JP Morgan, BlackRock team up for Asian settlement platform

JP Morgan and BlackRock are betting that Asian institutional investors will find the latter’s range of highly liquid dollar cash funds more alluring with the introduction of same-day settlement services for investors in the region.

The settlement platform, launched earlier this year, has been serving Asian investors of two BlackRock Ucits III-compliant dollar cash products – the ICS Institutional US Dollar Liquidity Fund and the ICS Institutional US Treasury Fund – which offer investors daily liquidity and same-day settlement.

The service was crafted at the behest of BlackRock and is provided by JP Morgan’s transfer agency business. JP Morgan processes redemption requests on behalf of the funds’ investors in the region and facilitates payments from the funds to investors, who are able to use the money within the same day. Investors must put in their redemption requests by 2pm Hong Kong time in order for their bank account to be credited via Swift transaction by the day’s end.

While JP Morgan has always offered settlement services to the two funds, the time differences between Asia and the US meant that money from investor redemptions would only be available for use on a next-day basis, according to Mark Stockley, head of international cash at BlackRock. “The products were offering same-day liquidity, but because of the time zones, redemptions effectively ended up being provided on a next-day basis,” he notes.

BlackRock declined to quantify the proportion of Asian investors in the two funds using the platform, but the asset manager, which runs $3.6 trillion in global AUM, has firm plans to grow its regional client base. “We are looking to increase our distribution and grow our business in Asia," says Stockley. 

The platform will later be extended to Asia-based institutional investors of BlackRock’s range of institutional liquidity funds, which invest in short-term money market instruments. Investor income is accrued daily and can be paid out as a dividend or reinvested in the fund at the end of each month.

JP Morgan will consider offering the platform to other asset managers who want to offer their Asian investors same-day settlement on highly liquid dollar cash funds, says Euan McLeod, JP Morgan senior product manager, transfer agency for Asia-Pacific.