Fund houses unite for STP
A new consortium of global fund managers operating in Asia wants to spread automation and standards among distributors.
Fund management companies in the region have formed a new organisation, the Asia Fund Automation Consortium (Afac), to address common interests among fund houses and distributors regarding processing. Automation among financial service companies in Asia lags counterparts in North America and Europe, and local operations executives are banding together to promote straight-through processing.
ôIndividually, fund managers have been trying to do something like this for years,ö says Dean Chisholm, regional head of operations, Asia-Pacific at Invesco in Hong Kong. ôWeÆll all win by going to the next stage, and through the creation of Afac will make the automation business model more sustainable.ö
Similar to the Findel Group in Luxembourg, which is supporting the creation of Afac, members of the Hong Kong-based consortium will work together and alongside distributors in achieving greater automation. However, unlike the Findel Group, Afac membership will not include service providers: for now, itÆs only open to buy-side firms.
The initial founders are seven fund management firms: Alliance Bernstein Investments, BlackRock Merrill Lynch Investment Managers, Fidelity Investments, Franklin Templeton Investments, Invesco, JF Asset Management and Schroder Investment Management.
Baring Asset Management has also just joined, and Afac is fielding applications from other fund houses dedicated to improving STP.
ôAfac was formed to address the common interests and to develop a high-level strategy to the automation initiative forward in Asia,ö says Janice Lin, director of operations for Asia-Pacific ex-Japan at Fidelity in Hong Kong. ôWe also want to see fund managers that are as committed to fund automation as the member firms to join.ö
The group has three primary objectives: Firstly, provide distributors throughout Asia-Pacific with a consistent approach to automation that can be easily replicated across the majority of fund providers; secondly, agree on common formats, standards and routes for automation of funds messaging to simplify automation for fund providers and distributors; and thirdly, recommend a standard format to be used for each market.
On top of that, Afac has already outlined some recommendations for the regional funds industry regarding the move to automated fund processing. The group is already stressing the use of the SWIFTNet Funds ISO 20022-complaint messages and is promoting the usage of a standard template for each region within Asia-Pacific.
ôIn terms of automation, Asia has the opportunity to leapfrog Europe by moving to ISO 20022 messages,ö says Mike Boardman, regional retail operations at BlackRock Merrill Lynch Investment Managers in Singapore. ôEurope uses ISO 15000 messages and will need to convert to ISO 20022. Asia will not face this problem and will be ahead.ö
STP should also improve risk control, customer service, scalability and processing speed, backers say.
The group does not expect a massive growth in automation as a result of its formation, but does expect that its emergence will facilitate more dialogue with distributors in the near term.
ôThe first challenge will be to get the fund houses to collaborate and talk with the distributors about automation,ö says Eddie Fong, managing director and head of operations Asia ex-Japan at JF Asset Management in Hong Kong. ôThen the process will truly begin.ö
Adds Nicholas Koo, vice president at BlackRock: ôLeveraging the platform and the experience in Europe, we can help distributors in Asia to customise automation in their own way and speed the development of a common way to process funds.ö
ôIndividually, fund managers have been trying to do something like this for years,ö says Dean Chisholm, regional head of operations, Asia-Pacific at Invesco in Hong Kong. ôWeÆll all win by going to the next stage, and through the creation of Afac will make the automation business model more sustainable.ö
Similar to the Findel Group in Luxembourg, which is supporting the creation of Afac, members of the Hong Kong-based consortium will work together and alongside distributors in achieving greater automation. However, unlike the Findel Group, Afac membership will not include service providers: for now, itÆs only open to buy-side firms.
The initial founders are seven fund management firms: Alliance Bernstein Investments, BlackRock Merrill Lynch Investment Managers, Fidelity Investments, Franklin Templeton Investments, Invesco, JF Asset Management and Schroder Investment Management.
Baring Asset Management has also just joined, and Afac is fielding applications from other fund houses dedicated to improving STP.
ôAfac was formed to address the common interests and to develop a high-level strategy to the automation initiative forward in Asia,ö says Janice Lin, director of operations for Asia-Pacific ex-Japan at Fidelity in Hong Kong. ôWe also want to see fund managers that are as committed to fund automation as the member firms to join.ö
The group has three primary objectives: Firstly, provide distributors throughout Asia-Pacific with a consistent approach to automation that can be easily replicated across the majority of fund providers; secondly, agree on common formats, standards and routes for automation of funds messaging to simplify automation for fund providers and distributors; and thirdly, recommend a standard format to be used for each market.
On top of that, Afac has already outlined some recommendations for the regional funds industry regarding the move to automated fund processing. The group is already stressing the use of the SWIFTNet Funds ISO 20022-complaint messages and is promoting the usage of a standard template for each region within Asia-Pacific.
ôIn terms of automation, Asia has the opportunity to leapfrog Europe by moving to ISO 20022 messages,ö says Mike Boardman, regional retail operations at BlackRock Merrill Lynch Investment Managers in Singapore. ôEurope uses ISO 15000 messages and will need to convert to ISO 20022. Asia will not face this problem and will be ahead.ö
STP should also improve risk control, customer service, scalability and processing speed, backers say.
The group does not expect a massive growth in automation as a result of its formation, but does expect that its emergence will facilitate more dialogue with distributors in the near term.
ôThe first challenge will be to get the fund houses to collaborate and talk with the distributors about automation,ö says Eddie Fong, managing director and head of operations Asia ex-Japan at JF Asset Management in Hong Kong. ôThen the process will truly begin.ö
Adds Nicholas Koo, vice president at BlackRock: ôLeveraging the platform and the experience in Europe, we can help distributors in Asia to customise automation in their own way and speed the development of a common way to process funds.ö
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