is one of the leading German commercial banks which operates as an C: Cornelia Keth
advisory, service and commercial bank on the areas of Asset Management &
T: +49 69 718 3738
Financial Services, Financial Markets & Corporates and Private Banking. Financial
F: +49 69 718 6050
Services comprises the bank’s custody services, investment company (depotbank)
services and its securities and derivatives clearing business. E: cornelia.keth@bhf-bank.com
Through the combination of its local market know-how with an in-depth product C: Moritz Ostwald
expertise it aims to serve its clients in an individual and flexible way. The bank’s T: +49 69 718 6838
longstanding experience in the German securities services market goes hand E: moritz.ostwald@bhf-bank.com
in hand with a corporate culture that values prompt acknowledgements and short A: Strahlenbergerstraße 45,
decision-making channels. 63067 Offenbach a.Main
Assets under Custody: EUR 180 bn Germany
No of funds: 244 W: www.bhf-bank.com

The CACEIS Group is a partnership between the Investor Services business lines
of Crédit Agricole S.A. and Groupe Caisse d'Epargne. We rank among the top 10 T: +33 1 43 23 89 75
custodians worldwide, with EUR1,681 billion in assets under custody C: (France)
(31/3/2006). CACEIS provides a full range of services to institutional clients in Patrick Lemuet
France, Luxembourg, Spain and Ireland. These services include, global and local E: france@caceis.com
custody (safekeeping of listed and OTC assets) depositary/trustee services, STP T: +352 4767 2567
transactions (SWIFT), corporate actions and income collection, proxy voting, tax C: (International)
services, compliance and performance monitoring, flexible online reporting, secu- José-Benamin Longrée
rities lending, matching, processing and settlement. We also have links to 200+ E: international@caceis.com
UCITS registrars. Our network of sub-custodians provides a secure environment W: www.caceis.com
for your assets in over 70 markets worldwide.

DBS offers a full range of custodial services including securities safekeeping, settlement of
trades, corporate actions and market information updates. These services are available in T: 65 6878-1830
Singapore, Hong Kong and other selected markets. DBS offers short-term, highly liquid F: 65 6878-4166
overnight facilities for its clients’ accounts to earn daily interest on any excess funds. DBS also C: Ms Low Swee Fun
provides the value added service of tax reclamation without holding tax reductions (where local
E: investorsvs@dbs.com
regulations permit) on income arising from securities safekept with it. Proxy voting services for
A: DBS Bank Ltd
clients’ holdings at Annual General Meetings and Extraordinary General Meetings are also
Global Transaction Services
available on request.
Securities services is an integral part of Global Transaction Services within DBS bank. With Securities Services, 6 Shenton
more than 20 years of experience in the custody business, DBS’ strengths lie in its ability to Way, 36-02, DBS Building Tower
provide quality services, in depth knowledge and expertise of the Asian markets. Its clientele 1, Singapore 068809
compromise the major global custodians, investment banks, private banks, insurance compa- W: www.dbs.com
nies and investment manages etc.

72 INVESTOR SERVICES JOURNAL


T: +47 22 94 92 95
F: +47 22 48 28 46
Contact: Bente I. Hoem
E: bente.hoem@dnbnor.no
W: www.dnbnor.com
T: +46 8 701 2988
F: +46 8 701 2990
Contact: Johan Wennerberg
E: custodyservices@handels-
banken.se
Address: Blasieholmstorg 12,
SE-106 70 Stockholm, Sweden
www.handelsbanken.com/nordic_
_custody_services
New York: Christopher Lynch
T: +1 718-242-7555
E: chris.e.lynch@jpmorgan.com
London: Dick Feehan
T: +44 (20) 7742-0102
E: dick.j.feehan@jpmorgan.com
Sydney: Laurence Bailey
T: (61-2) 9250-4833
E:laurence.bailey@jpmorgan.com
W: www.jpmorgan.com/wss
Anne-Lise Kristiansen
T: +47 2248 6238
E: annelise.kristiansen@nordea.com
Päivi Salonen
T. +358 9 165 51108
E: paivia.salonen@nordea.com
Steen Holmfred, Head of Global
Custody T. +47 2248 6238
E: steen.holmfred@nordea.com
Bo Thulin, Head of Client
Relations, Global Custody
T. +46 8 614 7721
E: bo.thulin@nordea.com
T: +44 (0) 20 7653 4096
F: +44 (0) 20 7248 3946
Contact: Tony Johnson
Head, Sales & Relationship
Management
E: antony.johnson@rbcdexia-is.com
Address: 71 Queen Victoria Street,
London, EC4V 4DE, UK
T: +46 8 763 5770
F: +46 8 763 6930
Contact: Goran Fors
E: goran.fors@seb.se
W: www.seb.se
Custody, Clearing & Settlement ISJ Directory of Services
DnB NOR is the largest and leading provider of Custody, Clearing and
Remote Member Service in Norway In addition, DnB NOR provides a wide
range of value added services to both Foreign and Domestic clients.
Through an Alliance solution with banks in Sweden, Finland and Denmark,
DnB NOR can offer seamless regional products, which can be customized to
our client's needs.
Handelsbanken was the first Nordic bank to provide complete custody services in the
entire Nordic region. We conduct in-house processing in each Nordic country, with
well-experienced staff with in-depth market knowledge and access to market infor-
mation. Each client is allocated an account manager fully responsible for the day-to-
day activities, as well as a regional relationship manager. Handelsbanken provides
specialised and tailor-made custody services including complete corporate action
services, securities borrowing and lending for all Nordic countries, as well as settle-
ment and clearing services to clients that are remote members of the Nordic stock
exchanges.
JPMorgan Worldwide Securities Services provides custody and securities servicing
solutions to the world's leading institutional investors, including fund managers,
insurance companies, pension funds and banks.
As one of the world's leading global custodians, we have $11.7 trillion in assets
under custody.
JPMorgan meets institutional investors' needs by providing extensive experience,
comprehensive products and advanced technology designed to optimize efficiency,
enhance revenues and mitigate risks associated with global investing.
Nordea is the leading financial services group in the Nordic and Baltic Sea region
and operates through three business areas: Retail Banking, Corporate and
Institutional Banking and Asset Management & Life.
- The leading financial services group
- A world-leading Internet banking and e-commerce operation
- The largest customer base of any financial services group in the region
- A leading asset manager in the Nordic financial market
- The most comprehensive distribution network in the region
Nordea is the leading custody services provider in the region. Nordea provides high
quality, tailor-made custody services for local and foreign investors dealing with
Nordic, Baltic or global securities.
RBC Dexia Investor Services offers a complete range of investor services to institu-
tions worldwide. Established in January 2006, we are equally owned by Royal Bank
of Canada (RBC) and Dexia. We rank among the world's top 10 global custodians,
with approximately USD 2.0 trillion in client assets under custody, including in-
house assets of RBC and Dexia. Our innovative products and services help clients
maximise operational efficiency, minimise risk and enhance portfolio returns. And
our 3,800 professionals in 15 markets offer proven expertise to enhance clients’
business performance.
As a leading supplier of custody services in the Nordic region, SEB Securities
Services expertise in dealing with securities, complex information flows, transactions
and payments efficiently and accurately is crucial to your own business methods -
and to your ability to make wise investment decisions.
A blend of personal service, advanced communication solutions and IT systems
means that SEB can provide you with the assistance you need in order to deal with
your securities in the most logical manner.
Assets under Custody: US$ 200 bn
73 INVESTOR SERVICES JOURNAL
 Financial Asset Services is the custody and investments-servicing division of
Standard Bank, providing a unique suite of services to sophisticated investors in A:Standard Bank
South Africa and eight sub-Saharan markets. Financial Asset Services
3rd Floor
Standard Bank views custody, investment administration and securities lending as a 25 Sauer Street
core business crucial to many other services the bank offers. The bank has invested Johannesburg 2107
significant capital in developing Financial Asset Services and is continuing to invest T: +2711 636 6615
to maintain and extend its leading position in its chosen markets. E: adam.bateman@standard-
bank.co.za
Standard Bank has assets under custody to the value of ZAR1.5 trillion and an W: www.standardbank.co.za
overall market share of approximately 40%.

Swedbank provides client-focused custody services to domestic and international

securities lending (including auto-borrow facilities), derivative clearing services,
proxy voting, full corporate actions and income service. Flexibility is an important
aspect of Swedbanks products and services. Our dedicated Client Relations T: +46 8 5859 1800
Managers and Account Managers are focused on personalized processing and F: +46 8 7237 147
reporting solutions. C: Neal Meacham, Head of
Custody
Other Features: ISO9001:2000 quality certification. Swedbank Markets Online
(SMO) internet information and reporting toolfor Custody and Securities Lending. E: neal.meacham@swedbank.com
Nordic Custody alliance with DnB NOR (Norway), OKO Bank (Finland) and A: Stockholm SE 105 34
Amagerbanken (Denmark) to offer regional custody product. Sweden
Institutional Assets under Custody: USD 70 billion
No. of Institutional Clients: 110

Data Services
Capco Reference Data Services (CRDS) provides a suite of reference data
management solutions that help financial services providers to achieve C: Donna Faup Bailey
superior data integrity, solve data integration issues and transform
operational performance while lowering data management costs. These Director Business Strategy &
services include a comprehensive managed services offering - a proven Marketing, Capco
alternative to in-house management of reference data as well as index T: +212 284 8749
and ETF data solutions. CRDS also provides consulting services E: Donna.FaupBailey@Capco.com
including advisory, assessment, migration, implementation, integration,
project management, development and training. For more information, W: www.capco.com/crds
please visit www.capco.com/crds.

Through its subsidiaries, DTCC provides clearance, settlement and information services for
equities, corporate and municipal bonds, government and mortgage-backed securities and London: Richard Bustard
over-the-counter derivatives. DTCC's depository also provides custody and asset servicing for T: +44 (0)20 7444-0403
more than 2.5 million securities issues from the United States and more than 100 other coun- E: rbustard@dtcc.com
tries and territories. In addition, DTCC is a leading processor of mutual funds and insurance
transactions, linking funds and carriers with their distribution networks. DTCC has operating New York: Susan Spivey
facilities in multiple locations in the United States and overseas. For more information on T: + 1 212 855-4144
DTCC, visit www.dtcc.com. E: sspivey@dtcc.com
DTCC’s GCA Validation Service gathers and distributes validated global corporate actions General information
announcement information on more than 1.4 million securities from more than 150 countries T: +1 212 855-1000
in more than 16 languages, more than any other provider.

Interactive Data Corporation (NYSE: IDC) is a leading global provider of Interactive Data (Europe) Ltd
financial market data, analytics and related services to financial institutions, active A: European Headquarters
traders and individual investors. The company’s businesses comprise: FT Interactive Fitzroy House, 13-17 Epworth
Data, ComStock, CMS BondEdge and eSignal. Street, London EC2A 4DL
T: +44 (0)20 7825 7800
FT Interactive Data provides global securities pricing, evaluations, dividend, corporate
action and reference data designed to support financial institutions’ and investment F: +44 (0)20 7608 3514
funds' pricing activities, securities operations, research and portfolio management. FT E: eu-info@interactivedata.com
Interactive Data collects, edits, maintains and delivers data on more than 3.5 million W: www.interactivedata.com
securities, including daily evaluations for approximately 2.5 million fixed income and C: Brendan Beith – European

Fund Administration
Andrew Collins Managing Director
Butterfield Fund Services (BFS) provides valuation, accounting, corporate secretarial, T: 441-299-3954
compliance, directorial and shareholder services to hedge funds, fund-of-funds, and
mutual funds. BFS also services international pension & insurance trusts. Clients E: andrewcollins@bntb.bm
such as financial institutions, insurance companies, and institutional investors use Tania Kowalski Marketing
Butterfield Fund Services to set up and launch investment funds. BFS operates in Manager
Bermuda, Bahamas, the Cayman Islands and Guernsey. T: 441-278-6300
E: tankakowalski@bntb.bm
Whether a fund is just starting out or is well established, Butterfield Fund Services A: Rosebank Centre 11
can provide complete solutions to help clients better service their investors. With
over $50 billion in assets under administration, many alternative funds have turned Bermudiana Road, Pembroke,
to Butterfield Fund Services for timely and accurate administration services. Bermuda HM 08 / P.O. Box HM
195 Hamilton, Bermuda HM AX

74 INVESTOR SERVICES JOURNAL


T: +33 1 43 23 89 75
C: Patrick Lemuet (France)
E: france@caceis.com
T: +352 4767 2567
C: José-Benamin Longrée
(International)
E: international@caceis.com
W: www.caceis.com
T: +1 732-667-1155
C: Skander Aissa
E: Aissa.s@dpmmellon.com
A: 400 Atrium Drive, Somerset,
New Jersey,
NJ08873, USA
W: www.dpmmellon.com
New York: Christopher Lynch
T: +1 718-242-7555
E: chris.e.lynch@jpmorgan.com
London: Dick Feehan
T: +44 (20) 7742-0102
E: dick.j.feehan@jpmorgan.com
Sydney: Laurence Bailey
T: (61-2) 9250-4833
E:laurence.bailey@jpmorgan.com
W: www.jpmorgan.com/wss
T: +44 (0) 127720 1222
F: +44 (0) 127720 0975
A: 77a High Street, Brentwood,
Essex, CM14 4RR, UK
C: Adam Hodgkins
E: adam@phoenixadmin.co.uk
W: www.phoenixadmin.co.uk
C: Fred W. Jacobs, III
A: PFPC, 301 Bellevue Pkwy
Wilmington, DE 19809 USA
T: 302-791-2000
F: 302-791-1570
E: Information@pfpc.com
C: Fergus McKeon
A: PFPC Riverside Two
Sir John Rogerson’s Quay
Dublin 2, Ireland
T: +353-1-790-3500
E: Information@pfpc.com
T: +44 (0) 1481 744000
F: +44 (0) 1481 744529
C: Jose Santamaria
E: jose.santamaria@rbc.com
A: PO Box 48 Canada Court
St Peter Port Guernsey
GY1 3BQ United Kingdom
W: www.rbcprivatebanking.
com/ci.html
The CACEIS Group is a partnership between the Investor Services business lines of
Crédit Agricole S.A. and Groupe Caisse d'Epargne. With a total of EUR823 billion in
assets under administration (31/3/2006), we are Europe’s premier third party fund
administrator. CACEIS provides a full range of services in France, Luxembourg,
Ireland, Belgium and The Netherlands. These services include portfolio valuation
with multiple and automated pricing sources, NAV calculation, product structuring,
tax relevant data calculation, fees and commissions calculation, on-line client report-
ing, legal and statutory investment guideline monitoring, performance measurement
and globalisation techniques such as Cloning. Our transfer agency services include
retail and institutional account management, Europe-wide transaction processing,
distribution network management, third party distribution and shareholder services.
The Fastnet Network, operated by CACEIS, undertakes some of the above services
and is a partnership venture with the Fortis Group.
Derivatives Portfolio Management provides onshore and offshore alternative asset fund
administration, back and middle office outsourcing, portfolio valuation, daily NAVs, risk
administration and portfolio transparency solutions for fund managers, asset allocators,
institutional investors and proprietary traders. DPM Mellon’s services are designed to
solve complex administrative needs and improve operational efficiency. DPM Mellon has
the systems, infrastructure and experience to handle your toughest administrative
challenges. DPM Mellonhas a world-wide staff of 200 employees. DPM’s HQ is in
Somerset, New Jersey with offices in London, the Bahamas, and the Cayman Islands.
A Mellon Financial Company.
JPMorgan Fund Administration provides a full suite of products for all aspects of
fund administration, enabling asset managers to focus on their core business of
investment management. Fully integrated with JPMorgan's custody and fund
accounting system, it also accepts automated data feeds from clients' in-house or
third party accounting platforms. By automating these activities, we leverage
technology to build flexible business systems that increase efficiencies and deliver
customer focused solutions.
A world-class team of experienced industry professionals provides the expertise you
need in fund administration services.
Phoenix Administration Services is a leading third party administration group of
companies targeted at the investment industry. Within the Phoenix group of companies,
there are two separate organisations:
Phoenix Administration Services Limited
Phoenix Financial Services Limited
The Phoenix offering is comprehensive. If you are looking to:
Outsource your back and middle office administration
Purchase or lease a systems solution
Get advice and guidance on fund administration
PFPC is a premier provider of processing, technology and business solutions to the
global investment industry. Our core offering includes accounting, administration,
investor services, middle-office services and regulatory administration services. Whether
your products are U.S. or non-U.S. domiciled funds, trust vehicles, limited partnerships
or commingled investment products, PFPC’s multi-jurisdictional, multi-fund capability
allows us to process your complex fund structures - from hedge funds, fund of funds
and private equity funds to master/feeder and multi-managed funds.
PFPC offers personalized alternative investment solutions tailored to your unique
needs. With more than 30 years in the fund servicing industry, our seasoned and
responsive professionals bring you the know-how, focus and dedication to deliver the
services you need, when and where you need them, any way you want them.
Our clients have access to a broad range of value added services and tailored solu-
tions including global custody and fund administration services for funds domiciled
in the Caribbean and Channel Islands.
Our services include Trustee, banking and credit facilities, treasury and foreign
exchange, trade execution, financial accounting, corporate services, derivative sup-
port services and online access, leveraging a custody network that covers 80 plus
markets worldwide. Our service combines leading edge technology with professional
expertise and a truly integrated service delivering creative, customised solutions.
75 INVESTOR SERVICES JOURNAL
 For over 25 years, professional advisors, financial institutions, corporations and high net Atlanta: Peter Cohen
worth families worldwide have relied on Trident Trust for integrity, reliability and commit- T: 001-404-233-5275
ment to client service. BVI: Barry Goodman
T: 284-494-2434
Main Services: A full range of back office administration services tailored for hedge, pri-
vate equity and closed-ended funds. We offer flexibility in structuring administration Cayman Islands: Rick Gorter
T: 345-949-0880
which allows us to work closely with accounting firms and other service providers.
Guernsey: Mark Le Tissier
Services include full fund accounting, NAV calculations, registrar and transfer agent,
T: 01481-740-930
corporate secretarial including company formation, due diligence compliance and inter-
UK: Robin Harris
net reporting. T: 44-(0)207-935-1503
Assets Under Administration: $13 billion * No. of Funds Administration: 185 W: www.tridenttrust.com

Cayman Islands: Sean Flynn,

UBS Fund Services is a leading fund administration business for traditional and tel. +1-345-914 1006
alternative funds and other collective investment vehicles. With a comprehensive Ireland: Guy Martell,
offering - from product design, through to registration, accounting, net asset value tel. +44-20-7901 5770
Canada: Pearse Griffith,
calculation and reporting – we offer a tailored, cost effective service making best use of
tel. +1-416-971 4702
the latest technology. Luxembourg: Jean-Paul Gennari,
tel. +352-44-1010 1
With administration centres located in the Cayman Islands, Ireland, Canada, Switzerland: Markus Steiner,
Luxembourg, Switzerland and the UK, at 31 March 2006, UBS Fund Services tel. +41-61-288 4910
administered assets of almost 340 billion Euro. UK: Mike Marsh,
tel. +44-20-7901 5000

Prime Brokerage
Fimat’s Alternative Investment Solutions team (AIS) is a dedicated global Prime
Brokerage team serving the alternative investment community including hedge funds C: Philippe Teilhard
and CTAs. A: Fimat International Banque SA
The AIS team offers a global range of brokerage activities on a wide range of asset (UK Branch) - part of the Societe
classes including equities, bonds, currencies, commodities, and their related listed & Generale Group
OTC derivative products. The team also provides a dedicated account management SG House, 41 Tower Hill
team, cross-margining tools between securities & derivative instruments, hedge fund London EC3N 4SG, UK
start-up services, hedge fund industry quantitative information and capital T: + 44 207 676 85 36
introductions services. F + 44 207 628 44 47
The AIS team is part of Fimat, which employs over 1,600 people in 26 markets, and E: philippe.teilhard@fimat.co.uk
is a member of 46 derivatives exchanges, and 17 stock exchanges worldwide.

Securities Lending
EquiLend Holdings LLC was formed by a group of leading financial institutions to T: +1 212 901 2200
develop a global platform for the automation of securities finance transactions. C: Carrie R. Schwartz
The EquiLend platform is designed to increase efficiency by standardizing, cen- E: carrie.schwartz@equi
tralizing and automating front and back office processes, while delivering global lend.com/info@equilend.com
access to liquidity, reduced risk and scalability. The EquiLend platform is A: 17 State Street, 9th Floor
New York NY 10004
designed to process equity and fixed income securities finance transactions on a
T: +44 20 7743 9510
global basis. Investors include: Barclays Global Investors; Bear, Stearns & Co.
A: 54 Lombard Street
Inc.; Credit Suisse; The Goldman Sachs Group, Inc.; J.P. Morgan Chase & Co.;
London EC3V 9EX
Lehman Brothers; Merrill Lynch; Morgan Stanley; Northern Trust Corporation; W: www.equilend.com
State Street Corporation; and UBS.

eSecLending is a global securities lending manager servicing large institutional T: US- +1 617 204 4500
lenders, including pension funds, mutual funds, insurance companies and T: UK- +44 (0)207 002 7600
investment managers. eSecLending's model is based on the premise that C: Dan Ahern
exclusive principal relationships generally offer greater value and significantly E: info@eseclending.com
higher returns to a lender than traditional custodial or third-party agency lending W: www.eseclending.com
programs. The firm, which has auctioned over $750 billion since inception, A: 175 Federal Street, 11th FL,
awards principal business through an auction process to ensure greater Boston, MA 02110, US
competition and price transparency. eSecLending is majority-owned by Old A: Old Mutual Place, 2 Lambeth
Mutual plc and maintains offices in Boston, London and Burlington, Vermont. Hill, London EC4V 4GG, UK

IFBS offers the financial industry a wide range of consulting services as well as T: +41 (0)44 218 14 14
individual and standard software solutions. The firm supports clients along the entire F: +41 (0)44 218 14 18
E: info@ifbs.com
security value chain - from business modelling to change management processes.
A: IFBS AG, Buckhauserstrasse
IFBS’s IT solutions range from FINACE®, a Securities Finance and Collateral 11, CH-8048 Zurich, Switzerland
Management Platform, to the development of tailor-made IT applications. W: www.ifbs.com

76 INVESTOR SERVICES JOURNAL

New York: Christopher Lynch
T: +1 718-242-7555
E: chris.e.lynch@jpmorgan.com
London: Dick Feehan
T: +44 (20) 7742-0102
E: dick.j.feehan@jpmorgan.com
Sydney: Laurence Bailey
T: (61-2) 9250-4833
E:laurence.bailey@jpmorgan.com
W: www.jpmorgan.com/wss
T: +44 (0) 20 7521 5672
F: +44 (0) 20 7521 2683
C: Jonathan Cossey, Head of
Equity Finance
A: Nomura House,
1 St Martin's-le Grand, London,
EC1A 4NP United Kingdom
W: www.nomura.com
T: +44 (0) 207 551 3000
E: info@bsg.adp.com
Address: The ISIS Building,
193 Marsh Wall, London,
E14 9SG, UK
W: www.bsg.adp.com
T: +44 (0)20 7631 9240
F: +44 (0)20 7631 9256
E: emea@advent.com
Address: One Bedford Avenue,
London WC1B 3AU, UK
W: www.advent.com
A: EMEA - Progress Apama
68 Lombard Street
London EC3v 9LJ
T: +44 (0) 870 3517212
E: fraser.herrick@progress.com
A: USA - Progress Apama
10th Floor, 230 Park Avenue
New York NY
T: +1 203 606 5006
E: jim.feingold@progress.com
W: www.progress.com/apama
T: +44 (0)20 7464 8407 / +1
212 445 1076
F: +44 (0)20 7464 8746 / +1
212 265 6402
Contacts: Pascal Guignabaudet
(EU), Belinda Hamer (US)
Address: 60 Lombard Street,
London, EC3V 9EA, UK
E: pascalg@asset-control.com
bhamer@asset-control.com
W: www.asset-control.com
JPMorgan Securities Lending offers institutional investors the opportunity to earn
extra income on investment and pension portfolios with minimal risk and
involvement by lending their securities to qualified borrowers. With more than 300
lending relationships and lendable assets in excess of $1.2 trillion, JPMorgan is
clearly committed to the market and to the value that our clients place in it. Our
resources enable you to develop programs that comply with your business
requirements and achieve your business objectives. When you select JPMorgan as
your securities lending agent, you have chosen a premier provider of securities
lending services worldwide.
Nomura Group is a global investment bank dedicated to providing a broad range of
financial services for individual, institutional, corporate and government clients.
The Group’s business activities include investment consultation and brokerage
services for retail investors in Japan, and, on a global basis, brokerage services,
securities underwriting, investment banking advisory services, merchant banking,
and asset management.
Nomura’s Global Equity Finance team has professionals located in Japan, Hong
Kong, the United Kingdom and the USA who are dedicated to providing a value
added approach to all Equity Finance needs.
Technology
ADP Brokerage Services Group is an industry leading outsourcing vendor for global
transaction processing systems, desktop productivity applications and investor
communication services to banks and brokerages worldwide.
-Proxy Edge – comprehensive solution for institutional global proxy voting management.
-Gloss – leading international STP system which automates the trade processing
lifecycle from trade capture through confirmation, clearing agency
reporting and settlement.
-Tarot - a UK retail and private client stockbroking, custody and fund management solution.
-Securities Data Management – outsourced data services for securities operations.
Advent Software EMEA, established in 1998, provides trusted solutions for the front
through to back office operations, based on a true real-time fund/portfolio
accounting platform, to the investment management community throughout Europe,
Middle East and Africa. Advent has an established network of offices across the
region serving a growing client base of asset managers, hedge fund managers, prime
brokers, fund administrators, wealth managers, private banks and family offices who
continue to improve their businesses using Advent’s suite of integrated investment
management solutions. Advent Software EMEA is part of Advent Software Inc.
(Nasdaq: ADVS), a global organisation that has been providing solutions to the
world's leading financial professionals since 1983. Firms in more than 50 countries
using Advent technology manage investments totaling more than US $8 trillion.
Progress Apama provides the next-generation Algorithmic Trading
Platform for both the buy and sell-side financial institutions - giving
traders full control over composing, deploying and managing algorithmic
trading strategies, such as VWAP, spread trading and index arbitrage.
Apama has customers using the Algorithmic Trading Platform in equities,
futures & options, foreign exchange and bonds and often trading multiple
assets classes within the same strategy.
Apama's platform plugs straight into any market data feeds, order
management systems and databases.
Data Solutions You Can Bank On
Asset Control's Total Data Management offers seamlessly compatible in-house
software and out-sourced services. Asset Control solutions manage prices, reference
data, risk factors, credit risk data, corporate actions and research data. The solutions
support market risk, Basel II, portfolio management, trading and enterprise-wide
operational coherency.
Asset Control is the only firm in its class offering turnkey solutions with guaranteed
delivery dates. These ready-to-work solutions eliminate development time and risk.
As a future-proof technology investment, Asset Control has been certified by a
unique track record of long-standing customer implementations in leading financial
firms around the world.
77 INVESTOR SERVICES JOURNAL
Technology
CMA's mission is to help its clients from the financial services industry increase their
P: +46 8 566 30 800
competitiveness through the supply and integration of value-creating IT-solutions and
F: +46 8 34 15 44
infrastructure. Each solution and implementation is individually tailored to a
customer's specific requirement in order to ensure maximum system effectiveness
A: CMA Small Systems AB
for financial institutions such as national banks, depositories, clearing and
P.O. Box 6463, Gävlegatan 22
settlement centers, retail banks, stock exchanges and brokerage houses.
S-113 82 Stockholm, Sweden
CMA Small Systems is represented with offices in Sweden, Russia and France.
W: www.smallsystems.cma.se
Market activities focus on Europe (Nordic, Baltic, Central/Eastern Europe and
CIS countries), Middle East and Africa.

T: +1 212 922 6590

Eagle Investment Systems LLC, a Mellon Financial CompanySM, is a global provider F: +1 212 922 7677
of financial services technology, serving the world's leading financial institutions. E: sales@eagleinvsys.com
Eagle's Web-based systems support the internal straight-through processing A: 200 Park Avenue,
requirements of firms of any size including money managers, mutual funds, hedge East Mezzanine,
funds, plan sponsors, banks, corporate trusts, and insurance companies. Eagle is New York, NY 10166
committed to providing leading-edge technology, professional services, and global T: +44 (0) 20 7163 5700
support for portfolio management, investment accounting, performance F: +44 (0) 20 7163 5701
measurement, attribution, reference data management, AIMR/GIPS compliance, A: Mellon Financial Centre,
reporting, and outsourcing. To learn more about Eagle's solutions, contact 160 Queen Victoria Street,
+44 207 163 5700 or uksales@eagleinvsys.com or visit www.eagleinvsys.com. London, EC4V 4LA
W: www.eagleinvsys.com

GOAL is the widely-acknowledged industry leader in providing creative products,

services and solutions to automate and optimise the reclamation of withholding T: +44 (0) 207 247 3094
tax on cross-border securities dividend income and royalties. Our research has C: Stephen Everard or Saghar
shown that in excess of US$6 billion of withholding tax remains unclaimed each Bigwood
year by the rightful owners and beneficiaries. A: 10, Earl Street, London,
To establish your potential ability to reclaim over-withheld taxes GOAL provides a EC2A 2AL, UK
free analysis of income entitlements. We simply require details of the income E: severard@goalgroup.com /
entitlement(s) together with the type and domicile of the underlying beneficiar- sbigwood@goalgroup.com /
ies. We do not need the name(s) of the beneficiaries. info@goalgroup.com
Our Products include GTRS, GQI, e-Reclaim, GOAL TaxBack, DMS and Bespoke W: www.goalgroup.com
Software Development.

Interactive Technologies is a leader in developing and delivering software solutions

that support current and emerging Financial Industry needs for enterprise-level T: +1 908 273 1116
billing and revenue management. Founded in 1993, Interactive Technologies was C: Mike Donoghue
acquired by Fiserv, Inc (Nasdaq: FISV) in June 2005 and is based in Summit, N.J., E: Mike.Donoghue@itadv.com
with additional offices in Los Angeles, London and Toronto. The company's sole A: 482 Springfield Avenue,
product - Advantage Fee System - provides banking and financial service institutions Summit, New Jersey NJ 07901
with a comprehensive solution for streamlining, automating and managing fee-based USA
billing operations. Over 60 organizations benefit from the Advantage Fee System, W: www.itadv.com
ranging in assets managed from 5 billion to well above 1 trillion US$.

C: Paul Hewitt, Business

Manifest offers global voting services to institutional investors encompassing 75,000 Development Manager, Europe
lines of stock around the world. We are renowned for the thoroughness, A: Manifest
independence and timeliness of our services, placing company research within an 9 Freebournes Court
appropriate local context. We deliver unrivalled consistency and transparency with Newland Street, Witham
Essex, CM8 2BL, UK
desktop-to-meeting electronic voting through our own web-enabled platform. Our
T: +44 (0)1376 503500
SWIFT membership gives us direct and seamless access to counterparties across the D: +44 (0)1376 504502
globe. With research, policy, analysis, voting and delivery integrated into a single M: +44 (0)7884 495165
straight-through process, it's easy to see why audit and control are central to our F: +44 (0)1376 503550
service. Manifest - big enough to deliver, small enough to care. E: paul.hewitt@manifest.co.uk
W: www.manifest.co.uk

AIM-listed Mondas PLC provides specialist software solutions to the International

Banking and Securities Industry. Radica CAPS is Mondas' market-leading solution for C: Harvey Colborne
Global Corporate Actions Processing which, in addition to the core CA modules, com- E: harvey.colborne@mondas.com
prises functionality for Manufactured Overseas Dividends, Election Arbitrage and A: 17 - 29 Sun Street
Claims Management. Other products from the Radica suite include; NIPS (New Issue London, EC2M 2PT, UK
& Placing System), Radica EMP (Election Management Portal), Radica SPS (Short E: info@mondas.com
T: +44 (0) 207 392 1300
Product Solution (Corporate Action & Income) & Radica PRISM (Parser & Router for F: +44 (0) 207 392 1301
ISO Standard Messaging (Corporate Actions & Income). Mondas' clients include W: www.mondas.com
HSBC, Credit Suisse First Boston, Credit Suisse Asset Management, Brewin Dolphin
Securities, Williams de Broë, Man Financial & Stocktrade. www.mondas.com

78 INVESTOR SERVICES JOURNAL


T: +44 (0)29 20402200
F: +44 (0)29 20402213
A: New Broad Street House, 35
New Broad Street, London
EC2M 1NH
E: info@peterevans.com
W: www.petervans.com
T: +1 609-987-2400
F: +1 609-514-4794
C: Lorne Whitmore, Vice
President, Global Sales &
Product Management
E: lwhitmore@pfs.com
A: 600 College Road East,
Princeton, NJ 08540, USA
W: www.pfs.com
T: +1 510 5507334 ext 1
A: 1904 Franklin Street, Suite
203 Oakland, California, CA
94612, USA
C: Seth Johnson, CEO
E: seth.johnson@redi2.com
W: www.redi2.com
T: +44 (0) 20 7651 8800
F: +44 (0) 20 7651 8811
C: Ian Crompton, sales director,
SimCorp Dimension
E: ian.crompton@simcorp.co.uk
London EC4N 8DQ, UK
W: www.simcorp.com
W: www.sungard.com/dataman-
agementsolutions
T: 1-888-441-9935
F: 212-977-7144
C: Marketing Department
E: moreinfo@sungard.com
A: SunGard
888 Seventh Avenue
New York, NY 10106
T: +44 (0)118 378 8239
F: +44 (0)118 931 4741
E: admin@icmacentre.ac.uk
C: Samantha Heslop
(please quote ref:IS001)
A: University of Reading,
Whiteknights, PO Box 242,
Reading RG6 6BA
W: www.icmacentre.ac.uk
peterevans is a leading independent provider of front to back office systems to the
financial services sector, providing both global solutions to major institutions and
highly-focused technology to smaller organizations.
The Company's creative, high-end solutions integrate seamlessly with existing infra-
structures to ensure business performance is optimised.
peterevans’ flagship products TRACS and Axim support end-to-end straight through
processing for the full range of back office automation and transaction requirements,
including SWIFT messaging. Tira, the company’s front to middle office system, links
effortlessly with the back office, providing fund and investment managers with one
of the most comprehensive tools on the market.
Princeton Financial® Systems, a wholly owned subsidiary of State Street
Corporation, is a leading provider of investment management and accounting
systems and ASP services for global institutional investors.
Its flagship PAM® investment management systems provide comprehensive STP-
ready functionality that can be licensed for in-house use or accessed via the
Internet. PAM® systems are currently used worldwide by over 275 leading invest-
ment managers, insurance companies, mutual funds and unit trusts, pension funds,
hedge funds, endowments, banks and corporation, which manage combined total
assets over US $3 trillion.
Princeton Financial has offices located throughout the United States, United
Kingdom, Belgium, Australia, Singapore, Amsterdam and Canada. Form more
information, visit Princeton Financial’s website.
Redi2 Technologies is an investment management software products and services
company headquartered in Oakland, Calif., Redi2 Technologies, Inc. is a premier
provider of fee billing and revenue management solutions to institutional investment,
private wealth, custody and general asset management firms.
Asset management firms implement Redi2 Revenue Manager to improve cash flow,
reduce global operating costs, improve client service and advance compliance initia-
tives.
Redi2 Revenue Manager 4.0 can be deployed on Oracle, Sybase, MS-SQL Server,
and IBM DB2 relational database platforms, and Sun Solaris, IBM AIX, HP-UX, MS
Windows Server, and Linux operating systems.
News and other information about Redi2 is available at www.redi2.com
SimCorp Dimension is a powerful, comprehensive and truly seamless investment
management system. It can handle NAV and other calculations, with complete
related accounting, for a huge variety of fund structures and product types, including
regional specialities. Support for broader functions, such as performance attribution
and risk management, are particular strengths of the system.
SimCorp Dimension has been designed from scratch as a total straight through pro-
cessing system, handling all aspects of the investment management process, consis-
tently. Data is recorded into a single database so that reporting is made easy, there
is no reconciliation of data and no duplication of procedures.
SunGard's solutions for data management provide technology for the management
and delivery of market, historical and reference data to financial services
institutions, energy and public sector organizations. SunGard also offers outsourced
data management services, as well as real-time, interactive and flat-file data feeds
for application integration. Aggregating market data and financial content from more
than 100 third-party sources, SunGard's solutions for data management add value
through a range of services including cleansing, enrichment and analytics. To find
out how SunGard's solutions for data management can help improve productivity,
portfolio optimization and investment opportunity with predictive analytics and
packaged data please visit www.sungard.com/datamanagementsolutions.
Training and Education
The ICMA Centre, University of Reading has an international reputation for providing
quality academic and professional programmes tailored to the capital markets indus-
try. Established in 1991 with funding provided by the International Capital Market
Association (ICMA) in Zurich, the Centre is housed in a purpose-built modernist
building with state-of-the-art facilities including two dealing rooms. Our academic
programmes include the MSc International Securities, Investment and Banking, MSc
Capital Markets, Regulation and Compliance, MSc Financial Risk Management and
MSc Investment Management.
Professional programmes offered:
- - ICMA and NASD certificate and diploma programmes
- - Practical finance workshops for market professionals (Market VaR, Options, Repo,
FX and Money Markets) – can be customised to company requirements
- - Simulated trading days.
79 INVESTOR SERVICES JOURNAL
Hindsight/Foresight
THGISDNIH FORESIGHT
In the first of a new series ISJ
invites a reader to look back at
what they did and look forward
to what they want to do.
HINDSIGHT
How have investment management strategies evolved
over the past five years, with the benefit of hindsight?
London & Capital has evolved its approach to invest-
ment in two ways. Lessons learnt in recent years have
facilitated the development of, firstly, our absolute
return strategies, which aim to participate in rising allo-
cated markets, but have an emphasis on extensive hedg-
ing programs to protect the downside during difficult
periods. In the bond markets, for example, there is a
wide selection of products that may be used to hedge a
portfolio’s capital value and we actively use risk control-
ling mechanisms to protect the downside. Secondly,
with the proliferation of available data for analysis and
the drive towards lower trading costs, quant driven
products have become increasingly popular.
How have lessons learnt impacted on the development
of new and innovative strategies?
Analysis of past events has led to our investment in the
second type of strategy mentioned above – the quant-
driven approach. Many quant models have been made
available over the past few years – driven by exploding
data volumes and the proliferation of trading venues –
particularly in the equity markets. However, we identified
a quant product which focuses on what we believe are the
correct dynamics when valuing a portfolio of US equities.
Our enhanced index, MarketGrader, is totally unemotion-
al, computer driven and based on algorithms, and looks
at what we believe are the important features of more
than 5700 US equities. MarketGrader selects stocks based
on the variables of cash flow, growth, value and profitabili-
ty – as opposed to just market capitalisation – by assess-
ing the financial results of companies submitted each
quarter. This is a level of ongoing analysis impossible for
a human analyst to achieve.
With the benefit of hindsight on market conditions and
volatility, what would you do differently?
London & Capital actually pre-empted the equity
volatility seen in the earlier part of this decade, and
evolved investment strategies to protect portfolios. This
was achieved by diversification across asset classes
(including real estate, bonds and hedge funds). On the
bond side, the strategy is complemented by the active
use of risk reduction/hedging tools such as bond
futures contracts and credit default swaps.
80 INVESTOR SERVICES JOURNAL
Rabbani Wahhab, Senior Fixed
Income Portfolio Manager at
London & Capital, reflects...
FORESIGHT
Are hedge funds still alternative?
It is undeniable that there has been a massive explo-
sion in the number of hedge funds in recent years. In
1990, there were just over 600 hedge funds; the num-
ber now exceeds 8,000, calling into question the con-
tinued status of hedge funds as an ‘alternative’ asset
class. Hedge funds are an important part of London &
Capital’s overall strategy. Beyond using hedge fund
strategies directly (especially for our bond portfolios),
we have also gone down the fund of funds route. We
cherry pick a few dozen external funds each year from
the thousands of funds that are out there, allowing us
to selectively extract optimal returns from the wide set
of strategies pursued by the hedge fund community.
This has provided a stable return stream that has fitted
in well with our absolute return packages.
Over the next few years where will the largest returns
come from?
As the trend towards quantitative analysis contin-
ues to gain momentum, quant driven funds will
become increasingly important. As trading volumes
continue to increase and trading venues continue to
expand, asset managers must evolve their trading
strategies to continue to capitalise on market oppor-
tunities. We see quant-driven analysis as a growth
area here – we hope to build on MarketGrader’s suc-
cess by encompassing a wider universe of products
attached to different equity markets.
What's the biggest risk you face?
There is a chance that long-only mandates may again
gather favour amongst the investment community,
however our premise is that we’re going to see an
increasing trend towards absolute return strategies.
This could be seen as a risk; however our ongoing
focus on absolute returns is based upon lessons
learned from market developments over the past five
years. On the quant side, there is a chance there could
be a surge in similar types of quant driven products –
enhanced indices have gained favour in the US, but
MarketGrader is one of the first of its type in the UK.
However, rather than a risk, we see this as eventually
inevitable.
ISJ
 1 B
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and regulated by the Financial Services Authority and a member of the
London Stock Exchange. Barclays Capital is the investment banking
division of Barclays Bank PLC, which undertakes US securities business
in the name of its wholly-owned subsidiary Barclays Capital Inc., a SIPC
and NASD member. © 2006, Barclays Bank PLC.