Isj 048

ISJ |
Volume 7 No. 48
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Mad World?
The Outsourcing Jailbreak
Regulation -
EFAMA on UCITS
Profile -
Alan Brown of Schroders
Under the microscope -
The future of
Prime Brokerage
From October 2010 www.eFunds.tv
Fundamentals
Securities Services & Securities Lending for Funds, Managers and Investors
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ISJ |
Volume 7 No. 48

USD 379 - America
Journal
EUR 286 - EMEA
ISJ |
www.ISJ.tv
Mad World?
Regulation -
EFAMA on UCITS
Profile -
Investor
Services
The future of
Journal
Prime Brokerage
Fundamentals
Editor-in-Chief
Roy Zimmerhansl
roy.zimmerhansl@ISJ.tv
CONTENTS
Editor
Brian Bollen
brian.bollen@ISJ.tv
4 Swings Deutsche Bank, Bravura, SGSS
Advisory Board Chairman
and
Clive Gande
roundabouts Northern Trust
clive.gandeISJ.tv
Senior correspondent
Craig McGlashan
craig.mcglashan@2i.tv
US correspondent
John Sandman
8 Lead story Outsourcing Jailbreak,
John.Sandman@ISJ.tv
Special correspondents
Mad World?
Cherry Reynard
Design
Serena Ventrella
Head of sales
14 Under the The future of Prime Brokerage
Patricia De La Grange microscope
trish.delagrange@ISJ.tv
Account managers
Eradat Munshi
eradat.munshi@ISJ.tv 18 The ISJ profile Alan Brown of Schroders
CTO
Peter Ainsworth
peter.ainsworth@2i.tv
Managing director
Jon Hewson 22 Regulation EFAMA On UCITIS
jon.hewson@2i.tv
Publisher
Mark Latham
mark.latham@2i.tv
27 Technology MTF - Xtrakter
2i UK One Angel Wharf,
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contents Continued
ISJ |
Volume 7 No. 48
ISJ |
USD 379 - America
Journal
EUR 286 - EMEA
www.ISJ.tv
Mad World?
Investor
Services
Regulation -
EFAMA on UCITS
Profile -
The future of
Prime Brokerage
Journal
Fundamentals
Securities Services & Securities Lending for Funds, Managers and Investors THE GLOBAL CUSTODY AND ASSET SERVICING INDUSTRY MAGAZINE
CONTENTS
N
30 Analyse this Information Mosaic
31 Spotlight on Safekeeping funds

Partnerships and alliances
SGSS and NBAD to join forces
Eurex on ETFS
36 The ISJ Profile Tony Klim of Bravura

NT
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38 US and DTCC Acquires Avox
inc
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Technology an
Focus Euroclear and Avox
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swings and roundabouts Appointments
relationship management Morgan Stanley’s asset Asia Pacific and Japan, at

for DSS said: “We continue management operations HP Software. In this role
to focus on strengthening in Luxembourg. His he was responsible for sales
our direct securities career in the financial leadership of HP Software’s
ervices business by services industry began information management
Deutsche Bank
announces senior
developing new business
opportunities. The
As the senior executive
appointment in Direct appointment of Rebecca, responsible for the coordination
Securities Services business
More evidence to suggest
with her extensive broker
dealer and investment
of all business activities in the
that Deutsche Bank is keen bank relationships, South East Asia region, Mak
to rebuild some form of
cross-border securities
and expert knowledge reports to Teresa A. Parker, Chief
demonstrates our
services capability, as continued commitment in Executive Officer of the Asia
hinted at in ISJ 47.
Deutsche Bank has
this regard.” Pacific Region for Northern Trust,
appointed Rebecca who is also based in Singapore.
Walsh to the position of RBC Dexia elevates
director, global sales and Marco Siero RBC Dexia in 1991 with Kas Bank as solutions business in the
relationship management, has appointed Marco client service manager for Asia Pacific Japan Region
within its Direct Securities Siero as managing director Dutch pensions funds and
Services (DSS) business. of its Switzerland office, insurance companies. Prior to this, he held a
based in Zurich. He will number of senior positions
Based in London, Walsh be responsible for driving at various organisations,
will be responsible for further growth of the Bravura appoints Andrew including Mercury
developing business company’s operations in Belger Sales Director - Interactive Australia and
origination within the Switzerland, as well as APAC IBM Australia. In addition
global clearing community managing RBC Dexia’s to knowledge of the IT
across the 32 markets in regulatory relationships for From Sydney, Australia, industry, he has significant
which DSS operates. this key centre. comes news that Bravura experience with driving
Solutions Limited sales teams and in the
She joins from Standard Siero will report to (Bravura) - a supplier achievement of revenue
Chartered Bank where Simon Shapland, head, of transfer agency and and operating profit
she spent three years in targets.
Siero was most recently director of relationship He will be based in
Bravura’s Sydney office.
management at RBC Dexia in Luxembourg, where
he focused on large multi-market clients. Northern Trust Names
William Mak to Lead
transaction banking sales. sales & distribution, wealth management Singapore Office
Prior to joining continental Europe. software applications and
Standard Chartered professional services - has Northern Trust has
Bank, Rebecca worked in Siero has almost 20 years expanded its global team appointed William Mak
various relationship and experience in the investor with the appointment of as Singapore Country
operational management services industry. He Andrew Belger as sales Manager and Head of
roles for 10 years with joined RBC Dexia in 2008, director for the Asia Pacific Institutions Group, South
Citigroup. prior to which he held (APAC) region.
various key positions in the
Commenting on the global transaction services Before joining Bravura, Societe Generale Securities
appointment, Rob Scott division of Citigroup. Belger held the position Services appoints Olivier
and Michael Aschauer, co- Before this, he was of director, information Renault as Country
heads of global sales and general manager of management solutions, Manager for Luxembourg
4
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FINAL.indd 5 1 14/08/09 17:06:31
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swings and roundabouts Appointments
Societe Generale
Securities Services
(SGSS) has appointed
Olivier Renault as
Country Manager for
Luxembourg, replacing
Michel Becker. Renault
will report to SGSS
Executive Management
and becomes a member of
the Executive Committee
of Societe Generale
Bank and Trust (SGBT),
in charge of Securities
Services.
Renault, 46, has a degree
from the Paris Graduate
School of Economics,
Statistics and Finance
(ENSAE). He began his
career as a consultant in
the banking sector before
being appointed Director
of Financial Control
for a services company
in France. He joined
Societe Generale Group’s
Human Resources
department in 1999
and was then appointed
Head of Clearing at SGSS
in France. In 2006, he
became Deputy Head
of SGSS S.p.A. in Milan
where, in particular,
he managed project
integration and synergies
with this subsidiary,
which was acquired by
Societe Generale that year.
Siero was most recently director of relationship

management at RBC Dexia in Luxembourg, where
he focused on large multi-market clients.
6
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Lead story Outsourcing and offshoring
Has the world Important elements
finally gone mad? Other important but secondary elements include cost reduc-
tions, superior technology, an understanding of the industry,
flexiblity and capacity. Chemistry inevitably plays a part too.
Do the people on either side feel they can communicate with
Absolutely stark starting one another? Ask that question of staff involved at Barclaycard
bonkers mad? which recently decided to create a centre of fraud excellence in
India and you will receive an expletive-filled reply worthy of the
The news that an Indian leadership of the British National Party.
outsourcing company, that An examination of the putative partner’s key attributes is not
claims The Royal Bank of limited to the buy-side’s due diligence on the providers. Provid-
ers will cast just as critical an eye over asset managers and fund
Scotland and Goldman Sachs managers before agreeing to join hands.
amongst its clients, plans to The size and quality of an organisation have a crucial role to
employ time-serving prisoners play in making the right selection, but they are only part of the
at Cherlapally Central jail in story. More important is the psychology. It might be a bit of a
cliché but outsourcing is not based on a client-supplier relation-
Hyderabad, India, strongly ship, it’s a partnership. The client’s vision must dovetail with
suggests the answer is yes. the supplier’s vision. If the client sees the supplier purely as a
vendor, it’s not going to work.
Client and supplier need a common platform, and to agree
This unique public private experiment, as it was described in on tax structure and location. The longer the mating dance,
The Times newspaper of May 13 this year, will see around 250 the better; both sides get to know one another better, and learn
prisoners – both convicted and awaiting trial – employed to what the other likes and dislikes.
help process bank paperwork. They will receive training in basic The economics need to work for both sides, but corporate
tasks such as typing application form details into computers alignment, cultural alignment and shared values are also im-
before being unleashed on the job. portant. Suppliers who take a high-touch approach will not fit
In what sounds perilously close to allowing lunatics to take well with clients who want a commodity service. In the securi-
over the asylum, they will also help to process insurance claims. ties services world, the outsource supplier needs to become an
The world is familiar with the well rehearsed arguments in fa- extension of the fund manager involved.
vour of outsourcing and offshoring. The idea of using convicts The client might worry about giving up control, but the sup-
does, though, however outrageous it might at first sound, tick plier will think more in terms of extending the client’s reach
a number of boxes which could lead to it being given serious and capabilities. Clients who are unable to invest intellectually
consideration. are less likely to derive the full benefits from outsourcing.
Picking the right partner is a combination of art, science and
sheer gut instinct. Organisations which are considering out- The economics need to work for both sides, but corporate
sourcing generally look for two key attributes. alignment, cultural alignment and shared values are also im-
One, commitment to the business. Will the supplier still be portant. Suppliers who take a high-touch approach will not fit
around in five to 10 years? In this case, it will depend on the well with clients who want a commodity service. In the securi-
length of the original jail sentence. ties services world, the outsource supplier needs to become an
Picking Not all suppliers which have entered extension of the fund manager involved.
the right the market will survive; the likely
winners will be a handful of global
The client might worry about giving up control, but the sup-
plier will think more in terms of extending the client’s reach
partner is a players, though in some countries and capabilities. Clients who are unable to invest intellectually
combination there will be specialist niche provid-

ers who’ll do very nicely.
are less likely to derive the full benefits from outsourcing.
of art, science They should also ask if a supplier

is credible in delivering day-to-day
One area where the prisoner model clearly falls down is that the
client needs to know that it is not a guinea pig, that its supplier
and sheer solutions; do they have the capabili- has been over the course before and will not be learning the
gut instinct. ty and the capacity? Can the supplier
deliver the promised new solution,
ropes at its expense. The outsourcing market is mature enough
to recognise the importance of choosing the right partner.
and manage their client through the change process? People will Honest suppliers insist they stand prepared to walk away from a
focus on systems, but it is more important to help clients man- deal if they think it is the right course of action for them or for
age the re-engineering process, changing the way people think. the prospective client.
8
Risk is a key consideration, and there is a correlation between the educated brain to proceed to the question that Radiant Info
price and risk. This is another area where the prisoner model is Systems put to The Times: Why not?
surely found wanting, given that its primary attraction seems to
be the low cost. The risk associated with handing confidential The reaction of Tony Klim, CEO (Europe, Middle East & Ameri-
financial information to convicted criminals must outweigh all ca), at Bravura Solutions, and profiled elsewhere in this issue,
possible cost considerations. Fund managers make their living was thought-provoking. “If it’s providing a useful contribution
by being innovative, and suppliers need to provide a viable serv- and prisoners are not being exploited, and they are willing to
ice. The back office needs to work, and to be totally trustworthy. do it, why not indeed? It could even help them become rehabili-
If ever there were a transitional element to outsourcing that will tated,” he commented. The suspicion is that where one provider
keep a fund manager awake at night, then surely this is it. follows, opening up a new pool of even cheaper labour, others
In a normal outsourcing contract, cost reductions have to be will follow in the race to cut costs to the lowest possible level.
paid for, and the client will want to extract value from day one,
whether in the form of a cheque or a promise on fixed costs.
This will normally have an impact on people, who need to know
whether they will be out on the street or have good long-term
prospects with the new provider. In this case, cue general ironic
laughter; releasing proven workers, even on the completion of
their sentence, will surely quickly become anathema to all con-
cerned, except the prisoners. Might we see the emergence of
imaginative new ways to extend the professional life of experi-
enced, hard-working prisoners? Or perhaps they could become
genuine full-time employees with career prospects?
We have first-evidence later in this issue of what is involved in

selecting a supplier. “In making a selection for an outsourcing
partner, we focused on the qualities of strong independent con-
trols and checks and balances around key processes and service,”
says Steven Blakey, chief executive officer of ECM. “Further-
more, a good cultural fit with GlobeOp and career opportuni-
ties for our employees were essential.”
“In making a selection for
an outsourcing partner, we
focused on the qualities of
strong independent controls
and checks and balances around
key processes and service,” says
Steven Blakey, chief executive
officer of ECM. “Furthermore, a
good cultural fit with GlobeOp
and career opportunities for
our employees were essential.” All other considerations aside, this could significantly throw
into disarray the popular theory that each new low-cost out-
Captive supplier sourcing centre enjoys a 10-year life cycle before it is replaced by
an even lower cost centre. If need be, the potential labour pool
But the use of prisoners would introduce a whole new dimen- could be quickly topped up in times of need by randomly ar-
sion to the argument. Not least because in this case the supplier resting innocent people and so creating new inmates. In cultures
would literally be a captive supplier. The reactions to the sugges- where disregard is high for the concept of the rule of law, and
tion have, though, been genuinely interesting, even educational. where illicit payments are an accepted fact of life, the tempta-
The first reaction is generally one of bemused laughter. The next tion of those in a position to do such a thing could well prove
is to ask: are you sure? Whichever way the ‘wow’ factor manifests difficult to resist.
himself in any individual, it only takes about two seconds for

In Conversation with...
The news could provide another tool in the argument against Etienne
outsourcing and offshoring. “Someone is bound to react to the
notion that you could employ time-serving prisoners,” com- Carmon,
mented one market player. “If you’re already anti-offshoring,
that kind of suggestion is bound to confirm your opinion of it
head of
as a practice. ” international
And many of us remain deeply sceptical about outsourcing and
product
offshoring, even as the cheerleaders reach a frenzy in their cel- development
ebrations of it. As observed in our separate story about the won-
derful life of BT Radianz, BT says that it continues to innovate, at
enhance and invest in its financial services portfolio. BT Radi- CACEIS Bank
anz is just one part of a specialist suite of products dedicated to
the financial services sector to address their communications- Luxembourg.
related requirements. From wholesale through to corporate
and retail banking, financial markets and payments sectors, BT “In addition SJ: What is your reaction
to the news that an Indian
boasts that it helps to increase operational efficiency, agility and
customer service. It enables the largest, secure networked finan- to the more outsource services provider is
proposing to recruit time-
cial community in the world to carry out its business reliably
and fast, using integrated voice, data and video to communicate
specialised serving prisoners to handle
within and between thousands of institutions and providers activities some of its workload?
around the world.
explained above, Etienne Carmon: This is
BT La-La Land business sections not the first time a prison
population has been given
What BT claims is indeed impressive, if it is all true. But permit that are most the opportunity to work - in
the States, there are many
those of us who live in the real world rather than BT La-La Land
to disagree. Try telling that story to anyone who has had experi-
often outsourced instances of prisons manufac-
ence of telephoning a BT help line which is obviously located on are administrative turing goods. However, this
is the first time I have heard
the sub-continent to book an appointment for an engineer to
come and investigate why their phone line makes them sound
tasks, IT of prisoners being involved in
as if they are making a call while going over Niagara Falls in a processing and the services sector.
Broadly speaking, the services
barrel equipped with crackle magnification and echo enhance-
ment machinery. development and sector requires skilled labour,
call centres. “ whereas many manufactur-
ing positions can be filled by
The day-to-day functioning customer helplines is a searing
the unskilled workers readily
indictment of the principle and practice of outsourcing, and
found in prison populations.
a 100% convincing argument against it. The regular, violent
loss of temper by UK-based customers faced with explaining
problems to telephone operators who cannot speak English,
ISJ: Do you think the idea is so outlandish that it shouldn’t be
whatever their paper qualifications might claim, must surely be
given the dignity of a reaction?
causing grave long-term damage to traditional links between
the sub-continent and Britain. As must the practice of requiring
Etienne Carmon: Not at all. But there is an ethical element to
Indian employees to watch the drab, dreary and horrendously
this question. If the workers are free to chose whether they wish
tedious EastEnders soap opera, and Match of the Day, the BBC’s
to work, are of working age and work in suitable conditions,
flagship association football programme, so they can under-
then there is no ethical issue.
stand British life more fully. And encouraging Indian workers
Furthermore, they have the opportunity to learn a new skill
to adopt English-sounding names is surely the most patronising
which could help them once their sentence comes to an end, and
element of this peculiar form of neo-colonialism. On reflection,
may even earn money that could help compensate the victims of
life in jail is very possibly the ideal preparation for working in
their crimes. Therefore, if these ethical aspects are well managed
an Indian call centre. Maybe the world hasn’t finally gone alto-
by the prison and strongly controlled by authorities, I don’t see
gether mad after all. Do feel free to write to ISJ expressing your
major problem in theory.
own point of view, for or against the motion.
10
Lead story How the world finally gone mad?

FAX_Fu
In Conversation with Etienne Carmon
to undertake tasks at a lower cost. Furthermore, due to the

Etienne Carmon: Financial services companies looking to companies’ size, they are able to take advantage of economies of
outsource, carry out thorough due diligence prior to selecting a scale, spreading their resources across the business of numer-
partner. There are of many aspects to this, including the ethical ous clients. Many European financial services companies have
aspect – no company wants to find out it has indirectly used been able to significantly reduce their costs through outsourc-
child labour for example. However, once the ethical concerns ing operations, whilst maintaining the quality levels their clients
surrounding the workforce have been dealt with, the key con- expect. To ensure a relationship is successful, it must be built on
sideration is then quality. a well-defined Service Level Agreements and Key Performance
Indicators to ensure quality of service is maintained at all times.
Can the company provide a consistent level of quality in its
services? ISJ: And what doesn’t work?
Etienne Carmon: To date, there have been few examples of Clearly, outsourcing can have its drawbacks too.Financial
successful offshoring operations when the goal is cost cutting. Services companies are also putting operational risk and to an
The additional risk factor of utilising a prison workforce for extent, reputation risk in the hands of a third party, so thorough
activities where quality is paramount seems unrealistic, espe- due diligence is critical. In terms of IT, there have been cases of
cially following the recent financial turmoil. For these reasons, production errors occurring, which have been rapidly resolved,
I doubt a financial company would seek to cut costs and be however information on the problem and the solution has not
willing to accept the additional risk associated with an incarcer- been forthcoming, leaving the “outsourcee” in the dark as to the
ated workforce. issue.
Another problem companies face concerns protection of intel-
ISJ: On a broader note, where might the suggestion sit in the lectual property rights and industrial espionage.
broader context of outsourc- By outsourcing, you are effectively handing over your business
“CACEIS has ing and offshoring? processes, know-how and information to another company.
outsourced Etienne Carmon: Finan- Despite the presence of client confidentiality contracts, there is
few parts of cial services activities often a risk that an unscrupulous person could exploit the informa-
its business, require heavy investment

into human resources and
tion to set up a company that competes with your own. Finally,
the question of a local presence. Clearly, offshore call centres
preferring to IT and many companies
find their resources are better
have been the subject of negative press in the UK and elsewhere,
demonstrating that clients wish their calls to be handled by a
retain the greater utilised when channelled local agent rather than an operator in another country.
part ‘in-house’ “ into a specialist outsourcing
company. Financial services
However, setting up an outsourced call centre staffed by local
employees in a country where you distribute your funds, can be
companies can find the skill an astute commercial move which can help to dissolve cultural
set and IT capabilities they seek in many local and international barriers.
third-parties, however, for the reasons explained above, a prison
is unlikely to provide the qualified staff, the tight controls and ISJ: Do you have any other thoughts/opinions that are not
robust technical infrastructure that is so essential to a successful covered by the above?
outsourcing venture.
Whereas outsourcing is driven by a desire to deliver improved Etienne Carmon: We have outsourced certain aspects of our
services, offshoring’s objective is principally cost-cutting, which IT production and infrastructure to a reputable Luxembourg-
explains why India and China, with large, cheap labour forces, based company, which took on a large number of our IT staff.
are favoured by companies looking to significantly reduce their We have outsourced the facilities management of back-up sites
production or development costs. If quality standards are met, as part of our business continuity plans. In Luxembourg, we
then offshoring is justifiable, but in the financial sector, where have outsourced client document management and reporting to
controls need to be tighter than ever, I doubt that any signifi- a Luxembourg company which is granted the same status as a
cant part of the activities could easily be offshored. Offshor- banking institution.
ing has not yet been met with anything like the acceptance of
outsourcing and it will be many years before asset managers
contemplate such a radical change to their company set-up.
ISJ: Can you remind us what works?
Etienne Carmon: As already mentioned, India and its out-

sourcing competitors have access to a vast pool of relatively
cheap, but skilled labour which enables outsourcing companies
12
FAX_Fullw_ISJ_081309.qxd 8/13/09 3:06 PM Page 1
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Under the microscope The Future of Prime Brokerage
brokers after the crisis while 20% decreased to reduce costs and
complexity of collateral management.
Finally, regulators are extremely focused on reforming our
industry. A number of proposals are being contemplated across
the US and Europe that undoubtly change our industry. Some
of these proposals include: banning naked shorts, spinning out
proprietary trading desks from investment banks, as well as
spinning out the swaps business from investment banks. Any of
these three proposals would result in a profound change in our
industry.
What should we expect next? These trends are rapidly and
dramatically changing the operating model of the industry. The
The Future Given the crisis has unleashed forces that are irreversible. In the years
to come it will be seen as the catalyst that led to a complete
financial crisis of
of Prime 2008, the hedge
overhaul to the structure of the industry and the introduction
of standardisation and co-operation. Each participant has been
impacted in profound ways and must now meet new require-
Brokerage fund industry is ments that cannot be effectively addressed by the status quo:
by Sameer Shalaby
rapidly changing
to cope with a We are also witnessing the emergence of the mini-prime broker
new world. model – one where a broker dealer acts as an aggregator of small
hedge funds to clear with larger prime brokers. On the fund ad-
The entire industry is reacting to a variety of pressures from in- ministration side, we are seeing the death of self-administration
vestors and regulators which will eventually result in previously in the US hedge fund markets – one where hedge funds rely on
anticipated institutionalisation in the form of regulation, and their internal processes and infrastructure to report net asset
standardisation in technology and infrastructure. The indus- valuations (NAVs) to their onshore funds investors.
try has not evolved to support these new demands, and hedge
funds, prime brokers, fund administrators, technology vendors On the technology front, we are seeing a rapid move towards
and service providers now have to anticipate and engineer new simplification of the hedge fund infrastructure to cut costs. This
service models. has come in two main forms—more reliance on third-party
technology vendors, especially those with hosted ASP platforms,
The industry began to claw its way back to the previous levels in as well as expectations that service providers will ramp up their
the past couple of months. Assets under management (AUM) services to include more bundled technology platforms that
in hedge funds managed from North America rose above $1 provide integrated and comprehensive front-to-back office
trillion in April 2010 for the first time in 18 months, accord- coverage, while ensuring multi-prime broker support.
ing to Eurekahedge. At the end of April, global AUM stood at
$1.53 trillion, also up 0.6% since the end of March 2010. Other Investors
regions saw marginal net inflows in April. European managers
gained $500m and Asian (excluding Japan) managers gained Investors are no longer satisfied with solely understanding
$100m. performance, but also now require a deep understanding of
business risk. As a result, over the last several months, they have
Still, increases in asset flows no longer means a return to the dramatically expanded their due diligence process to cover all
previous operational status quo. The crisis has already fast- aspects of a hedge fund’s operations and relationships. Accord-
tracked the trend for multi-prime brokering that Paladyne ing to a recent study by Albourne Partners, the average due
Systems predicted several years ago. The collapse of Lehman diligence process has now grown to over six months. Some of
heralded the death of the single-prime broker model – one the key areas covered in this due diligence include counterparty
where hedge funds rely on just one prime broker to service their risk, third-party fund administration, and operational/technol-
needs. Now the vast majority of hedge funds (large, small or ogy processes.
start-ups) have multiple prime broker relationships. Additionally, investors are now expecting other hedge fund
investment vehicles for their investments. This is mainly com-
On average a global hedge fund now uses three prime brokers, prised of managed accounts (which is more common in the
a number Paladyne expected would become the industry norm US), and UCITS (which is more common in Europe). We expect
in 2007 when large funds worked with as many as a dozen and this trend to continue, although not at the initial pace as previ-
some utilised only a single prime. Others in the industry hold ously predicted by industry experts.
the same view, according to a Celent report “Hedge Funds in
Europe –Riders in the Storm” released in May 2010 [see separate Hedge Funds
article], a third of hedge funds increased the number of prime
14
Under the microscope The Future of Prime Brokerage
Hedge funds are facing unprecedented pressure to invest in a ment banks, hedge funds, and possibly fund administrators—
considerable amount of resources explaining and reporting from transparency and reporting, to trading and shorting, to
both their performance and their business risk to all types of pricing and valuations. We are likely to witness the beginning of
interested external parties (including investors, prime brokers, significant regulatory reform that will continue for several years
administrators, auditors, regulators, and others). This reporting to come.
is further complicated by the need to aggregate their activi-
ties across multiple prime brokers. We expect the relationship Fund Administrators
between hedge fund managers and these external parties to be
much more formalised, with significant due diligence up front, The financial crisis has had a significant impact on fund admin-
and high expectations for ongoing transparency and reporting. istrators. Given the reduction in total assets under management,
most fund administrators have lost huge assets, in some cases,
Prime Brokers 50% of their AUA (assets under administration). This trend
has put significant pressure on fund administrators to revisit
The crisis instantly dispelled any lingering doubt that the multi- their business models and their commitment to the space. For
prime model was not the way of the future. Overnight, hedge some, this created an opportunity to build their service offering
funds sought to mitigate counterparty risk by moving their to support the wave of new mandates offered in the US alone.
assets across multiple counterparties. Prime brokers that could Given the pressure from investors to use independent fund
provide the adequate services and reduced risk, along with a administrators, self-administered hedge funds have looked to
multi-prime solution, were clear immediate winners. One of administrators for their help. We expect this trend to continue
the winners in this race was Credit Suisse which was the first well into 2010.
prime broker to introduce multi-prime technology through its
Advanced Prime partnership. Primes that lack this multi-prime Fund administrators have looked to opportunities to offer full-
infrastructure now face the costly prospect of retooling their service support to small-to-medium sized hedge funds. Many
mostly single prime technology, to the new multi-prime stand- administrators have been expanding their offering to include
ard. This comes at precisely the same time as there is wide- middle-office support, in addition to their back-office and
spread pressure for primes to reduce their high-cost structure as traditional NAV services. Finally, many administrators have ex-
well as strengthen their balance sheets. panded their offering to include a technology platform that can
support trade capture, real-time P&L, as well as multi-prime
In addition, primes have been eavaluating and will continue to reporting.
evaluate their current hedge fund clients to terminate unprofit-
able relationships. This will continue into the future with a clear New Requirements
focus on profitable clients that have the proper pedigree as well Prime Broker Roadmap – Five Steps for Success
as strong operational controls to minimise risks.
In order for prime brokers to be successful and capture more
Another unsettling issue for many primes is their inability to assets in a multi-prime world, we expect them to adapt their
understand the complete aggregated leverage of their hedge offering by expanding it to include other services, in addition to
fund clients. This lack of transparency into the activities of their traditional core services. We have identified five necessary
their clients was a major contributor to the misgivings many requirements – essentially a roadmap to success:
had about the solvency of the investment banks at the height of
the crisis. Number One: Broker-Neutral Technology
Regulators Our roadmap is built first and foremost around broker-neutral

technology. While prime brokerage houses have often spoken
Although in many respects hedge funds were not contributors about a future state of open architecture, with multi-prime
to the financial crisis, yet they were still blamed for much of it. support, this has only become an industry reality in the past two
The public perception was that regulators had been asleep at the years. Leading prime brokers offer the most advanced prime
wheel and that they did not have an adequate understanding technology platforms, but were compatible mostly with the
of the role that the funds played in the extreme market volatil- single-prime model. Their clients so far have not had the choice
ity we experienced. As a result regulators can no longer allow of hosting data from competing primes on the existing technol-
the industry to operate in relative anonymity. With regulation ogy.
pending in Europe that seeks to protect investors and registra-
tion of hedge funds taking place in the US, funds will be re- What these firms require are platforms that are not only seam-
quired to become more transparent regarding their investment less across their various in-house desks, but also with technol-
holdings and activities. Regulators will need reporting capa- ogy platforms hosted by other primes. Additionally, they must
bilities that allow them to understand the risks associated with provide combined accounting, reconciliation and reporting so
individual funds as well as broader industry-wide systemic risks. that a manager receives one consolidated statement at the end
of the day or week.
Furthermore, financial reform is likely to span across invest-
15
US focus Corporate Actions
Credit Suisse has recognised this need before any other prime Number Four: Fund Administration and Independent Net
broker and was a pioneer in providing such solution. It formed Asset Valuation
EX
a groundbreaking alliance with Paladyne Systems in June 2006
to offer a fully-hosted, front-to-back office multi-prime tech- The fourth requirement of our roadmap is to provide fund
T
nology platform. Industry analysts initially thought this would administration and independent net asset valuation. More and
make Credit Suisse’s clients less ‘sticky’. However, the strategy more investment banks have been building this capability as an
was clearly justified after the death of the single prime model in additional source of hedge fund revenue. Fund administration
2008. needs to be run independently from the bank’s prime brokerage
side to safeguard a fund’s privacy. As an alternative to perform-
Following this partnership, Citigroup teamed up with Linedata ing this function internally, banks can avoid potential conflicts
to include Beauchamp as part of its Open Prime offering, but it of interest and privacy pitfalls by establishing a strategic rela-
did not offer a hosted ASP solution. In September 2009, Sophis tionship with a third-party fund administrator.
joined forces with J.P. Morgan’s Prime Brokerage business and
introduce iSophis, a reporting solution that allows hedge funds Number Five: Independent Business Consulting Services
to comprehensively manage their risk and portfolios across
multiple prime brokers. (Given the recent news about the im- As a final component, prime brokerages will need to further
minent sale of Sophis, this offering may be in jeopardy.) enhance their independent business consulting practices.
Most primes already consult with their clients in areas such as
Number Two: Independently Hosted Technology staffing, office space, technology systems, vendor selection and
service providers. However, these internal consulting groups are
A critical component of the independent technology offering is very expensive and must remain current in many areas. Keeping
the delivery model, which must be provided by an independent in-house staff abreast of the latest trends, software, IT upgrades,
third party and offered as a full service Application Service Pro- among other things, in a fast-moving industry, can prove chal-
vider, or ASP model. The third-party delivery ensures privacy
of positions and trading strategies, which is a key concern for
lenging for banks. T
hedge funds. Any multi-prime technology that is not delivered
via an outside, independent vendor is less desirable because
As a more likely scenario, a prime would maintain a core team
in-house to provide such services, in addition to establishing
T
it potentially could offer a prime a complete view of a fund’s one or two strategic consulting partnerships to complement
activities across all of their prime relationships. In addition, a their offering and perhaps include as a white-labeled service to
technology solution provided within the bank will be difficult their customers. This model is not only more cost-effective. It
to modify and interface with other prime broker technology also ensures the objectivity of their business recommendations.
Sameer Shalaby is chief executive officer of Paladyne Systems
platforms, as well as be another concern in any single-prime
counterparty relationship. An independently hosted technology requirement. Squeezing the definition of what constitutes a day F
solution (even if funded by any prime broker) still offers hedge will put further pressure on moving off T+3. If we stay in T+3,
do we get any benefit from an earlier affirmation? Another way
funds the freedom to maintain an independent relationship
with the same vendor, even if they no longer have a relationship of looking at that is if we do same day affirmation, does it mat- w
with such prime. ter if we stick to T+3.”
Number Three: Middle- and Back-Office Services Forcing The US Issue B

A third component of the roadmap is the delivery of middle- Overseas regulation may force the US to act. Omgeo’s Cutrone
o
and back-office processing services to customers in combina- noted that the EU, has been promoting a T+2 settlement cycle,
tion with the technology offering. Hedge funds are already keen
to outsource these functions as evidenced by the huge increase
parallel with the Target2 Securities settlement and has to
harmonise settlement across the EU, with the German T+2 cycle +
in demand for daily processing from fund administrators. being the driver. “They have to go to T+2,” Curtone said. “T+3
One benefit is lower costs. It is cheaper for managers to have would mean Germany would have to roll back their settlement Fi
a third-party perform these functions rather than to attract cycle.” Cutrone predicted that T+2 in the EU would force the
co
and maintain the talent to do it in-house. Second, institutional US to adopt. The other tendency is to stand pat on the grounds
that budgetary constraints remain significant.
in
investors favour managers who leverage outside parties for daily
processing and reporting. Prime brokers are perfectly situated to “The cheaper it is to fail trades,” said Stamey, “the less incentive se
deliver these mid-to-back office services given their familiarity there is to change.” he
with cash management, daily settlement, reconciliation, col- Once the industry is forced to change, however, he saw a co
lateral management, corporate actions processing and portfolio silver lining for firms with high touch processing. “Matching to
reporting. We expect prime brokers to more actively provide settle is going to force SDA,” said Stamey. “Firms that start this
these services either on their own or, more likely, via independ- from scratch won’t have to take legacy systems out of IS
ent partners. production.” ISJ st
Th
Th
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The ISJ Profile Alan Brown

by Sameer Shalaby
A Director and 40-50%, by improving insulation and replacing two boilers with
Go Green, Make Trustee of the super-efficient zoned central heating, and totally renewing all
Money! Clerkenwell, Lon-
don-based Car-
lighting. Insulating buildings enjoys a very rapid payback of the
original investment, he reminds us. This writer’s own personal
Go green, and make bon Disclosure experience bears that out. After taking advantage last autumn
yourself some money. Project (CDP),
which claims that
of a subsidised cavity wall insultation scheme at a total cost of
less than £250 for a house with around 1650 square feet of floor
That is the advice of since its forma- space, energy bills have already dropped by more than £50 a
tion in 2000 it month. On that figure alone, payback took about five months.
Alan Brown, Chief has become the
Investment Officer at gold standard for
carbon disclosure
Alan is also devoted to his work for the CDP, an entirely vol-
untary project whose objective is to persuade companies to dis-
Schroder Investments. methodology close details of their carbon footprints. The CDP boasts names
Not only will you be and process, Alan
Brown is the kind
such as former US President Bill Clinton, former UK Prime
Minister Tony Blair, and the current German Chancellor Angela
making a contribution of optmist whose Merkel on its roster. It has grown year-on-year both in terms of
to saving the planet, glass is always

half-full rather
the number of companies participating in the disclosure and in
the quality of the reports that they produce on their corporate
you’ll be helping to than half-empty.
Moreover, one
carbon emissions. The CDP says thousands of companies take
part each year. More information can be found at: http://www.
prepare for mankind’s suspects there cdproject.net
financial future. are always plenty
more bottles chill- Personal climate This has come as something of a personal
ing in his fridge. change climate change. Although his brother
He also has a buring passion for the very specialist, sophisti- was always a conservationist, Alan was
cated and presumably expensive activity of carriage racing. originally a scientist. He holds a degree in natural science
A young-looking grandfather of three, Alan Brown is passion- from Christ’s College, Cambridge University (for the sake of
ate about climate change and the measures that people can take pedantry we should probably add England, to differentitiate it
to mitigate its effects without sacrificing any quality of life. “I’m from Cambridge Universities elsewhere). “We won’t go into the
worried about the planet not being such a pleasant place to live quality of the degree,” he says. “I would probably have got a first
in the future, and there is lots we can do to try and prevent that in punting.”
happening,” he says. “We don’t have to wear bearskins and live
in caves, but we should get rid of the gas-guzzlers. There IS a For some time Alan and his brother wouldn’t speak to one
Lexus 4x4 hybrid. In fact, there is an upside to climate change ; another, even though he was not what today would likely be
the geological extension of the Champagne region is Kent, and labelled a climate change sceptic. Or, even more emotively, given
I gather that the Champagne houses have already been investi- the strong linguistic link with a genuine man-made disaster, a
gating buying land there. They couldn’t, though, call it Cham- climate change denier. “It is hard to believe that global climate
pagne of course any longer; they’d have to call it Britain. There change is not being caused by mankind’s activities,” he says
ARE winners in this!” in the quiet, personable, reasonable way that comes to define
perceptions of his character.
Losers could Losers could include the likes of Bangla
include Desh. It could lose 15% of its land mass Schroders launched the Climate Change Fund at the end of
if storm frequency and intensity increase, June 2007, aiming it initially at retail investors. Alan takes great
leading to a breakdown in agriculture and water supplies. That pains to stress that Schroders launched the fund not to enhance
would bring war, disease, famine and mass migration. The four its green or eco credentials, but to make money, investing in
horsemen of the Apocalypse will find themselves very much in mainstream manufacturing companies who will find themselves
their comfort zone if these predictions come true. Investment very much in what he calls the ‘fast flowing part of the river’.
on the scale of a third Industrial Revolution will be needed if we From a fund manager’s perspective, and whatever the topic of
are to avoid such disaster. discussion the fund manager in him inevitably forces its way to
the front, it would be dangerous to have a narrower focus on
Alan’s own sacrifices for the climate change cause include trad- areas such as solar energy and wind power, he says.
ing in his gas-guzzling Porsche Cayenne for a Lexus Hybrid. “I
can now drive to CDP meetings in a state of grace,” he quips. The fund was the first of its kind in the UK, offering investors
He is also working on his house to reduce fuel consumption by exposure to companies involved in mitigation of (measures
18
to reduce carbon dependency), or adaptation to (changes to investment case. Having established the investment universe,
adapt to the consequences of), the effects of climate change on a the team is focused on the very best ideas that have been identi-
globally diversified basis. Simon Webber and Matthew Frank- fied by Schroders global equity team and locally based equity
lin (Joint Fund Managers) are supported by a team of climate portfolio managers and sector specialists.
change specialists, global sector specialists as well as Schroders’ Robin Stoakley, Managing Director UK Retail said: “We believe
wider global network of 80 experienced large and small cap there are excellent returns available by investing in companies
analysts. which will benefit from efforts to mitigate and adapt to climate
change. Dealing with climate change is likely to be the biggest
Climate change Simon Webber commented at launch: global investment theme of the next 20 years plus.
launch “Investors simply can’t afford to ignore
the realities of climate change. Across all “The rapidly changing landscape will enable innovative, flexible
sectors, climate change will have a broad and lasting impact and well run companies to improve their prospects relative to
along the value chain. For the mainstream equity investor, now competitors, leading to strong investment returns. We believe
is the time to adopt a global approach to what will be a major an unconstrained portfolio dedicated to investing in these
investment theme for the foreseeable future. Crucially, Schrod- well positioned companies has the potential to generate very
ers has the capability to strong investment returns. This is not just about a few wind
“Investors simply take a global approach farms.”By mid-2009 it had begun to experience institutional
can’t afford to to a global challenge –
enabling us to identify
take-up and Schroders was entrusted with $200m by an institu-
tion (WHICH ONE?) to invest in accordance with the fund’s
ignore the realities the broadest possible strategy.
of climate change. opportunity set.”
Investment The fund’s investment objective is to
Across all sectors, Before launching the Objective and
Policy
provide capital growth primarily through
fund, Schroders estab- investment in equities and securities of
climate change will lished a proprietary data- worldwide issuers which will benefit from efforts to accommo-
have a broad and base of companies where
the effects of climate
date or limit the impact of global climate change. Investment
will be primarily in directly held transferable securities. The
lasting impact along change have a significant fund may also invest in collective investment schemes, cash,
the value chain." impact on the long-term deposits, derivatives, warrants and money market instruments.

Risk Profile
The fund holds investments denominated in currencies other

than sterling, changes in exchange rates will cause the value of
these investments, and the income from them, to rise or fall.
The fund can use derivatives for investment purposes. These
Alan Brown at a glance
instruments can be more volatile than investment in equities or
bonds.
Joined Schroders in 2005 and is a Director of Schroders plc.
Potential investors in emerging markets should be aware that
Joined State Street Global Advisors, initially as Managing Di-
this can involve a higher degree of risk. Less developed mar-
rector of the London office, and later as Group Chief Invest-
kets are generally less well regulated than the UK, investments
ment Officer and Vice Chairman of SSgA, and Executive Vice
may be less liquid and there may be less reliable arrangements
President of State Street Corporation. He joined Posthorn
for trading and settlement of the underlying holdings. Invest-
Global Asset Management in 1984 as Head of Fixed Income,
ments in smaller companies can be less liquid than investments
moving to PanAgora Asset Management as Chief Investment
in larger companies and price swings may therefore be greater
Officer in 1989.
than in larger company funds. The fund is not tied to replicat-
Investment career commenced in 1974 upon joining Morgan
ing a benchmark and holdings can therefore vary from those in
Grenfell as an equity analyst before moving to New York to
the index quoted. For this reason the comparison index should
go through the JP Morgan Commercial Bank Management
be used for reference only. By June 2010, the Climate Change
Program. He returned to London becoming an International
Fund, managed by Simon Webber and Matthew Franklin, was
Fixed Income Fund Manager, eventually moving up to Direc-
worth £28.8m.
tor of Investments responsible for all Fixed Income.
Member of the Group Management Committee. Externally
Its top 10 of 72 holdings in descending order of percentage
he is Chairman and Treasurer of the CERGE-EI US Founda-
holding are: Polycom, (communications) BG Group (oil, gas
tion (Centre for Economic Research and Graduate Education
and consumable fuels), Lowes Companies, (speciality retail),
- Economics Institute), CFA Advisory Council for Market
Cisco Systems Inc (communications equipment), Honda Motor,
Integrity, MSCI Barra Editorial Advisory Board and Carbon
(automobiles), Hansen Transmissions International (Ma-
Disclosure Project Advisory Board.
chinery), Sekisui Chemical (household durables), Koninklijke
BA, MA in Natural Science (Physics), Cambridge.
Philips Electronics (industrial conglomerates), Muenchener
Rueckversicherungs (insurance) and DuPont de Nemours
(chemicals).
Historic yield is 0.0%. Growth since launch is 5.5%, compared
GBP
with –1.0% for its benchmark index, the MCSI (World( NDR
20
CRAFTING THE vision FOR THE securities industry
The Essential Work of ISITC Continues.
ISITC September 2010 Industry Forum & Working Groups

September 12-14, 2010
Four Seasons Hotel, St. Louis, MO
This conference will consist of Forums and Working Group Sessions.

Please visit www.isitc.org to register.
Don’t miss the chance to represent your firm and participate in
ISITC’s ongoing industry forums and working groups.
We look forward to seeing you in St. Louis!
FOR ADDITIONAL INFORMATION VISIT www.isitc.org

390 Amwell Road, Suite 402, Hillsborough, NJ 08844
Phone +1 (908) 359-1184 Fax +1 (908) 359-7619 E-mail usainfo@isitc.org

KN2248
Regulation EFAMA ON UCITS
On AIFMD, UCITS:
The view from Custom House
Dermot Butler: Therefore, in order to be able to market a fund
to EU member state resident investors, a non-EU
“It appears that regulated manager will probably have to set up an
there is an impasse EU-regulated manager who will be able to comply

without tainting the non-EU parent of the manage-
between the ment company.
Thus, it will be much more difficult for managers
European Parliament to market their products, however structured, into
and the European the EU. This will reduce competition to the extent
that many managers will probably just not bother to
Commission and, if market to the EU, but, more important than reduc-
there isn’t a sensible ing competition will be the fact that investors will
be limited in the choice and probably the quality of
compromise, then service with regard to certain hedge fund products.
we will have chaos.” Itinvestment
is certain that investors will miss out on sound
opportunities. I would like to think the
authorities do not have the faintest idea about what
Much has been written about the potential effect of the EU’s they are doing, because if they do understand what
AIFM Directive, and much more will certainly be written. Der- they are doing, then it would appear that they have positively
mot Butler shares with ISJ and its readers his thoughts on the evil motives.
Directive and other popular topics of discussion, even though
the final result is not yet known at the time of writing. I do not believe it is a measured reaction to recent times in the
Mor
context of hedge funds, because, as already stated, hedge funds
I have no idea when it will be finalised. It appears that there is were not responsible for the financial debacle. I do think that it
an impasse between the European Parliament and the European is a knee-jerk reaction and the draft Directive, when it was first
Commission and, if there isn’t a sensible compromise and the issued in April of last year, was so blatantly obviously politically
Directive is passed on the basis of the worst options, then we motivated and, unless it is improved substantially more than it
will have chaos. I personally think it is unlikely to be passed has been to date, it will turn out badly.
before the end of this year and, therefore, will run into the next
presidency. Whatever happens, I think it is unlikely that it will There is a contention that one of the main motives is investor
be implemented before the end of 2012 and, speaking in the in- Mor
protection and this follows the Madoff scandal. The irony is
dustry, there are those who think it will just wither on the vine. that Madoff never had a hedge fund and that there were several
UCITS funds which invested in Madoff and lost all their money.
I don’t think that we will have forgotten the lessons of the past This somewhat destroys the illusion that the regulated UCITS
three years, although I am not sure that is a relevant question fund adds to investor protection.
to AIFM. The AIFM Directive was definitely a political move
that had no real direct relationship to either the involvement Restrictions on EU-resident investors investing out
of hedge funds in the economic debacle, or the potential for of the EU into non-EU authorised funds
systemic risk and the requirement for investor protection.
This seems to be very dictatorial and unreasonable Big Brother-
Marketing Non-EU Funds Into Europe ism. Investors into hedge funds are, virtually without exception,
Sophisticated Investors. It seems to me that this regulation is
It would appear that the only way non-EU funds will be able to infringing their liberties and could, no doubt, result in some
be marketed into Europe and sold to EU member state inves- legal action down the road, under EU freedom or human rights
tors, will be if those non-EU funds are able to comply with EU legislation. Where are Phil Goldstein’s cousins when we need
regulations. More importantly, the managers of those non-EU them? [Phil Goldstein was the hedge fund manager who won
funds, if they are not EU registered, will have to undertake to a landmark action against the SEC for trying to force registra-
comply with EU regulations on transparency, reporting, etc., tion of funds when they had no legal authority to do so]. Such
and the regulator of the non-EU manager will have to confirm a regulation will reduce the competition and it will be bad for
that they will police the manager’s compliance with the EU investors in the context of choice and the fact that they will miss
regulations. I think this is never going to happen in the context out on some perfectly good investments opportunities.
of the US regulator and, therefore, it is unlikely that a US-
resident manager will be able to manage either an EU fund or a My comment above about authorities not having the faintest
non-EU fund that can be sold in the EU. idea about what they are doing applies, although in this case I
22
KN2248ISJAD 203x267:Layout 1 21/7/10 13:08 Page 1
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think it is likely they do know what they are doing and one of as I understand it, a fund cannot sell short of a motor index in
their objectives is to find out where everybody’s money is and to order to hedge a long position in pharma stocks.
control it. It is not a measured reaction to anything and it may
well be a knee-jerk reaction and will turn out badly. It can be seen that the now common or garden merger arbi-
trage, convertible arbitrage and even long-short equity funds
The likelihood is that both of these regulations are likely to will have to modify their strategies in order to meet UCITS reg-
lead many non-EU managers deciding to ignore the EU market ulations. Some will never be able to do so. On the other hand
and that will lead to an increase in isolationism because I think a professional investor, long-short hedge fund, can be more
many European managers will have the same reaction to the precise about what it wishes to short and therefore presumably
recently introduced US regulations. generate greater profits or smaller losses.
The benefit of setting up in the EU as a manager or UCITS are more expensive to establish than a professional investor
fund fund and have higher operating costs. This is because:
Obviously the main benefit of setting up in the EU, whether Legal costs in terms of UCITS funds are very much higher than
setting up either a manager and/or their fund in the EU, is that they are for what are almost ‘boiler plate’ professional investor
their fund will be able to be marketed to EU residents. I think funds. Those establishment costs have to be written off in the
it is likely that, if a manager wishes to go through the hassle in first year of operation unless the auditors are reasonably flexible;
order to market to EU investors, they will have to establish a Annual operating costs are higher because you have to have a
manager in an EU jurisdiction on the understanding that that custodian and the reporting and supervision requirements for
manager will have to comply with the EU regulations which we UCITS are very much more onerous and penalties for error are
have already discussed. On that basis they will also be able to very much higher for UCITS funds. Director fees are higher,
set up the fund in the same or another EU jurisdiction and will audit fees tend to be higher, and there is almost certain to be
then be able to market their fund in the EU, to EU Investors. some ongoing legal work with lawyers attending every quar-
terly board meeting and very often having to update or amend
UCITS documentation.
UCITS were originally introduced in 1985 as a counterpart to Investment manager fees don’t come into the picture, as they
the US mutual fund and is a product that could be marketed are the same for both types of funds. I don’t think that non-
to retail investors in Europe. Although it has gone through UCITS funds are charging too little – just that the structure of
several changes, UCITS have always had restrictions regarding UCITS funds makes it more expensive. It is correct that most
investments and quite strong regulation to protect investors. UCITS funds, which are generally mutual funds, have more
Although some of those restrictions have been eased, never- than $1m NAV (net asset valuation), but that is not the case
theless there are only very few hedge fund strategies that can with hedge funds anymore.
utilise UCITS without substantial amendment to their normal
strategy. Selling short for any reason other than hedging is very To go back to my previous comment, the perceived
difficult but this has been achieved by introducing derivatives benefits of UCITS funds are:
including swaps.
Greater distribution and a way of attacking the retail market.
It seems to be that the current popularity of UCITS This is true, providing you have the distribution. Most hedge
is based on three perceptions: fund houses do not have the distribution and have to rely on
third parties. Hedge fund strategies are much more difficult
They will automatically give access to the European market; to explain and many long only funds – mutual fund/unit trust
They are strongly regulated and therefore “safer”; marketers - do not wish to fall foul of the best advice regulations
They will not be subject to the restrictions under the AIFM in terms of marketing a hedge fund UCITS to retail clientele.
Directive, however the manager will in all likelihood have to
comply with the restrictions, that have been discussed above, UCITS are more expensive to establish than a professional investor
with regard to complying with AIFM requirements. fund and have higher operating costs. This is because:
The drawback with regard to UCITS and hedge funds strategies 1. Investors may think that because a UCITS fund has higher
as I understand it, is that it is still not possible to have naked regulation, it needs less due diligence. Good regulation does
shorts within a UCITS strategy, although short positions can be not prevent the appointment of an incompetent investment
established in indices or similar vehicles if they can be shown to manager.
be hedging the portfolio or specific parts of the portfolio. Thus,
it would be possible to hedge by going short of an index or ETF 2. It seems to be forgotten that there were at least two and
providing the fund was long of securities that comprise, in part, possibly four UCITS funds in Ireland and Luxembourg that
the index or ETF in question. Similarly presumably the fund were invested in Madoff. Therefore the UCITS structure has
could sell short of stock-specific futures contracts. However, not, to date, prevented a crook taking money out of the UCITS
24
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If the manager funds; form of distribution arrangement. The problem, that I have
already alluded to, with hedge fund and CTA strategies, is that
does not fall in 3. The UCITS fund avoids they are more complex and therefore more difficult to explain
under any of the AIFM Directive. This is
true as far as the fund goes,
to the average ‘retail investor’, who is likely to be influenced by
somewhat biased tabloid and broadsheet press, but that is a
these options but it does not reduce the whole other subject. It is my understanding that several UCITS
burden that has to be borne – i.e. many more than can be counted on one hand - have been
then, to make by the investment manager formed, but I’m sure only a very few have raised any meaningful
the UCITS – it is after all the Alternative
Fund Investment Manage-
money. That is probably because they fall under one of the three
examples above.
successful he will ment Directive.
need to establish If the manager has qualified
You ask if we are going to see more fraud and theft. I am not
sure that I see the connection between fraud and theft and an
some form of distribution arrangements, institution that wishes to invest in a particular strategy but
distribution then it may be worth setting
up a UCITS.
is restricted from investing in anything but a UCITS vehicle.
Having said that, it must be realised, that in any situation where
arrangement. Some of the big hedge fund large sums of money are circulating, whether it is in the hedge
managers have been able to fund Industry or anything else, that fraud and theft are likely to
seed their UCITS by way of a transfer of subscriptions from be seen. Prohibition is the perfect example.
their existing offshore funds into their UCITS fund. Others
have very effective distribution networks such as MAN’S AHL I have never believed that regulation per se stops the dedicated
FUND, and Winton, and I have no doubt that if they establish crook. It may stop or hinder the opportunistic thief, but the
UCITS they will be able to get investors interested and meet dedicated crook will carry on regardless. I agree that without
their $100m level quota in a relatively short time. trust the Western economy is doomed but I don’t think that it
It may be that a manager is in contact with a European institu- is doomed just because of some high-flying crooks. To put it
tion, or for that matter an Asian institution, which is mandated another way, you may only want to buy a house that has got a
to restric investments into hedge funds by way of UCITS. They good alarm system, but we all know that won’t prevent a clever
come across an investment manager whose strategy they like burglar, especially if you happen to be away from home. The
and are prepared to invest $100m but require a UCITS. It fact that you may be the victim of a clever burglar does not
would be a very arrogant manager who didn’t go through the mean that you do not buy a house and choose to live in the park
process of establishing their own UCITS to meet the require- instead.
ments of those investors.
My comments, specifically regarding Madoff, are not that
If the manager does not fall in under any of these options then, UCITS regulation is imperfect because Madoff existed. What
to make the UCITS successful he will need to establish some was imperfect about the UCITS regulations was that several
UCITS funds were able to
invest money with Madoff,
either because the managers
were careless or because the
mangers did not follow the
investment restrictions that
were imposed on their funds.
Madoff never had a fund.
The error in this case appears
in regard to the managers
of the UCITS funds failing
to do their due diligence
on Madoff. The problem
with Madoff was that it was
a huge sum of money that
itself was dwarfed by the sub-
prime collapse. If you read
“The Big Short” by Michael
Lewis, then one is inclined
to think that the sub-prime
mortgage market was run by
bigger and better crooks than
Madoff ever was.
26
Technology Managers Lag Behind Technology
Tradeweb Europe ranked No.1 for fixed income & Chi-X

ranked No.1 for equities trading by Xtrakter clients
The top five execution venues for Xtrakter clients to execute fixed income trades representing
85.03% of the total share processed.
equities during Q2 2010 as
processed by Xtrakter were as When comparing Q1 & Q2 2010 percentiles relating to fixed
income trading Xtrakter highlighted the following: the level
follows: in first place was of trades executed OTC dropped by 0.64%; Tradeweb Europe
increased its share by 0.61% and Bondvision rose by 0.10% of
Chi-X Europe (27.79%), in second the total amount of fixed income transactions processed by
place was NYSE Euronext - Xtrakter.
Paris (11.61%), in third place The top five execution venues for equities during Q2 2010 as
BATS Europe (11.22%), in fourth processed by Xtrakter were as follows: in first place was Chi-X
Europe (27.79%), in second place was NYSE Euronext - Paris
place Turquoise with (6.39%) and (11.61%), in third place BATS Europe (11.22%), in fourth place
Turquoise with (6.39%) and in fifth place the London Stock
in fifth place the London Stock Exchange (6.21%).
Exchange (6.21%). Xtrakter noted when reviewing the combined venues of execu-
tions that the NYSE Euronext group of companies captured
17.87% of the total equities share. OTC execution represented
The onward march of the 9.34% of all equity trades conducted by Xtrakter clients during
this period. A detailed breakdown of the top 10 venues and
multilateral trading venues their percentiles is listed on
continues, while opinions abound Xtrakter.com.
on which will be next to throw When comparing the percentiles for the first and second quar-
in the towel as the inevitability of ters of 2010 relating to equity trading the following was noted:
The London Stock Exchange lost 4.54% of its share; Chi-X
consolidation in an oversupplied dropped by 2.30% & NYSE Euronext – Paris rose by 2.66% of
the total amount of equity transactions processed by Xtrakter.
market begins to bite. Recently
Tradeweb Europe was ranked No.1 In 2009, Xtrakter calculates that it processed 578m transactions
on behalf of its user community. It adds that its league tables are
for fixed income trading and Chi-X based on the number of transactions processed by Xtrakter and
was ranked No.1 for equities not by their nominal value.
The tables do not include data relating to systematic internal-
trading, according to clients of isers or general data for trades conducted on the LSE stock
Xtrakter, a provider of post-trade exchange trading system.
services and data to the capital The consolidation of MTFs is more or less inevitable, according
to seasoned industry observers, following the pattern of behav-
markets. iour already experienced in the USA. “At the last MTF mini-
census, CESR (Committee of European Securities Regulators)
The most recent edition of its liquidity-tracking tables for the counted 137 of them active in Europe, compared with 85 in No-
second quarter show that the top five execution venues for fixed vember 2007, 100 in March 2008, 122 in February 2009 and 130
income were as follows: Tradeweb Europe (3.8% of the total in December 2009”, observes Dr Anthony Kirby, Chair of the
fixed income transactions processed by Xtrakter during this ISITC-Europe Regulations Unit. “It is debateable whether 80%
period); Bloomberg Tradebook (2.12%); MTS S.P.A (1.14%); of those names carry consistently significant levels of liquidity,
ICAP Electronic Broking (1.00%); Bondvision (0.73%). he adds, because many exist only for registration purposes”.
Xtrakter noted that when reviewing the combined venues of While the number of MTFs in Europe has grown by 61% in lit-
execution data that the MTS group captured 1.77% of total tle over two and a half years, the benefits brought to the market
fixed income activity. OTC remains the preferred method for
27
from greater levels of choice and functionality are clear. The regulation. And remember, an MTF has to build enormous scale
effect of regulation has been to encourage more competition to be profitable. They don’t have a listing business and the other
between trading venues and the development of new business revenue streams that the traditional exchanges enjoy. And they
models. Without MiFID, the European directive that did so are dependent on price formation on the lit markets provided
much to promote the proliferation of MTFs, there would have by exchanges”.
been less high frequency and algorithm-based trading. Whether
or not that is a positive is a subject for a different story in anoth- “Looking ahead, the quality and solidity of clearing relation-
er issue. In ISJ issue 49, we plan to examine the dangers involved ships could well prove to be the deciding factor.” So much so, in
if the technology in the front office moves too much out of line fact, that he predicts that clearing, one of the many Cinderel-
with technology in the middle and back office. “Looking ahead, las of the industry, will
finally get to go to the
The common claim, though, that investors have benefitted from the quality and ball, as a G20-level issue.
lower costs is the subject of some dispute. Automation has in-
deed cut headline costs, comments Dr Kirby, but the total costs
solidity of clearing “From a regulatory and
prudential point of view,
of trading – including the implicit costs which are not often relationships could clearing is the next big
visible to the end investor - are broadly similar to 2003. “Spreads thing, with upstream
and commissions are coming down, but market impact and well prove to be the transparency fulfilling
opportunity costs have ramped up over the last two years. And
if you include post-trade costs, which are often priced per trans-
deciding factor.” a similar role from a
business point of view,”
action, then these are actually going up given the trend towards he concludes. “What gets
smaller trade sizes in Europe, following the US pattern over the cleared and at what price point will occupy business as well as
last decade”. operational minds over the next three to five years”.
On balance, he believes that MTFs have proved to be an inter- Only 32% of risk managers feel business executives are up to
esting model for all assets classes, particularly for derivatives. date on technology. That is one of the key findings of a recent
“Who knows where it is going to go when it comes to cross- Global Association of Risk Professionals study by Sybase: Risk
asset class trading?” he comments. “It depends on the pace of Management Systems in the Aftermath of the Financial Crisis.
innovation, the provision of real-time systems and on beneficial The survey commissioned by Sybase was sent to more than
28
Most Risk Managers Lag Behind Technology

“Most risk 5,000 professional
risk managers in
institutions. This is a concern as the recent financial crisis un-
covered significant weaknesses in aggregate risk reporting across
management Germany and the many organisations.”
organisations lag UK.
A bare majority said their middle office provides integration
two to three years “Most risk manage- with multiple trading systems, while only 47% said their middle
ment organisations office systems could integrate with multiple risk systems. “By
behind in taking lag two to three years integrating systems, risk managers can reduce reconciliation ef-
advantage of the latest behind in taking ad-
vantage of the latest
forts, cut expenses and, most importantly, operate from a single
data source, leading to significant savings in data storage costs.
technology—on both technology—on both Risk managers don’t want constant real-time reporting; rather
the business and IT the business and IT
sides,” said Stuart
what they need is on demand access to information in real-
time,” said Grant.
sides,” said Stuart Grant, EMEA busi- More than half (63%) of firms are now willing to increase
Grant, EMEA business ness development
manager, financial
investment in risk management technology. Grant continued,
“Risk management has always struggled to achieve funding
development manager, services, Sybase. “By although regulators may yet demand greater investment in risk
doing this, these management. With these factors in mind, it’s encouraging that
financial services, firms miss out on the investment is now a more recognised priority.”
Sybase. “By doing this, associated cost and
efficiency benefits
these firms miss out that come with better
on the associated cost integrated systems.”
and efficiency benefits Furthermore, 57%
that come with better of respondents said

they only update
integrated systems.” their risk manage-
ment database
overnight, while risk
professionals largely agree many of the results they need should
be available on demand. Only 28% run complex analysis for
trades in real-time, although another 32% did the analysis in-
traday. For larger problems, such as portfolio and counterparty
risk or global positions, most firms relied on overnight process-
ing. Only a few managed this in real-time, while approximately
20% run their portfolios, counterparty and global position
calculations weekly.
David Greenough, publisher, Risk Professional magazine, GARP

added: “The survey results indicate that the lack of real-time About the study This survey was conducted by the Global
data processing continues to be a challenge for risk managers. Association of Risk Professionals on
This calls into question the usefulness of current risk reporting behalf of Sybase. It was sent to more
systems and model analytics as global markets, products and than 5,000 professional risk managers in
counterparty relationships become increasingly complex.” Germany and the UK. The purpose of the
survey was to learn about the technology
The study also reveals further issues faced by risk manag- which risk managers are using or plan-
ers: some complain they have to deal with too many different ning to acquire, how often they update
databases (24%), another 15% think their databases are too results, and the role of the front and back
slow and 11% say new features and analytics are either too time office in risk management. It uncovered
consuming or expensive. some interesting contradictions—risk
Greenough continued, “Data integration and integrity are keys managers often appeared relatively
to effective enterprise risk management. With less than 40% of content with systems which failed to give
survey respondents reporting adequate system integration it them all the information they need to do
appears data silos continue to be prevalent in many financial their work.
29
ISJ Analyse this: Corporate actions
How can corporate actions automation support the

growth of securities lending?
Securities lending is one of the fastest growing activities in Automating corporate action processing on these lent positions
the capital markets space. Manmohan Singh, Global Head of would considerably reduce the complexity and its associated
Product Leadership at Information Mosaic, discusses how to risk, freeing analysts to focus on adding value for their clients.
manage system scalability and operational risk to capitalise on
the opportunity. One of the biggest challenges custodians face – and where
breakless corporate actions
processing could help - is deter-
mining the entitlement benefits
of a corporate action event on a
lent position. As the title of the
security transfers to the bor-
rower, the borrower becomes
the legal owner of the security,
receiving all dividend payments
and any other rights, such as
voting, until the loan is settled.
However, depending on the

underlying arrangement,
these entitlements may need
to be ceded back to the lender,
typically from manufactured
benefits. Custodians then need
to compute obligations ac-
cording to contractually agreed
Securities lending processes have undergone considerable terms and tax regulations, creating complexities around benefit
refinement due to the complex and dynamic nature of the computation, position reconciliation, election management,
business, but standard industry practices are still in their taxes, and claims when processing the corporate event. Lack of a
infancy. After a period of consolidated view of all books/positions can lead to high levels
Yet the securities rapid growth and with of manual intervention and narrative, adding to interpreta-
lending and the current emphasis
on transparency, the
tive risk. An integrated, single view not only helps in paperless
processing but also lowers breaks, reducing reconciliation issues,
borrowing traditional approaches to and improving workflow within the front, middle and the back
business cannot managing securities lend-
ing are struggling to keep
office.
be underestimated pace with business and The adoption of existing market standards to correctly report
in terms of industry requirements,
creating system scalability
positions out on loan along with other positions types would
also help the flow of information. The problem is that static
business potential and risk issues for the data in corporate actions legacy systems often can’t support the
industry. Yet the securi- maintenance of trade agreements at relationship- or deal-level.
and enormous ties lending and borrow- Digitising the agreements between participants would cater
opportunities it ing business cannot be
underestimated in terms
for all downstream processing, simplifying the manufacture of
corporate action benefits and taking care of tax regimes.
presents. of business potential and Getting the right operational and technology infrastructure in
enormous opportunities place is going to be key to controlling cost, managing risk, and
it presents. supporting new and existing regulation as the industry contin-
From an operational and technology standpoint, these solu- ues to grow. The solution lies in identifying processes - such as
tions have historically focused on either using upgraded legacy claim identification, attribution and calculation (including tax)
or highly manual systems. The over-the-counter nature of the - which can be automated to remove unnecessary breaks which
business, where each deal has individual nuances, is already require manual intervention. Custodians are then able to build
straining these systems; lending analysts spend a high percent- claim instruction mechanisms which are sophisticated and
age of their day just looking for the data needed for servicing flexible enough to be automatically generated on pre-configured
loaned assets instead of providing value-added services to days, and can focus their attention on offering innovative
clients. products and services.
30
Spotlight on: Safekeeping founds
Safekeeping funds: A new challenge ahead

by Mario Mantrisi
even more important, because of the risks involved in trans-
The Depository Trust and Clearing Corporation (DTCC), the lating the terms and conditions of a corporate event into a
central securities depository for the U.S., has made forays formatted message for use by all intermediaries and end in-
into the European market for at least the last several years. vestors. Tools that help to extrapolate the relevant data from
Initiatives range from the 2008 alliance with Swift and XBRL the prospectus, which minimise typing errors, will certainly
US to leverage the Swift-sanctioned ISO 20022 message help to reduce such concerns. In the Belgian, Dutch and
formats for corporate actions to the July announcement French markets, Euroclear has already asked issuer agents
to open a trade reporting repository in London under its to use a new fax template, which is based on the ISO 20022
new subsidiary, the DTCC Derivatives Repository Ltd. The data model, to help them get prepared for fully automated
repository will be an extension of the New York-base trade communication using the new message standard.
information warehouse and contain credit default swap data. “It is important that the XBRL taxonomy adopts the ISO
20022 data and business model and, therefore, ensures
“DTCC is not attempting to compete with CSDs in Europe interoperability with XML messaging,” said De Pauw. “It
or anywhere else,” said Daniel Thieke, vice president, DTCC is also important to note that for the Eurobond market, we
asset services. “The creation of the Derivatives Repository are working to agree on market-practice and information
Ltd was required by European lawmakers to help assuage standards. Such initiatives should also be leveraged when
fears regarding our already existing global repository for defining XBRL taxonomies.”
OTC credit derivatives based solely in the U.S. and subject
to U.S. supervision.”
Yet the DTCC’s moves also highlight the uniqueness of the
European markets and corporate actions processing is an
example. Euroclear itself has already entered the messag-
ing space with its issuer agent messages that are ISO 20022
compliant and Swift sanctioned.
That doesn’t mean automated corporate actions are the
rule at Euroclear, however. The Brussels-based CSD still
struggles with paper coming from its issuers. “Currently, as
part of our issuer CSD business, Euroclear sources corpo-
rate action information directly from the issuer, often by fax,”
said Edwin De Pauw, director and head of Euroclear’s Single
Platform and Market Harmonisation team. “As part of our
investor CSD business, Euroclear sources corporate action
information from well-established data vendors.”
“We are now in the process of completing a major strategic

programme known as Euroclear’s ‘Single Platform’, in part
to further enhance our asset-servicing capabilities.” said De
Pauw. “A key element of the programme involves end-to-
end automation of information flows and, in this context,
Euroclear took on the leading role in developing ISO mes-
saging for issuer agents that disseminate corporate action
information. The business justification for the new standard
was approved by ISO in 2006 and the new ISO messages
went live in 2009.”
Euroclear’s new Single Platform will accept ISO 20022

messages from issuers or their agents, and will also provide
them with a screen interface from which they can generate Euroclear is not a member of XBRL US, but DePauw added
such messages. De Pauw added, “We see XBRL as a way that they are in regular contact with their (XBRL US) repre-
to help issuers generate ISO 20022 messaging, and we are sentatives in order to ensure market standards consistency
open to expanding its use within Euroclear once issuer inter- within the corporate actions domain globally.
est is confirmed.” Like Euroclear, Clearstream is concentrating on normalis-
ing data within its own market, not to the exclusion of
So far, issuers don’t seem to be first movers. The vagaries pan-industry standardisation, but with a view toward giving
of local market practice are at least part of the reason. “We priority to its own markets. “At Clearstream Banking, we
expect some hesitancy from issuers in implementing ISO have implemented a workflow management tool which
20022 corporate action information messaging,” De Pauw compares fields from a variety of different data providers,”
stated, “not only because of the cost of investment but, said Mathias Papenfuss, head of operations at Clearstream.
31
Spotlight on: Partnership and alliances
“They are then allocated a risk weighting. This is done by

taking into account numerous factors, including the past
Playing to one’s strengths
payment history of an asset. The workflow tool assesses
whether an appropriate level of reliability has been achieved
by either producing a golden copy or by creating an excep-
tional workflow item
“At Clearstream that can be reviewed
Alain
Banking, we have by our operations
specialists. This data Closier,
implemented cleansing and scrub-
global head
bing functionality is
a workflow used for corporate
of Societe
management tool action and income
event information Generale
which compares gathering.”
Securities
Papenfuss said
fields from a variety Clearstream is fully
Services.
of different data compliant and stand-
ardising around ISO Playing to one’s strengths is a relatively simple thing to
providers” 15022 formats. “It do. Consider the England association football team and
should be noted that its assortment of players of varying abilities, many of them
ISO 15022 compli- simply not very good. When confronted with a scenario in
ance varies in each which they know exactly what they have to do – say, for
local market.” He said. “It’s exactly in this area where the example, beat Slovenia – they do what comes naturally [this
co-operation with issuers is critical and of utmost impor- was written before the events of June 27 in the World Cup in
tance.” Bloemfentein]. Refer to 4-4-2 and get stuck in. No mess-
ing around with attempts at continental European or Latin
Due to multiple markets and processes, standardisation in American sophisticated football, just turn up the volume in
Europe is more challenging than in the U.S. The European the dressing room, charge around the field like maniacs, and
Central Securities Depository Association (ESCDA) took deliver the goods.
steps in 2004 to remove barriers to effective settlement
identified by the Giovannini Group. Barrier 3 concerned the Recognising one’s weaknesses in the first place, that is the
harmonisation of corporate actions and pre-dates XBRL- hard part of the equation. It can take great personal and in-
DTCC S.W.I.F.T.’s corporate action initiative - even if XBRL stitutional courage to admit to oneself and to the world that
attempt to solve problems ESCDA didn’t’ address. one has a weakness. But as with alcoholics or drug addicts
“In Europe the removal of Giovannini Barrier 3 has led to who might have a chance of weaning themselves off their
the establishment and endorsement of corporate actions addiction, admission of weakness is a necessary, if painful,
standards in 2009,” said Papenfuss. “In the implementation first step.
phase of these standards the banks, market infrastructures
and data vendors are heavily dependent on the willingness It is refreshing then, to hear of not just one major financial
of the issuer community to contribute to the success of the institution, but two, own up to weakness when announcing
harmonization across multiple markets. Similar interdepend- a major new initiative. This is what Societe Generale Securi-
encies have been identified in the most recent International ties Services (SGSS) and U.S. Bancorp Fund Services, LLC
Securities Services Association ISSA report on corporate (USBFS) did in announcing the launch of their Global Secu-
actions in June 2010 as well.” rities Services Alliance TM (GSSA). The formal announce-
ment is couched in
While Clearstream is actively following the development of “Our commercial the usual corporate-
the XBRL-Swift DTCC, Papenfuss said, “Based on the bilat-
eral discussions in exploring the details of the initiative, it’s
partnership with speak, telling how this
new commercial alli-
too early to transport it into other markets - Europe, for ex- U.S. Bancorp Fund ance leverages each
ample - as the actual delivery and implementation is pend- organisation’s geo-
ing. Finding the right incentives and momentum to involve Services provides graphical and product
issuers in this process is key. How and when this is going
to happen remains to be seen.” Meanwhile, Clearstream
investment managers expertise to provide
comprehensive
is supporting the adoption of best market practice at the with the financial fund services for all
source of information, the issuance community. U.S.- and European-
strength of both domiciled funds with
organisations,” complete securities
services and broader
global support.
32
“Our commercial partnership with U.S. Bancorp Fund The GSSA commercial alliance between USBFS and SGSS
Services provides investment managers with the financial combines both companies’ service models to offer global
strength of both organisations,” said Alain Closier, global administration, shareholder servicing, distribution support,
head of Societe Generale Securities Services. “It allows capital introduction support, product development, securi-
clients to access industry leading technology, key adminis- ties lending, trustee services, credit facilities, and middle of-
tration services, and the tools necessary to be successful fice solutions. Investment managers seeking a single source
in the global investing market. Clients benefit from premier for servicing global products are able to receive 24-hour glo-
transatlantic services that are not necessarily available today bal support. Each of the two organisations brings significant
through one single organisation.” industry tenure and best-in-class reputations within their
respective local markets.Compelling interest
In simple terms What he means in simple terms is that “The growing interest in global distribution is quite compel-
previously SGSS had to shrug its col- ling,” said Joe Redwine, president of USBFS, in a quote
lective shoulders dolefully and say no tucked away towards the end of the official announcement.
when asked if it could provide clients “We are pleased to offer this innovative commercial alli-
in its home region, Europe, Middle ance with SGSS, one of the leading European investment
East and Africa, if it could service their management services providers [one suspects that these
needs in the USA. SGSSs’ coverage words originated from the Tour SGAM SGSS WHQ in Paris
of the USA was somewhere around rather than with Mr Redwine, but shame on us for being so
approximately zero. Now it can smile cynical; that’s the corrosive effect of more than a quarter-
broadly and say to those clients, at the century on the front line of international financial journalism].
risk of breaching President Obama’s “Their European expertise and presence, both in the product
copyright on the phrase: “Yes, we can!” offerings and in the countries where they are distributed, will
The reverse is true for USBFS, which provide our clients with strong regulatory support, distribu-
can now offer the growing number of tion services, and global access to investor market trends
US-based clients who are looking for a across Europe.”
way into EMEA that previously did not
exist. For those who might not already know, Societe Generale is
fond of telling the world that is one of the largest financial
“One approach to the problem that we had previously was services groups in the euro-zone. It is one of the largest
to identify an institution in the US that has strong relation- banks in the euro-zone in terms of assets under custody
ships with US fund managers but little or no infrastructure in (€3,246bn, March 2010) and under management (€164bn
EMEA,” observes Sebastien Danloy, global head of sales at excluding Amundi, March 2010). Established in 28 locations
SGSS. “USB might not be a well known name in EMEA but worldwide with more than 4,000 employees, SGSS provides
it has a 20-25% market share in its home market. There are a full range of securities services that are adapted to the
750 US mutual sponsors, for example; of those, 207 are cli- latest financial markets and regulatory evolution: clearing
ents of USB. And there are around 7,000 fully active funds in services, custody and trustee services, retail custody serv-
the US; of those, 1,323 are clients of USB. The fit between ices, liquidity management, fund administration and asset
our two organisations is an excellent one. They want help in servicing, fund distribution and global issuer services. SGSS
EMEA. We want a way in to the US. Hence, the alliance.” is currently the sixth-largest worldwide global custodian and
the second-largest in Europe.
It might be an unfamiliar name to some, but U.S. Bancorp,

with $282 billion in assets as of March 31, 2010, is the par-
ent company of U.S. Bank, the fifth-largest commercial bank
in the United States. The company operates 3,025 banking
offices in 24 states and 5,312 ATMs and provides a compre-
hensive line of banking, brokerage, insurance, investment,
mortgage, trust and payment services products to consum-
ers, businesses and institutions.
Since 1969, U.S. Bancorp Fund Services has supported

investment managers, banks, and broker-dealer firms
sponsoring mutual funds with assets ranging from the level
of start-up to $88bn. Established exclusively to serve the
unique needs of registered and unregistered products, it is
headquartered in Milwaukee, Wisconsin and provides com-
prehensive mutual fund and alternative investment services
to 273 fund complexes with 1,635 portfolios and aggregate
assets of $590bn.
33
SGSS & NBAD to Expand Securities Services Coverage

Societe Generale “Following the licensing of NBAD as the first UAE Custo-
“This commercial Securities Services dian by Emirates Securities and Commodities Authority, we
agreement with (SGSS) and the
National Bank of Abu
are now positioned for greater opportunities regionally &
globally. This agreement expands the coverage and range of
the number one Dhabi (NBAD) have
signed a commercial
services provided to both NBAD and SGSS clients.”
bank in the United agreement which Alain Closier, head of SGSS, said “This new commer-
Arab Emirates, is a capitalises on their
abilities to securi-
cial agreement is another illustration of our development
strategy to build on our strong pan-European platform and
clear indication of ties services in their
respective regions.
offer local expertise and resources to foreign players who
are increasingly interested in accessing European markets.
Societe Generale’s We can now bring additional value to our clients by offering
commitment to The commercial
agreement allows
them direct access to the leading local securities services
provider for the GCC countries.”
developing its SGSS, the world’s
sixth-largest global Commenting on the importance of the GCC countries to
presence in the custodian and the Societe Generale Eric Wormser, Societe Generale group rep-
region.” second-largest in
Europe, and NBAD,
resentative for the Gulf region said: “This commercial agree-
ment with the number one bank in the United Arab Emirates,
the first licensed is a clear indication of Societe Generale’s commitment to
securities custodian in the UAE, to expand the geographical developing its presence in the region.”
coverage of their securities services.
“Using SGSS as a preferred provider will allow us to offer
SGSS says that each business will benefit from the other’s our local clients the range of securities services available
strengths by leveraging its product expertise in order to from one of Europe’s leading Custodians,” said Hany Samir,
provide comprehensive solutions and broader global sup- the Head of NBAD Custody Services. “NBAD is a forward-
port to European- based institutions and clients in the Gulf looking bank that devotes considerable capital, care and
Co-operation Council (GCC) countries. effort to innovating the best-in-class financial products and
services for all of our clients here in the UAE and across the
“NBAD is actively and prudently expanding its services by GCC.
capitalising on its strengths and advantages,” said Rüdiger
von Wedel, the senior general manager of Global Wealth
Division of National Bank of Abu Dhabi.
34
Eurex Options on Exchange Traded Funds

ETF as the hedge), than doing it on the index itself and
Exchange-Traded Funds, better known as ETFs, celebrate struggle to get the hedging right. ETF options could there-
their 10th anniversary in Europe this year. The product has fore pave the way for exchanges to cover more markets with
found its way from the U.S into Europe and has seen an liquid options. In return, the ETF issuers, who often act as
impressive growth in virtually every category: assets man- liquidity provider, can expect positive effects on the assets
aged, funds offered, traded volumes as well as the number under management.
of issuers, exchanges and user groups involved.
ETF options encourage trading options on the underlying
In Europe, currently over $200bn are invested in ETFs, and A look into the U.S. market reveals the potential for ETF
an increasing number of issuers and investors is asking for options. For the first time, the number of ETF options being
options on those underlyings. To meet the market’s needs, traded on eight different U.S. option exchanges exceeded
Eurex Exchange has extended its ETF segment by launch- one billion in 2008. It is interesting to see that the growing
ing new options. In May 2010, three options on ETFs by use of ETF options has not had a negative influence on the
Deutsche Bank were launched, more precisely on the db corresponding cash-settled options on the same underly-
x-trackers MSCI Emerging Markets, MSCI Europe and ing. In fact, the opposite is the case: cash-settled options
MSCI World. Only a few weeks later, Eurex added options have flourished after ETF options on the same underlying
on seven ETFs listed by Source, focussing on their STOXX had been listed in parallel. We are eagerly waiting to see if
Europe 600 Optimised sector ETFs. Altogether, they com- this product group becomes similarly successful in Europe,
plement the existing products on iShares DAX and EURO but the first few weeks of trading have been encouraging
STOXX as well as the Credit Suisse ETF on SMI, which were with open interest in the newly launched options exceeding
already listed back in 2002, when ETFs in Europe were just 38,000 contracts by end of July.
about to take off. It is very likely that further options on ETFs
will follow soon, on other issuers. The product can either be traded based on the perma-
nently generated quotes shown on the Eurex screen, or by
ETFs – the additional opportunity for trading equity indices contacting the Market Makers directly: Deutsche Bank is
ETFs provide investors with an opportunity to trade broader the market maker for the options on db x-trackers ETFs,
indices in just one single trade, similar to trading shares. Be- whereas the banks behind the Source consortium (Goldman
fore ETFs were made available to the market, indices were Sachs, Morgan Stanley, BoA Merrill Lynch, Nomura and JP
tradable either via basket trades (with more transactions Morgan) are the liquidity providers for the options on Source
involved), index swaps and structured products (including ETFs, with Nomura acting as on-screen market maker.
counterparty risk) or futures (for which a margin account is
necessary).
About the author
With the growing amount of money invested in ETFs and
increased trading activity, institutional investors have started Ralf
to look for a safe and sound way to trade optionality on
those ETFs. They might want to get short-term protection Huesmann
for their ETF positions without having to sell them, or they
could try to generate extra revenues by selling call options. Ralf Huesmann works in
With Eurex Exchange’s new offering, they can also trade the Product Development
many other strategies expressing views on the direction of Department of Eurex in
the market or the volatility. Eurex’s options on ETFs cover London, focussing on in-
expiries up to two years. dex products. He is respon-
sible for the development
In the past, the only liquid, exchange-traded equity in- of new index derivatives in
dex products in Europe were cash-settled options on the asset classes like equities
relevant national benchmark indices like DAX, SMI or FTSE and commodities. Hues-
100 or the most important benchmark index for the Euro- mann is the main contact
zone, the EURO STOXX 50. within Eurex for product-related topics on benchmark prod-
ucts like futures and options on the EuroSTOXX and DAX.
The search for liquidity
For other underlying indices like MSCI World or MSCI
Before joining Eurex at the end of 2004, Huesmann worked
Emerging Markets, it is more difficult to find liquidity provid-
at Deutsche Boerse in the index development team. He holds
ers, as those indices cover different time zones, currencies
and exchanges. In this context, options on ETFs are offering a degree in Mathematical Economics from the University of
new trading opportunities: as the ETF itself is already traded Bielefeld, Germany.
and quoted on Xetra by a number of market makers, it is
easier to trade options on that particular ETF (and use the
35
The ISJ Profile Tony Klim
from the EMEA region, through offices in London, Tonbridge,

Manchester, Edinburgh, Luxembourg and Warsaw. Klim
particularly enjoys visiting Warsaw, where the people and
work ethic are nothing short of remarkable, he feels, but that
possibly reflects a bias born from his father’s being Polish.
Jan Klim, after spending time in a Siberian labour camp,

arrived in England in the early days of WWII, and became a
lieutenant in the Royal Navy. “I’m very proud of him,” says
Klim, and it is indeed difficult not to allow his father to hijack
this profile. After the war, Klim Sr attended Battersea Col-
lege, later to become the Guildford-based Surrey University,
and become one of the country’s leading metallurgists. He
Tony Klim met an English girl, Iris, and they married in the early 1950s.
Klim Jr arrived on the scene in March 1958, born in Chelsea,
but not, he insists, the ‘posh’ part. Although today he lives
in a house near Cheltenham, which he and his wife, Julie,
whom he met in 1982 while was studying for her PhD con-
Profile: Tony Klim verted back from being a hotel after buying it in 2001.
Graduated from Manchester He went to Boswell House primary school in Hayes, Mid-
University in 1979 with a degree dlesex, near Heathrow Airport. His secondary school was
the Salvatorian College, a grammar school in Harrow run by
in Physics, and began his adult the Salvatorian order of priests, whose primary instrument
business life working for Software of torture was the cane or slipper. Anyone of that genera-
tion who experienced a strict Catholic education will have
Sciences, which became part of an instinctive understanding of the standards of work and
performance and discipline expected of even the humblest
IBM. pupil. Even the most virtuous and hardest working will have
He then joined System suffered corporal punishment at one time or another, the
severity of which would be regarded as barbaric by modern
Designers, which became part of western educational standards. An everlasting sense of
guilt, even when entirely innocent, thus became embedded
EDS. in the individual and collective psyche.
It somehow seems very appropriate that the chief executive He then joined System Designers, which became part of
officer (EMEA – Europe, Middle East and Africa) of Bravura EDS. “I served my apprenticeship with several big names
Solutions is a keen skier. There are, after all, direct and indi- in the 1980s, with a lot of my early work being in defence
rect analogies between being at the head of a high-growth systems,” he says. “Secure communications and command
company in testing economic times. The thrill of the growth and control systems were very hi-tech, and it became clear
can be likened to the thrill of descending rapidly down a that they could be applied to financial services, especially
steep slope with only a helmet and a bit of Lycra for protec- banking, where networks were very much needed to sup-
tion. The potential for danger should concentration slip for port card technology and payment systems.”
even a moment is self-evident.
Having hit on his niche, Klim joined a small privately held
Tony Klim (full name Anthony Brian Klim) is not only a keen start-up company, The Software Partnership. He worked
skier, he is also an eager sailor. Cue a series of obvious ref- there as a director and consultant from the mid-1980s to
erences to learning the ropes, man overboard and navigat- the mid-1990s helping to service a client list which boasted
ing awkward hazards. Strangely, though, the formal sailing most major UK and European banks. The company became
qualifications in his family belong not to him, but to his wife. a leader in direct electronic banking, he recalls, in the days
He is more of a leisure sailor on their family summer jaunts before the internet exploded into general usage. The found-
sailing in the Caribbean, and around Greece and Turkey. Mrs ers sold The Software Partnership to Deluxe Corp of the US
Klim is firmly in charge, running a tight ship. in 1994, and he stayed with Deluxe as head of international
marketing until 1998.
Just as Klim himself does in his post at Bravura Solutions,
an Australia-based provider of transfer agency services and In 1998 he accepted an invitation to join Marlborough Stir-
software to top financial institutions, and wealth manage- ling, at the time a 200-man outfit focused on new technol-
ment services. International known clients include Citigroup, ogy for the life insurance and pensions market. As director
Schroders, Invesco, J. P. Morgan Worldwide Securities of strategy, he drove the company through a period of rapid
Services, GAM and BNY Mellon. Despite being listed in growth, a combination of organic and by acquisition.
Australia, Bravura today derives around 70% of its business This took staff numbers to around 2,000 in six offices in the
36
The ISJ Profile Tony Klim
UK (three), Italy, Isle of Man and Cape Town. The company

floated in 2001, and he eventually left in 2006, spending the
next two years working with several private companies on
buyout opportunities in the investment market. He became
interested in Bravura and the inroads it was making into the
UK in 2007. “The company asked me to carry out a stra-
tegic review of the
“The company asked business. I liked it so
me to carry out a much that I decided
to join it in 2008, and
strategic review of the business has
grown strongly since,
the business. I liked making two acquisi-
it so much that I tions in that time.”
decided to join it The first was a buyout

of the Citigroup Euro-
in 2008, and the pean transfer agency
business has grown software operation
based in Poland. The
strongly since, making second, in June 2010,
was the purchase
two acquisitions in of Mutual Fund
that time.” Technologies from
Fidelity. This purchase
brought with it not
only software but also Schroders, Invesco, J. P. Morgan
WWS and GAM as clients, as already mentioned. Bravura
will not be resting on its laurels any time soon. “We are
pushing ahead with Bravura’s high growth strategy, based
on industry knowledge and expertise,” he says. “We are
openly acquisitive going forward. My skills lie in identifying
opportunities, executing them, and integrating the compa-
nies bought into our business.”
Klim learnt skiing in a typically British way, traipsing up to

the Scottish ‘ski resort’ of Aviemore from Manchester with
his university friends, donning duffle coats, tying themselves
to wooden skis, and throwing themselves downhill until they
found they could ski. Amongst his favourite pistes he lists
Lake Louise in Canada, between Calgary and Vancouver. “It
is very quiet, and my two teenage daughters [both educated
at Cheltenham Ladies College] love it with its log cabins,
moose heads and log fires. We can ski on Christmas Day,
and it’s my idea of heaven.” He also enjoys the very different
Courchevel/Miribel area. Remarkably, he has yet to break a
bone on the pistes, though admits to having come close, on
a black run known as The Wall in Avoriaz in France. “It’s a
very steep mogul run,” he says. “People have serious acci-
dents there every year; I’ve landed on my head a few times.”
Other less dangerous interests, apart from the building

project that is the house near Cheltenham, include going to
the races nearby with his family. “We love the Cheltenham
Gold Cup [held in March each year] and the whole social
scene.”
Remaining ambitions are to be involved in at least one more
major stock market flotation. ISJ wishes him well in the
future of what has already been, by any standards, a packed
life and fulfilling career.

US and Technology Focus
DTCC ACQUIRES AVOX LTD.

In what industry insiders are depicting as a move of majority of shares in Avox, formally closed the transaction
extreme rarity, the Depository Trust & Clearing Corpora- with DTCC on July 1. Under the terms of the deal, the two
tion (DTCC) has acquired the outstanding shares of Avox founders of Avox, the aforementioned Ken Price and the
Limited, a reference data business located in Wrexham, in not previously mentioned Steve French, who were also
the Principality of Wales. “The DTCC rarely acquires other minority shareholders, will head the company in the capac-
firms,” observed one industry veteran. “They’re a utility, this ity of chief executive officer and chief operating officer,
isn’t how they operate. I’m reading this as an anti-money respectively.
laundering or fraud play although why now? Or perhaps
it’s an over-the-counter derivatives play? Maybe it was a “The market has long searched for a true industry-owned
case of this company becoming available and the price was utility platform for business entity reference data. Combin-
right.“ ing Avox’s proven capability to deliver high quality content
with the DTCC’s networked community of users and user
Pat Kirby, DTCC managing director, asset services, and governance is exactly what firms have been asking for.”
Ken Price, chief executive officer of Avox, moved quickly said Price, CEO. “What I find particularly exciting is the
to quash any suggestions of AML or fraud considerations. DTCC’s willingness to collaborate with other infrastructure
In a tunnel-interrupted telephone conversation with ISJ organisations around the world to create a global industry
that began as they took the two-hour train journey back to standard for company related data. By combining our ca-
London the day after completing the deal, and gave way to pabilities with DTCC and those of our clients and partners,
a straight, virtual question and answer session, they spelt we’re in an excellent position to help the industry better
out the details of a deal that provides a missing piece for mitigate risk, achieve operational efficiencies and reduce
the DTCC jigsaw. their internal compliance costs.”
Avox Limited’s primary business is cleansing and maintain- Avox clients include major financial firms such Citi, Bar-
ing reference information on legal entities and counterpar- clays, Nomura International, Standard Bank, Mizuho,
ties needed by financial services to support a variety of Allianz, Eurex, SWIFT, Mitsubishi UFJ and Royal Bank of
operational, risk management and regulatory compliance Canada.
activities, including know your customer (KYC) and anti-
“The company asked money laundering
(AML) reporting. Avox
DTCC says it has a growing range of data management
and reference data services aimed at helping its custom-
me to carry out a provides an auto-
mated, centralised
ers around the world improve operational efficiency and
mitigate risk, including its Global Corporate Action (GCA)
strategic review of corporate data- Validation Service, which provides a centralised source of
the business. I liked base resource, with
readily accessible
scrubbed information on corporate actions, e.g., tender
offers, conversions, stock splits, dividends and nearly
it so much that I information on the
legal name, address,
100 other types of events for equities and fixed income
instruments for more than two million securities from 160
decided to join it corporate hierarchies, countries; its New Issue Information Dissemination System
in 2008, and the immediate and ulti-
mate parent, industry
(NIIDS), part of the underwriting process, provides data on
municipal bonds, equities and corporate bonds that are
business has grown sector codes, com-
pany identifiers, and
DTC-eligible to vendors, dealers and market participants;
and security data from its masterfile, which provides basic
strongly since, making regulator information information on all securities handled by DTCC’s depository.
two acquisitions in applicable to these
companies.
that time.”
“The need for accurate, well maintained reference data
on securities and legal entities is a growing priority for the
financial services industry, to help manage credit expo-
sure, meet new regulatory compliance requirements and to
improve transparency from the issuer to the end investor,”
said Kirby. “The acquisition of Avox is a natural comple-
ment and part of a global strategy DTCC has underway to
provide our customers with a full suite of value-added data
capabilities.
The all-cash deal valued the business at a low double digit

million sterling figure. Deutsche Börse, which held the
38
US and Technology Focus DTCC ACQUIRES AVOX LTD
Express
Briefing
With Pat Kirby, DTCC managing direc- In Context

tor, asset services, and Ken Price, chief By Michael Atkin, managing director, EDM Council
executive officer of Avox,
ISJ: Will the Avox database be stan- I think this is fairly straightforward and logical.
dalone or will it be integrated into ex-
isting DTCC database(es). How many • Reference data is hot because it is a required factor
different databases/data warehouses of input into the business processes of financial institutions as
does the DTCC have? well as for system-wide supervision of global financial mar-
kets. Getting the data right and achieving the prime directive
DTCC/Avox: Avox will continue to (i.e. achieving trust and confidence that the data needed for
operate its central business entity business and regulatory oversight is fit for purpose without
database and will integrate data from reconciliation and transformation) is essential.
it into various DTCC data services.
DTCC has multiple databases and data • DTCC is an industry-owned utility and its mem-
warehouses.
bers (clients) have a series of problems ensuring that the data
they use for processing, share among their counterparties and
ISJ: Are the Avox data formats similar
to DTCC’s?
report to regulators is trusted and comparable. DTCC clients/
members are simply looking to DTCC to help them with a
DTCC/Avox: Avox can publish content recognised problem and one that is common to all financial
in multiple formats and will be develop- institutions (as well as to regulators).
ing an integration with DTCC stand-
ards.
• The acquisition of Avox fills a void and provides
ISJ: Are there any integration issues? needed capability in entity data management. The clientele of
DTCC provides a ready avenue of future customers to Avox.
DTCC/Avox: Avox will become a sub- Smart business move.
sidiary of DTCC and will continue to
operate under the Avox name. • DTCC already has lots of experience with instrument
reference data (as depository, with corporate actions, with NI-
ISJ: Are Avox employees going to IDS and source tagging, with standards, etc.) and now acquires
remain in their jobs and if so, will they expertise in entity data.
become DTCC employees when the
deal is done?
• The trend within the industry is toward better
DTCC/Avox: Current employees,
including contract employees, of Avox
management of the data chain of supply (i.e. get the data right
will remain with the company. from the point of issuance) as a utility for the industry. DTCC
would be a natural candidate to manage/run such a utility.
ISJ: The press release says: “The DTCC also has good relationships with other depositories (for
market has long searched for a true global coordination) as well as with other industry utilities
industry-owned utility platform (such as S.W.I.F.T.). This is good positioning for the future
for business entity reference data.” It while addressing a real data problem in the interim.
almost sounds like DTCC is replacing
an existing database with Avox. If that’s • Some of the important areas to address would be global
the case, why are they doing this now? co-ordination, data utility management, relationship to and
experience with ISO/standards processes. The industry needs
DTCC/Avox: The Avox business entity a coordination mechanism and I can’t think of a better one
database is complementary to data- than DTCC. Don’t forget to address commercial concerns and
bases and warehouses currently man- relationship with data vendors. Go forth and conquer. Don’t
aged by DTCC. DTCC is not replacing hesitate to ask if you need additional from me.
an existing database.
39
US Technology Focus
Euroclear and Clearstream: Still Competing, but Both

XBRL Agnostic
By John Sandman
Euroclear’s new Single Platform will accept ISO 20022
The Depository Trust and Clearing Corporation (DTCC), the messages from issuers or their agents, and will also provide
central securities depository for the U.S., has made forays them with a screen interface from which they can generate
into the European market for at least the last several years. such messages. De Pauw added, “We see XBRL as a way
Initiatives range from the 2008 alliance with Swift and XBRL to help issuers generate ISO 20022 messaging, and we are
US to leverage the Swift-sanctioned ISO 20022 message open to expanding its use within Euroclear once issuer inter-
formats for corporate actions to the July announcement est is confirmed.”
to open a trade reporting repository in London under its
new subsidiary, the DTCC Derivatives Repository Ltd. The So far, issuers don’t seem to be first movers. The vagaries
repository will be an extension of the New York-base trade of local market practice are at least part of the reason. “We
information warehouse and contain credit default swap data. expect some hesitancy from issuers in implementing ISO
20022 corporate ac-
“We are now in “DTCC is not at- tion information mes- “It is important that
tempting to compete
the process of with CSDs in Europe
saging,” De Pauw
stated, “not only
the XBRL taxonomy
completing a major orsaidanywhere else,”
Daniel Thieke,
because of the cost adopts the ISO
of investment but,
strategic programme vice president, DTCC even more important, 20022 data and
asset services. “The
known as Euroclear’s creation of the De-
because of the risks
involved in translating
business model and,
‘Single Platform’, rivatives Repository
Ltd was required by
the terms and condi- therefore, ensures
tions of a corporate
in part to further European lawmakers event into a format- interoperability with
to help assuage fears
enhance our asset- regarding our already
ted message for use
by all intermediaries
XML messaging”
servicing capabilities.” existing global repos-
itory for OTC credit
and end investors.
Tools that help to extrapolate the relevant data from the
derivatives based prospectus, which minimise typing errors, will certainly help
solely in the U.S. and subject to U.S. supervision.” to reduce such concerns. In the Belgian, Dutch and French
markets, Euroclear has already asked issuer agents to use
Yet the DTCC’s moves also highlight the uniqueness of the a new fax template, which is based on the ISO 20022 data
European markets and corporate actions processing is an model, to help them get prepared for fully automated com-
example. Euroclear itself has already entered the messag- munication using the new message standard.
ing space with its issuer agent messages that are ISO 20022
compliant and Swift sanctioned. “It is important that the XBRL taxonomy adopts the ISO
20022 data and business model and, therefore, ensures
That doesn’t mean automated corporate actions are the interoperability with XML messaging,” said De Pauw. “It
rule at Euroclear, however. The Brussels-based CSD still is also important to note that for the Eurobond market, we
struggles with paper coming from its issuers. “Currently, as are working to agree on market-practice and information
part of our issuer CSD business, Euroclear sources corpo- standards. Such initiatives should also be leveraged when
rate action information directly from the issuer, often by fax,” defining XBRL taxonomies.”
said Edwin De Pauw, director and head of Euroclear’s Single
Platform and Market Harmonisation team. “As part of our Euroclear is not a member of XBRL US, but DePauw added
investor CSD business, Euroclear sources corporate action that they are in regular contact with their (XBRL US) repre-
information from well-established data vendors.” sentatives in order to ensure market standards consistency
within the corporate actions domain globally.
“We are now in the process of completing a major strategic
programme known as Euroclear’s ‘Single Platform’, in part Like Euroclear, Clearstream is concentrating on normalis-
to further enhance our asset-servicing capabilities.” said De ing data within its own market, not to the exclusion of
Pauw. “A key element of the programme involves end-to- pan-industry standardisation, but with a view toward giving
end automation of information flows and, in this context, priority to its own markets. “At Clearstream Banking, we
Euroclear took on the leading role in developing ISO mes- have implemented a workflow management tool which
saging for issuer agents that disseminate corporate action compares fields from a variety of different data providers,”
information. The business justification for the new standard said Mathias Papenfuss, head of operations at Clearstream.
was approved by ISO in 2006 and the new ISO messages “They are then allocated a risk weighting. This is done by
went live in 2009.” taking into account numerous factors, including the past
40
payment history of an asset. The workflow tool assesses standards in 2009,” said Papenfuss. “In the implementation
whether an appropriate level of reliability has been achieved phase of these standards the banks, market infrastructures
by either producing a golden copy or by creating an excep- and data vendors are heavily dependent on the willingness
tional workflow item that can be reviewed by our operations of the issuer community to contribute to the success of the
specialists. This data cleansing and scrubbing functionality harmonization across multiple markets. Similar interdepend-
is used for corporate action and income event information encies have been identified in the most recent International
gathering.” Securities Services Association ISSA report on corporate
actions in June 2010 as well.”
Papenfuss said Clearstream is fully compliant and standard-
ising around ISO 15022 formats. “It should be noted that While Clearstream is actively following the development of
ISO 15022 compliance varies in each local market.” He said. the XBRL-Swift DTCC, Papenfuss said, “Based on the bilat-
“It’s exactly in this area where the co-operation with issuers eral discussions in exploring the details of the initiative, it’s
is critical and of utmost importance.” too early to transport it into other markets - Europe, for ex-
ample - as the actual delivery and implementation is pend-
Due to multiple markets and processes, standardisation in ing. Finding the right incentives and momentum to involve
Europe is more challenging than in the U.S. The European issuers in this process is key. How and when this is going
Central Securities Depository Association (ESCDA) took to happen remains to be seen.” Meanwhile, Clearstream
steps in 2004 to remove barriers to effective settlement is supporting the adoption of best market practice at the
identified by the Giovannini Group. Barrier 3 concerned the source of information, the issuance community.
harmonisation of corporate actions and pre-dates XBRL- .
DTCC S.W.I.F.T.’s corporate action initiative - even if XBRL
attempt to solve problems ESCDA didn’t’ address.
“In Europe the removal of Giovannini Barrier 3 has led to

the establishment and endorsement of corporate actions

To be listed,
Directory of Asset Servicing Vendors contact:
editorial@2i.tv
Custody & Clearing
BHF Asset Servicing GmbH comprises the custody, depotbanking

and securities services of BHF-BANK Aktiengesellschaft. With around
250 members of staff, approx. EUR 270 billion in assets under Strahlenbergerstraße 45;
administration and a depotbanking volume of EUR 85 billion, BHF 63067 Offenbach a.M.
Asset Servicing GmbH is one of Germany’s leading specialists in Germany
depotbanking and custody business. It develops innovative and high- •Contact: Moritz Ostwald
class services for investment companies, institutional investors and •Phone:+49 69 667744 838
foreign banks, and excels at tailoring solutions to the individual needs •Email: moritz.ostwald@
of its clientele. bhfassetserv.com
Assets under Administration: EUR 270 bn
No of funds: 478
DnB NOR is the leading provider of Custody, Clearing and Remote T: +47 22 94 92 95
Member Service in Norway. DnB NOR offers a full range of securities F: +47 22 48 28 46
settlement, Corporate Action and cash management services for Contact: Bente I. Hoem,
both foreign and domestic institutional clients. The bank has a strong Head of Global Relations &
commitment to the Custody business in Norway and the staff is highly Network
knowledgeable and experienced. In addition, DnB NOR provides E: bente.hoem@dnbnor.no
a wide range of value-added services for foreign clients such as W:www.dnbnor.com
Securities Lending, Income Collection, Proxy Voting, Tax Reclaim, and
MIS reporting.
As the largest commercial bank in Norway, DnB NOR offers clients
full services in securities trading, registration, foreign exchange and
Money Market.
Banking Securities Services provides award winning local and regional For further information
custody services for investment professionals. We are proud to be the please contact
largest custodian provider in terms of assets and number of foreign Lilla Juranyi, Global Head
clients in Central & Eastern Europe. ING has been providing Securities Custody
Services in CEE since 1994 and we will continue our ongoing pursuit of at + 31 20 7979 435
excellence through new technology. Innovation and client focus are the or contact her by email:
key drivers to service our clients the best way. Lilla.Juranyi@mail.ing.nl
Other activities of ING Wholesale Banking Securities Services are
Paying Agency Services and web-based management of employee
stock option & share plans.
ING is your local partner in: Belgium, Bulgaria, Czech Republic,
Hungary, Poland, Romania, Russia, Slovak Republic and Ukraine.
Intesa Sanpaolo’s Transaction Services include :

• Sub Custody, Derivatives and Remote Membership Clearing Piazza della Scala 6
• Global Custody and Depository Bank for mutual funds, pension 20121 Milan, Italy
funds, real estate funds, private equity funds and hedge funds T: +39 02 8794 2466
• Fund Administration for mutual funds, pension funds, real estate F: +39 02 8794 1519
funds, private equity funds and hedge funds W: intesasanpaolo.com
• Paying Agent for foreign funds and sicavs C: Riccardo Lamanna
• Cash and Payment services like swift to checks, mass payments, E: riccardo.lamanna@
checks and cash letters intesasanpaolo.com
Nordea is the leading financial services group in the Nordic and Baltic
region and operates through three business areas: Nordic Banking,
Private Banking and Institutional & International Banking. Nordea is the Contact:
leading custody services provider in the region. Nordea provides high Nina Groth
quality, tailor-made custody services for local and foreign investors Head of Sub-custody and
dealing with Nordic and Baltic securities. Due to the unique history of Clearing
being formed from four established banks, Nordea is the only Nordic Tel: +45 3333 6124
custody provider with strong local presence and expertise in all four E-mail: nina.groth@nordea.
markets. Nordea combines Nordic competence with local expertise, and com
has proven ability to deliver high quality services that meet both clients’
and each local market’s requirements.
• Leading Nordic custodian:
• Critical mass and resources available;
• deep local experience and active involvement in each Nordic market;
• Complete operational capabilities and best-fit systems developed in each
Nordic market;
• Proven ability to deliver high-quality service in all Nordic markets; Excellent
connection with key players in all Nordic Markets;
• Extensive product and service offering;
• Your single point of entry to the whole Nordic region.
42
RBC Dexia Investor Services offers a complete range of investor
services to institutions worldwide. Our unique offshore and onshore
solutions, combined with the expertise of our 5,300 professionals in 71 Queen Victoria Street
16 markets, help clients grow their business and sustain enhanced London EC4V 4DE, UK
performance through efficiency improvements and robust risk C: Tony Johnson
management practices. T: +44 (0) 20 7653 4096
Equally owned by RBC and Dexia, the company ranks among the E: antony.johnson@rbcdexia.com
world’s top 10 global custodians with USD 2.5 trillion in client assets W: http://www.rbcdexia.com
under administration.
RBC Dexia’s innovative solutions include global custody, fund and
pension administration, shareholder services, distribution support,
securities lending and borrowing, reconciliation services, compliance
monitoring and reporting, investment analytics, and treasury services.
Banco Santander is a retail and commercial bank, based in Spain,

with presence in 10 main markets. At the end of 2009, Santander was
T: Europe: (34) 91 2893932 / 28
the largest bank in the euro zone by market capitalization and fourth
T: USA: (1212) 350 39 02
in the world by profit. Founded in 1857, Santander had EUR 1,245
W: santanderglobal.com
billion in managed funds at the end of 2009. Santander has 90 million
E: globalsecurities@
customers, 13,660 branches and 170,000 employees. It is the largest
gruposantander.com
financial group in Spain and Latin America. In 2009, Santander
registered €8,943 million in net attributable profit.
SEB is the leading provider of securities services in the Nordic and

Baltic area. We are committed to custody and clearing processes for
the wholesale market. We hold securities worth over EUR 500 bn and
provide services in more that 80 markets, 11 of them under the SEB C: Goran Fors
name (Sweden, Norway, Finland, Denmark, Luxembourg, Germany, T: +46 8 763 5770
Estonia, Latvia, Lithuania, Russia and Ukraine). E: goran.fors@seb.se
We offer a full range of securities services including corporate W: http://www.seb.se
action and information services, securities lending and services to
remote members of the Nordic and Baltic stock exchanges. We
are also General Clearing Member on all CCP´s covering Nordic
securities. We continuously develop new products in connection
with clients and partners to ensure we deliver the high-quality
products our clients demand. We always strive to make the
processes more efficient. With a history of 150 years in the securities
industry; we know the market and our clients well.
Sébastien Danloy
Société Générale Securities Services offers institutional investors, Global Head of Sales,
asset managers and financial intermediaries a comprehensive range Investor Services
of financial securities services: custody, clearing & trustee services, Société Générale Securities
fund administration, asset servicing and transfer agency. SGSS Services
currently ranks 3rd European custodian and 9th worldwide custodian T: +33 (0)1 41 42 98 65
(Source: Globalcustody.net) with EUR 2,580* billion in assets held E: sebastien.danloy@socgen.
and valuates 4,354* funds representing assets of EUR 405* billion (as com
of June 2007). W: www.sg-securities-services.
com
Fund Administration
With more than 35 years’ industry experience, Capita Financial Group

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administration services, enabling you to free up your day to focus on Leah Cox
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innovate, increase efficiency and provide the high level of customer www.capitafinancial.com.
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centres (Jersey, Guernsey, Ireland and Gibraltar), we offer a bespoke
service to our clients and each area’s unique regulatory environment.

Intesa Sanpaolo’s Transaction Services include :
• Sub Custody, Derivatives and Remote Membership Clearing Piazza della Scala 6
• Global Custody and Depository Bank for mutual funds, 20121 Milan, Italy
pension funds, real estate funds, private equity funds and T: +39 02 8794 2466
hedge funds F: +39 02 8794 1519
• Fund Administration for mutual funds, pension funds, real W: intesasanpaolo.com
estate funds, private equity funds and hedge funds C: Riccardo Lamanna
• Paying Agent for foreign funds and sicavs E: riccardo.lamanna@
• Cash and Payment services like swift to checks, mass intesasanpaolo.com
payments, checks and cash letters
Société Générale Securities Services offers institutional investors, asset Sébastien Danloy
managers and financial intermediaries a comprehensive range of Global Head of Sales
financial securities services: Clearing, Liquidity Management, Custody Société Générale Securities
and Trustee, Fund Administration, Asset Servicing, Fund Distribution Services
Services and Issuer Services. SGSS currently ranks 3rd European T: +33 (0)1 41 42 98 65
custodian and 7th worldwide E: sebastien.danloy@socgen.
custodian (Source: Globalcustody.net) with EUR 2,731* billion in assets com
held and valuates 5,158* funds representing assets of EUR 499* billion W: www.sg-securities-services.
(at end March 2008). com
Swiss Financial Services

(Ireland) Ltd. Block 4B,Cleaboy Business Park, Old Kilmeaden Road, Waterford, Ireland T: +353 51 351180
UBS Global Asset
Management- Fund Services Brunngässlein 12, PO Box CH-4002 Basel, Switzerland tel. +352-44-1010 1
Hedge Fund Administration
Apex Fund Services Ltd is a global hedge fund administration C: Peter Hughes
solution for hedge funds and private equity clients located in 12 Group Managing Director
separate jurisdictions across the globe. The company uses the T: +1 441-292-2739
software solution, PFS PAXUS, which is a fully integrated hedge fund F:+1 441-292-1884
accounting system combined with web-based reporting to allow E: peter@apex.bm
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We will tailor all solutions to meet your needs and our continuing Group Manager of Operations
focus on the quality of service and the relationship with each and T: +353 21 4633366
individual client ensures that we retain our ethos of providing a F: +353 21 4633377
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Highly qualified and experienced staff, mirrored with top tier
technology and competitive fee structures make Apex Fund Services
Ltd the clear choice for your fund administration needs.
Custom House Global Fund Services Ltd. (“CHGFS”), the Malta Custom House Global Fund
based parent company of the Custom House Group of Companies Services Limited
(“Custom House”), was established when Equity Trust’s fund services Head Office Address:
division was merged into Custom House in September 2008. CHGFS Tigne Towers
is recognised as a fund administrator and licensed under a Category Suite 33
4 license as a Custodian for Funds of Funds and is also an authorised Tigne Street
Trustee for Trusts. Sliema 3172
Custom House offers a full 24/5, “round the world”, “round the Malta
clock” administration service out of its offices in Amsterdam, Chicago, www.customhousegroup.com
Dublin, Guernsey, Luxembourg, Malta and Singapore. This service, Contacts: Dermot S. L. Butler,
which enables Custom House to offer daily dealing NAVs covers all Chairman
aspects of day to day operations, including maintaining the fund’s dermot.butler@
books and records, carrying out the valuations, calculating the NAV customhousegroup.com
and handling all subscriptions and redemptions, as well as over- T: +353 1 878 0807
seeing payment of the fund’s expenses.
Custom House uses the PFS-PAXUS fully integrated fund Albert Cilia, Managing Director
administration system. Reporting is effected through CHARIOT, albert.cilia@
Custom House’s secure web-reporting platform for managers and mt.customhousegroup.com
investors. T: +356 2702 2799
Custom House is fully SAS70 compliant and the Dublin office was the only
hedge fund administrator in the world ever to be awarded a Moody’s Management
Quality Rating. CHGFS and its subsidiaries are fully regulated, as required, by
the relevant authorities in their jurisdiction.
44
EquiLend is a leading provider of trading services for the securities www.equilend.com
finance industry. EquiLend facilitates straight-through processing by EquiLend Europe Ltd.
using a common standards-based protocol and infrastructure, which 14 Devonshire Square
automates formerly manual trading processes. Used by borrowers London, EC2M 4TE
and lenders throughout the world, the EquiLend platform allows for +44 (0) 207 426 4426
greater efficiency and enables firms to scale their business globally. T: UK- +44 (0)20 7743 9510
Using EquiLend’s complete end-to-end services, including pre-
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while allowing firms to drive down unit costs, allowing firms to expand T: US- +1 212 901 2224
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W: www.equilend.com
eSecLending is a leading global securities lending agent servicing
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This differentiated approach achieves best execution while delivering Address: 1st Floor, 10 King
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Web: www.eseclending.com
Finace is currently the only fully integrated solution which supports T: +41 (0)44 298 92 00
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which was developed with performance and robustness as the focus CH-8004 Zürich,
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and modifications can be quickly and easily applied to the standard W: www.finacesolution.
component set. com
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Santander Global Banking & Markets is the Group’s wholesale W: www.gruposantander.

division, offering products and services to large corporations and com
institutional investors through local and global teams with deep T: (3491) 289 39 42/54
market knowledge. The business is structured around six areas: E: securitieslending@
Global Transaction Banking, which includes cash management, trade gruposantander.com
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and debt products; Rates, covering all trading activities involving
interest and exchange rates; Equities, involving all businesses related
to the equity markets; and Proprietary Trading, which manages the
Group’s positions in fixed-income and equity markets.
J.P. Morgan Worldwide Securities Services (WSS) is a premier To find out more, visit
securities servicing provider that helps institutional investors, jpmorgan.com/visit/wss or
alternative asset managers, broker dealers and equity issuers optimize contact:
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Chase Bank, N.A., WSS leverages the firm’s unparalleled scale, J.P. Morgan Worldwide
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vehicles and fund structures with customized, full-service back-office jpmorgan.com or 44-207-
support. We service a broad array of investment products, including 3253742
mutual funds, private equities, partnerships and commingled trusts,
offering full support for high volumes of derivatives and complex Huw Williams,
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or 44-207-7775434

Technology
Broadridge Financial Solutions, Inc., with over $2.1 billion in revenues in

fiscal year 2009 and more than 40 years of experience, is a leading global
provider of technology-based solutions to the financial services industry.
Our systems and services include investor communication, securities
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to increase their focus on core business activities.Proxy Edge - our
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Gloss - our 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.
Eagle Investment Systems LLC is a global provider of financial Eagle Investment Systems LLC
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Financial Tradeware provides integrated solutions for medium to small

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and compliance. Ultra.net®, S-Messenger® and H-Fund® arwe the London W1S 4ND UK
company’s flagship products all based on Microsoft.NET infrastructure.
The company also offers a Member Concentrator for hosted SWIFT
connectivity and Member Administered Closed User Group (MA-CUG)
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Fidelity ActionsXchange is the leading provider of flexible, technology-

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Founded in 1997, Information Mosaic currently supports the post-trade emadigan@informationmosaic.com
operations of over 60 financial institutions worldwide. The company
has a proven track record of helping financial institutions transform Europe:
post-trade operations, enabling them to enter new markets, improve egrant@informationmosaic.com
customer service and reduce the risk and cost associated with volume
and complex processing. Information Mosaic’s breakless post-trade Asia:
automation platform removes reconciliation points and therefore reduces djennings@informationmosaic.com
risk and cost for all core post-trade services including corporate actions,
securities settlement, trade, portfolio and cash management.
The company supports its global customer base from offices in Dublin,
London, Luxembourg, New Delhi, Singapore, Melbourne and New York.

Isis Financial Systems provides mission critical investment
management software and services to many large and small
companies. Our customers perform a broad range of accounting and
management functions covering various industries including the fund, Isis Financial Systems
hedge fund, wealth management, and pension and endowments, 14 Felton Street
etc…. Our integrated solution services span from the back office to Waltham, MA 02453
the middle. Even some front office operations are available. IMS E: Sales@IsisFS.com
is built on a contemporary three tiered architecture. Our services T: (00-1) 781-209-0262
help financial companies improve operating efficiencies, increase
accuracy and reliability and improve customer service.
IsisFS has the experience and IMS is the platform to improve your
operations and save you money.
KOGER is a leading provider of technology solutions to the fund
administration industry. KOGER products are used by some of the
largest and most respected institutions in the industry. KOGER has
offices in each of the USA, Ireland, Slovakia and Australia and provides
comprehensive 24/5 technical support. C: Mr Ras Sipko
NTAS (New Generation Transfer Agency System) is the premier T: +1-201-291-7747
shareholder register and transfer agency system in the market. NTAS E: ras@kogerusa.com
modules include an extensive range of incentive fee calculation W: http://www.kogerusa.com
methods as well as an extensive list of capabilities such as dividend
processing, cash flow management, anti-money laundering, blacklist,
taxation and fee management. NTAS supports a wide variety of fund
structures including master-feeder, fund of funds, series, limited
partnerships, private equity and side pockets. Reports are fully
customizable and worldwide replication is available.
KOGER’s GRID (Global Reach Interface Daemon) is a middleware
interface that integrates NTAS with any third-party system.
Misys provides integrated, comprehensive solutions that deliver

significant results to over 1,200 financial institutions globally. Our
buyside solutions help asset servicers, asset managers and hedge
funds handle the latest complex products, streamline processes, C: Suzanne McLaughlin
reduce costs and improve STP. Misys Summit is our award winning, T: +44 (0)20 3320 5000
multi-asset class solution that boasts 18 years OTC derivatives E: tcm.marketing@misys.com
market expertise. With extensive OTC buyside coverage and the W: www.misys.com
market leading structured products module, Misys Summit delivers
the solution you need for handling the end to end process for OTC.
We also provide a customisable ASP service for fast implementation
and lower costs.
Misys provides integrated, comprehensive solutions that deliver
significant results to over 1,200 financial institutions globally.
Building on over twenty years of experience in capital markets

and cross-asset software solutions, Murex introduces Mx Asset
Manager - a unique cross currency, cross asset fund management
solution capable of handling the full range of products, from plain C: Hélène Desbiez
vanilla to the most complex derivative products. Coupled with a high Business Development Manager
degree of flexibility and customization, Mx Asset Manager features a T: +33 1 44 05 32 00
multifaceted design catering to the needs of both service providers
(prime brokers, administrators, asset servicing providers) and direct E: helene.desbiez@murex.com
clients (portfolio managers for mutual, pension or hedge funds,
insurance companies). With so many new challenges presented to W: www.murex.com
buy-side managers when integrating increasingly-complex derivatives
into their portfolios and funds, Mx Asset Manager represents a strong
and reliable ally for dynamic position keeping and multi-dimensional
risk management in a thriving market.
peterevans is a leading independent provider of front to back office

solutions for the financial services sector. Clearly focused on the
securities and investment market, and building on over 24 years A: peterevans
experience of providing award winning solutions to this sector, peterevans New Broad Street House
presents a sophisticated boutique approach in a homogenised market 35 New Broad Street
place. With xanite our new suite of applications we can help ensure that London EC2M 1NH
you deliver extraordinary products and services to your customers.
The peterevans xanite suite offers a configurable, fully integrated, T: +44 (0)29 20402200
browser based, comprehensive front to back solution that can be either
deployed as a single application or integrated as components into your E: info@peterevans.com
existing platform.
xanite has been designed for today’s market, and provides Multi-entity, W: http://www.peterevans.com
Multi- currency, and Multi-language support. User access to the system
is configurable allowing each user’s experience of the system to be
tailored to suit their specific needs. Each of the xanite modules can de
delivered via an ASP or self-hosted. The xanite suite of products supports
the following business areas: wealth management, custody, corporate
actions, clearing and settlement, private client and on-line stock broking,
peterevans gives full but controlled access to clients, portfolio, fund and
relationship managers, brokers, middle and back office staff – on line
anywhere and everywhere.

Pirum provides a full suite of automated reconciliation and straight
through processing (STP) services supporting Operations within the
global securities finance industry. The company’s on-line SBLREX T: +44 20 7220 0961
service encompasses daily contract compare, monthly billing F: +44 20 7220 0977
comparison, mark-to-market & exposure processing, pending trade C: Rupert Perry
comparison, income claims processing and custody reconciliation. E: rupert.perry@pirum.com
Subscribers to Pirum’s services significantly increase their A: Pirum Systems Limited
operational efficiency and reduce their risk by using Pirum’s solutions, 37-39 Lime Street
as staff are able to focus on fixing the exceptions instead of using London, EC3M 7AY
W: www.pirum.com
their time to check and process routine business. These automated
processes are more scalable and risk controlled too, allowing
significantly higher volumes to be managed without corresponding
increases in operations headcount.
SimCorp Dimension is designed to enable institutions which manage

or service investment portfolios to mitigate risk, reduce costs and T: +44 (0)20 7260 1900
position themselves for growth. F: +44 (0)20 7260 1911
It is a comprehensive, truly seamless system supporting front, C: Elizabeth Gee, sales
middle and back office functions as required. It handles NAV and other director
calculations, with full related accounting, for a huge variety of fund of SimCorp Dimension
structures and product types, including regional specialities. E: elizabeth.gee@simcorp.com
SimCorp Dimension was designed from scratch as an enterprise- W: www.simcorpdimension.
wide system, so it handles all aspects of the investment management com
process and related administration functions, consistently. Data is A: SimCorp, 100 Wood Street,
recorded once into a core database so that reporting is made easy, London EC2V 7AN
there is no need for internal reconciliation of data, no duplication
of procedures and integration with external systems is particularly
straightforward.
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. 888 Seventh Avenue
SunGard also offers outsourced data management services, as New York 10106, US
well as real-time, interactive and flat-file data feeds for application T: +1 888 441 9935
integration. Aggregating market data and financial content from E: moreinfo@sungard.com
more than 100 third-party sources, SunGard’s solutions for data W: http://www.sungard.com
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
our web site.
Advent Software 1 Bedford Avenue, London, WC1B 3AU, UK T: 0207 631 9240
Accuity Market House 124 Middleessex Street Bishopsgate London E1 7HY T: +44 20 7014 3454
Aquin Components GmbH Moosmatthalde 4, Meggen, CH-6045, Switzerland T: +41 44 455 62 44
BI-SAM 1 Cornhill, London EC3V 3ND T: +44 (0)20 3008 5834
Bravura Solutions Austin Friars House 2-6 Austin Friars London EC2N 2HD, UK T: 020 7997 3000
Calypso Technology 17 Dominion Street, London, EC2M 2EF, UK T: 020 7826 2500
DST International DST House, St Mark’s Hill, Surbiton, Surrey, KT6 4QD T: +44 (0)20 8390 5000
Princeton Financial Systems 600 College Road East, Princeton, NJ 08540, USA T: +1 609-987-2400
Redi2 Technologies, Inc, 1771 Broadway St., Oakland, CA 94612 T: +1 (510) 834-7334
SmartStream Technologies 1690 Park Avenue Aztec West Almondsbury Bristol BS32 4RA UK T: +44 (0)20 8390 5000
Witholding Tax
T: +44 (0) 208 760 7130

Goal is widely-acknowledged in the financial services sector for C: Stephen Everard or
its innovative and creative solutions to highly-specialized niche Saghar Bigwood
processes. A: 7th Floor, 69 Park Lane,
Goal’s research has shown that in excess of USD8 billion of Croydon, Surrey, CR9 1BG
withholding tax remains unclaimed each year by the rightful owners E: severard@goalgroup.com or
and beneficiaries and that over USD12 billion is lost because rightful sbigwood@goalgroup.com or
beneficiaries are not participating in class actions, bankruptcies and info@goalgroup.com
disgorgements. W: www.goalgroup.com
48
A new word for
cross border
Euroclear is making cross-border settlement an obsolete term. We will help clients

reduce their back-office costs, risks and complexities with our multi-currency Single
Platform, spanning a wide range of securities and markets. Together with harmonised
market rules and practices, all markets covered by Euroclear will operate as one.
Eliminate cross border from your settlement vocabulary.
© 2010 Euroclear SA/NV, 1 Boulevard du Roi Albert II, 1210 Brussels, Belgium, RPM Brussels number 0423 747 369

As a partnership for more than 190 years,
Brown Brothers Harriman (BBH) applies
the principles of partnership to everything
we do. Each client relationship benefits
directly from our relationship excellence,
trust, and long-term commitment. With
offices worldwide and a network covering
Partnership. close to 100 markets, we leverage our

global reach, leading-edge technology, and
Not just a word. A culture. industry expertise to deliver innovative
solutions to meet our clients’ goals and to
position their organizations for success.
Our culture is our strength. Come see what

a true partnership can do for you.
Learn more about our unique approach

at www.bbh.com.
WWW.BBH.COM
Custody
Accounting
Fund Administration
Offshore Services
Fund Distribution
Outsourcing
Securities Lending
Foreign Exchange
Brokerage
Consulting

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ISJ |

Services GBP 249 - UK, ROW

From October 2010 www.eFunds.tv

ISJ48 full FINAL.indd 1 22/09/2010 14:43

BNP Paribas Securities Services

With our precise understanding of each market’s internal workings,

ISJ48 full FINAL.indd 2 22/09/2010 14:43

Services GBP 249 - UK, ROW

From October 2010 www.eFunds.tv

ISJ48 full FINAL.indd 1 22/09/2010 14:43

2i US 410 Park Avenue,

© 2010 2i Media. All rights reserved.

From October 2010 www.eFunds.tv

31 Spotlight on Safekeeping funds

36 The ISJ Proﬁle Tony Klim of Bravura

From October 2010 E*T

ISJ48 full FINAL.indd 2 23/09/2010 13:21

USA IRELAND AUSTRALIA SLOVAKIA

ISJ48 full FINAL.indd 3 22/09/2010 14:44

relationship management Morgan Stanley’s asset Asia Pacific and Japan, at

A global player in asset servicing...

CACEIS, your comprehensive securities servicing partner.

Siero was most recently director of relationship

To capitalise on our expertise, please contact

nordea.com Making it possible

ISJ48 full FINAL.indd 7 22/09/2010 14:44

32051_Custody_210x297.indd 1 19.12.2008 15:11:14

Has the world Important elements

combination there will be specialist niche provid-

of art, science They should also ask if a supplier

We have first-evidence later in this issue of what is involved in

ISJ48 full FINAL.indd 9 22/09/2010 14:44

ISJ48 full FINAL.indd 11 22/09/2010 14:44

In Conversation with Etienne Carmon

to undertake tasks at a lower cost. Furthermore, due to the

its business, require heavy investment

ISJ: Can you remind us what works?

Etienne Carmon: As already mentioned, India and its out-

Powerful corporate actions solutions

As the most experienced vendor in the industry,

Leveraging our unparalleled expertise, technology

Work with a recognized leader and trusted partner to:

REDUCE COSTS | MITIGATE RISK | INCREASE CONTROL

Learn more at www.actionsxchange.com

ISJ48 full FINAL.indd 13 22/09/2010 14:44

Regulators Our roadmap is built first and foremost around broker-neutral

Number Three: Middle- and Back-Office Services Forcing The US Issue B

ISJ48 full FINAL.indd 16 22/09/2010 14:44

For more information visit:

ISJ48 full FINAL.indd 17 22/09/2010 14:44

Alan Brown of Schroders

to saving the planet, glass is always

ISJ48 full FINAL.indd 19 22/09/2010 14:44

The fund holds investments denominated in currencies other

Historic yield is 0.0%. Growth since launch is 5.5%, compared

The Essential Work of ISITC Continues.

ISITC September 2010 Industry Forum & Working Groups

This conference will consist of Forums and Working Group Sessions.

FOR ADDITIONAL INFORMATION VISIT www.isitc.org

ISJ48 full FINAL.indd 21 22/09/2010 14:44

Regulation EFAMA ON UCITS

there is an impasse EU-regulated manager who will be able to comply