ISJ 038

April 2009Volume 6 No. 38GBP 25 - UK, ROWUSD 45 - AmericaEUR 35 - EMEAwww.ISJ.tv

Analyse this - SEPA today

Profi le - Jon Robson, Thomson Reuters

Panel - Benelux Fund Administration

THE GLOBAL SECURITIES SERVICES INDUSTRY MAGAZINE

New role for the Old Lady

Could a privatised Bank of England mean better regulation?

Outsourcing - Who, where, why, how?Russia - An investor challengeSec lending reinvestment - Money market fundsHedge Fund Technology - Compliance & complexity

Front Cover Section ISJ38.indd 1 6/4/09 18:00:22

ISLA & RMA Present

18thAnnualConference on

international securities lending

200923 26 june

Issues that influence lending markets in Europe and around the world:

• Change in Regulatory Requirements Affecting Securities Lending.

• Beneficial Owners: Are You Lending Securities Now?

• Industry Leaders: Surviving the Crisis and What’s Next for the Market?

• Central Counterparty and Recommendations of ISLA Working Group.

Keynote Address:

Risk Management Lessons from the Financial Crisis

Juan Andres Yanes, Chief Risk Officer, Grupo Santander, Madrid

This is the conference that identifies best market practices and sets global standards in international securities lending.

Come and join your colleagues for these important updates and discussions!

The joint U.S./European Securities Lending Conference sponsored by the two recognized industry associations.

For more information and to register visit RMA’s Web site:www.rmahq.org/RMA/SecuritiesLending/or contact Kim Gordon (215) 446-4021,

E-mail: [email protected]

Conference Chair: David Hopton, Managing Director, Santander Global Banking & Markets, London

Hotel Arts • Barcelona, Spain

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Editor:Ben Roberts [email protected]

Contributors:Brian Bollen, Anthony harrington

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Heads upISJ Investor Services Journal

back offi ce functions is an example. Providers of outsourcing services are offering an increasingly diverse set of services for – in particular – asset managers, taking on much of the administrative and post-trade burden to allow them to focus on stock market twists and new sources of value. Cost savings, a decline in personel and tapping provider’s expertise are top reasons for this activity. On page 10, ISJ investigates the outsourcing trend, including companies that offer solutions to these providers. Hedge funds may look upon the second quarter with muted optimism. A partial defence of their sector from Lord Turner of the Financial Services Authority was welcomed by AIMA and kept the emphasis on banks and AIG. Reports have shown money fl owing again into hedge funds after a greatly varied last year for the sector: some funds recorded

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Our monthly selection of the key stories, reports and annoncements from ISJ.tv

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a profi t; some no longer exist. Many pension funds have held fi rm with their hedge fund allocation amid revisions of liquidity in some of the world’s biggest retirement plans. Much external scrutiny will remain on the operations of hedge funds and the wider ‘shadow banking’ system. In this issue ISJ focuses on their internal processes, and analyses the technology offerings that facilitate trading, administration and client reporting. Regulation - or rather, what it will become - is another area undefi ned following the meeting of the world leaders. In the UK there are growing calls for change to the regulatory structure. The unpopularity with the FSA has led to suggestions as to the role of the Bank of England as its replacement as the City watchdog, an issue discussed on page 7. n

Ben Roberts, Editor

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We are one quarter down in what should be called the year of reconstruction. The meeting of the G20 leaders in London was well-timed as we enter the second quarter, though despite a knee-jerk stock market lift (including a week-long rise in US stocks that rivalled 2007) and a USD1,000 billion contribution to the International Monetary Fund, the longer-term effects of their uneasy unity on sentiment and an open, global trading fl oor against protectionist tendencies is undefi ned. Some areas of the market seem to be sensing a turning point. Shareholders in HSBC snapped up 97% of the bank in a rights issue, a signifi cant statement of intent and a reemergence of the long position in a bank. In the midst of uncertainty and change, new combinations of securities services continue to develop. Outsourcing middle and

Editor’s letter

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Cautious hope

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P.17 Fund Administration P.15 Russia Market Profi le

10 Copyright 2009 © Oliver Wyman

Industry consolidation in both the asset management and hedge fund space is another driver of technology spend. Mergers will create larger firms that have greater amounts of capital to spend on technology. Over the last 5 years, the number of acquisitions has generally trended upwards. Following a dip in 2007, there was a large spike in M&A activ-ity in 2008. Hedge fund consolidation is being facilitated by acquisitions of alternative investment firms by larger financial institu-tions including universal banks and large asset managers. M&A activity also creates demand for IT because acquirers need to assimi-late acquisitions technologically. Consolidation increases the need for an integrated approach to technology with common products, systems, and standards across business units. However, market consolidation may also prompt reviews of spending to streamline operations and costs, diminishing technology demand.

As the Asian investment management industry grows and more new players enter the market, firms are looking for ways to remain compet-itive. Firms are turning to advanced technologies to give themselves an edge. They are adopting technologies that support more complicated trades and sophisticated trading strategies. They are also looking to reduce costs as well as maintain client confidentiality and keep their activities private by circumventing brokers.

There has been a significant rise in multi-asset, cross-asset, and cross-border trading, which is driving adoption of technologies that support these complicated trades. Cross-asset trading (when an equity security is bought and an option is written at the same time, e.g., foreign secu-rity bought, FX hedge is made) and cross-border trading (trading across exchanges of different countries) have been expanding across Asian

Figure 5: Asian Investment Management Industry Consolidation

Source: Bloomberg

Asian Investment Management Industry Consolidation

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Last year saw a steep incline in the amount of consolidation in the asset management space as many more of the strong survived and the weak were poached.

SOURCE: Bloomberg

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Contents

Letters to the editor

News and mandates The last month of updates in custody, clearing and settlement, securities lending, legal and compliance and technology.

Cover - Banking on revolutionOur new series on New Model Banking begins by looking at calls for a privatisation and a re-empowerment of the Bank of England.

Profile - Jon Robson, Thomson ReutersThe head of Enterprise Strategic Business Unit of the firm’s Markets Division talks to Ben Roberts.

Outsourcing - Middle to back officeCost saving and expertise are driving the outsourcing phenomenon, finds Ben Roberts.

Hedge with an edge - Technology - Anthony Harrington surveys the product offerings for hedge funds

Climate not changedRussia - Is the invetsor services market for foreign institutions still a Churchillian “riddle, wrapped in a mystery, inside an enigma”.

ISJ Panel Debate - Benelux fund administration ISJ asks industry experts about the servicing of funds in the region.

Reinvesting the wheel -Cash collateralThe use of cash collateral has been an ongoing concern in securities lending - with money market funds a viable option,

finds Brian Bollen.

Analyse This - SEPA today Richard Davies at Logica assesses the initiative for 2009.

Directory of servicesISJ’s exclusive monthly listing

of key service providers to the

global asset services industry.

Climate not changed Russia, page 15

Contents ISJ Investor Services Journal

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Richard Davies,Analyse This page 22

In this issue

People

Regulation

Securities Lending

Fund Administration

Custody

MEMBER - periodical publishers association

www.abc.org.uk

to REnEw youR SuBSCRIPtIon PLEASE tELEPhonE: +44 (0)20 7299 7700 oR vISIt... www.ISJ.tv

22 Reinvesting the wheel The many homes for cash collateral, page 20

Leonique van houwelingenPanel member, page 17

new role for the old LadyRegulation, page 7

COVER STORY

12 technology

16 26

Payments

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This will impact the way portfolios are managed and require asset managers to be both creative and flexible. One thing is clear, to remain in the game, these banks will need to offer superior private banking services via a customer-centric systems architecture to meet the satisfaction levels of the high net worth market. n Dr. Mohamed Goneid, Islamic banking strategy manager, Temenos

The development strategy for the financial market in Russia requires the creation of a centralised accounting system for the Russian securities market. Because the Russian prime minister announced that Russia plans to create financial centre in five years, you might think that a CSD can appear in the Russian market within this time. But in fact at the moment Russian authorities don’t have a final decision about the form of the centralised accounting system on the securities market. This is first important question to be answered. Once this is decided we can try to make a sensible estimate about the time needed to create a

centralized system (I mean CSD or system of CSDs) in Russia. This system can be established on NDC and DCC base but this is another decision.In the last two years, before the crisis, we saw an increase in the number of foreign investors in Russia. But after the start of the crisis we’ve obviously seen a decrease. Today we’re seeing overseas speculators return. Foreign investors prefer to invest in government and corporate bonds, and equities (firstly in blue chips). There are a number of other areas we believe need to be looked at. First, the question about foreign nominees in Russia needs to be decided. As you know, in Russia only a Russian depository can be as nominee because only a Russian entity is allowed a custody license. It seems this barrier makes it difficult for some types of investors - from the US, for instance – to enter the market. But it’s not simply that the Russian authorities want to avoid liquidity problems in the market. What they want is to find a balance between the existence of foreign nominees and the need for liquidity in the market. Second - reducing the infrastructure costs and

Prior to the financial meltdown, Islamic private banking was blossoming with high-net worth individuals looking to invest their wealth. Now with the credit crunch biting, banks are aiming to increase customer deposits to level the value of their credit/deposit ratios. Here is one perspective on what Islamic private banking could look like in the future: As individual Islamic banks have their own Shari’a committee, Islamic asset managers could construct portfolios around individual client ethics. In traditional Islamic private banking, this tailored service is only delivered to ultra-high net worth clients with large portfolios. If Islamic banks have to deliver this service to all clients, the cost of doing so may skew the market in the direction of ultra-high net worth individuals. Islamic private banks will also need to ensure that all their investments comply with Islamic law. Banks will have to create their own indexes to reflect their individual interpretations of Shari’a law. To do this, advanced Islamic banking systems will be required to ensure all activities are Shari’a compliant. Finally, Islamic private banks may need to take a more social view of their investments, beyond the mere accrual of investor wealth.

To express your views, write to [email protected] or blog at www.ISJ.tv

Letters ISJ Investor Services Journal

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Dear ISJ

optimising the infrastructure (in particular the registrars). Obviously, simplifying the infrastructure can help increase and improve operations. Third - possible changes in the Russian tax regime are needed, i.e. the tax regime for foreigners and tax for dividends etc.).These questions are all being discussed in Russia at the moment at the various levels, i.e. FFSM, State Duma & Russian senate.

n Mikhail Bratanov, Head of Securities Services development for SGSS in Russia

Turn to page 15 for our investor services report on Russia

Dear ISJ

Letters

“Only a Russian depository can be a nominee.

It seems this barrier makes it difficult for

some investors to enter the

market”

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J.P. Morgan Worldwide Securities Services has been appointed by Marshall Capital Partners, to provide fund administration.

Marshall Capital has USD2.5 billion of assets under management, comprised of Russian institutional and international investors.

The appointment is J.P. Morgan’s first for its Private Equity Fund Services in Russia.

The class action undertaken by two UK pension funds against RBS in the US on the grounds of withheld information as to the health of the bank is “not surprising”, according to David Paterson, head of corporate governance at the National Association of Pension Funds (NAPF).

The case – constructed by the Merseyside Pension Fund and the North Yorkshire Pension Fund and represented by Cherie Booth, QC, wife of former UK prime minister Tony Blair - has been launched in the US to take advantage of the ‘no win, no fee’ class action principle, which does not exist in the UK and can be expensive for the loser.

It was revealed that Société

charged for clearing in Europe.

The price cut is on the back of increasing competition in trading, specifically from new multi-lateral trading facilities such as Chi-X and the growing demand for the all-in cost advantage of efficient, low-cost and robust central counterparties.

It will apply to all trades submitted to EuroCCP for clearing and settlement. EuroCCP currently clears and settles trades executed on the Turquoise, NYSE Arca Europe and SmartPool trading platforms.

EXENET LLC, the IT consulting, integration and outsourcing service provider, has launched ProServo™ Managed Support for Alternative Assets, a tool for small to medium-sized asset management firms efficiently and cost-effectively manage their IT.

Fundtech Ltd (NASDAQ: FNDT), announced the acquisition of InterSoftware Ltd, through its UK-based division Accountis Europe Ltd.

Following the acquisition, InterSofware Bacstel-IP users will have access to a wider

Générale Securities Services’ (SGSS) German business, (SGSS KAG), won seven Master KAG* mandates and two outsourcing mandates in 2008. These mandates bring the total of assets under administration for SGSS in Germany to EUR55 billion (31st December 2008), an increase of 20% compared to 2007.

Earth Capital Partners (ECP), a new investment business with a specialist focus on environmental investment, selected Northern Trust to provide administration services for its fund platform.

Broadridge Financial Solutions, has extended its multi-currency Gloss securities processing system to include Japanese equities, convertible bonds and subscription rights processed by on-shore broker-dealers.

EuroCCP, the European subsidiary of The Depository Trust & Clearing Corporation (DTCC), will slash its clearing fees from six euro cents to five euro cents per side from 1st April - the lowest fee level

range of products and services in areas such as direct debit and credit management, remittance notification, fully automated enterprise payment workflow and electronic invoicing presentment and payment (EIPP).

Risk management requirements have extended amid the credit crisis, with derivatives, stress tests and value-at-risk (VAR) now integral to the mix, according to a survey of asset managers by Sophis.

The study revealed 63% of managers believed risk management had changed, with 35% believing it had changed “significantly”.

Also, 73% believed it is essential to have an integrated view of risk that includes derivatives. Three-quarters will increase the volume of stress tests and VAR reports that they carry out, and 65% will improve pricing and data models.

Reval, a provider for derivative risk management and hedge fund accounting, has opened a Hong Kong office and appointed of Will Marsden as sales director, Asia.

The opening marks Reval’s continued growth, expansion and commitment within Asia Pacific that includes Australia, New Zealand and India. n

News ISJ Investor Services Journal

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Custody

Month Winner Client Location Assignment Mandate size

March Northern Trust Earth Capital Partners London Fund Administration USD5 billion

February RBC Dexia Creststreet Ass’t Man. Toronto Custody/fund services n/a

February L&G Investmn’t Man. Oxfordshire Co. Council London UK Equity Portfolio GBP850 million

February Sage Advisory Servs. Texas State University Austin, TX USD12 million FI core strategy

Latest mandates

..............................................................................................................................................................................................

Clearing

technology

Fund Administration

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ISJ Investor Services Journal New Model Banking - Regulation

Banking on revolution

The Bank of England, the 315-year-old central bank for the United Kingdom, must soon move down one of the paths from the crossroads at which it stands. Its interest rate cuts – from 5.2% a year ago to barely over zero today - have seized headlines. The timeliness of its cuts has divided opinion, and the effective use of such measures as a counterpoint to inflation is in question. But other voices expressing deeper issues have emerged in the last few weeks. As juries remain out as to what the ‘Authority’ in Financial Services Authority really means in the context of enormous bank losses, nationalisation in all but name and plummeting public confidence after a decade of ascent for financial services, a reappraisal of the Bank’s role in the regulation of the City of London has been a leitmotif. Governor’s facial hair David Cameron, leader of the Conservatives and the Government’s chief opposition, on 22nd March advocated the reestablishment of the Bank’ authority over financial services. One movement of the [Bank of England] Governor’s eyebrow, he said, should be an ominous sign for the banks to fall into line. A more dramatic and detailed extension to this view came from a paper released by the Institute of Economic Affairs. Entitled ‘Central banking in a free society’, the study advocates the re-privatisation of the Bank, capitalised by a consortium of banking owners. This would reverse its nationalisation in 1946 and resemble the Federal Reserve in the US. The paper echoed Mr Cameron’s view that it should again wield industry authority. Professor Tim Congden, who

authored the paper, explained to ISJ that the governorship of Mervyn King and the implementation of the FSA have eroded the Bank of England’s successful relationship with the banks. As previously lender-of-last-resort in the case of a downturn, the central bank would have known the contents of banks’ balance sheets and the risks

they were taking. The FSA, the Debt Management Office and Governor King’s own outlook have separated the Bank from this role and has been replaced by an emphasis on research.Return of norm “This vision of the central bank is deeply flawed and should return to the historical norm: a Bank with responsibility for banking supervision, a responsibility for lending last resort, responsibility for managing public debt, and where most of the staff are not economists but actually bankers,” he said. “The tendency since the collapse of [mortgage lender] Northern Rock has been for the Bank of England to continue to jettison the lender-of-last-resort role and instead have a special resolution regime for banks in difficulties, to strengthen insurance, to prefund the safest compensation – I deplore all of these things.” The FSA has become “extremely unpopular” with the financial industry,

and described the chance of the wholesale side of financial institutions leaving these shores for ECB and Federal Reserve-regulated markets as “a real threat”. Specifically, the FSA’s failure is in its regulation of all areas of financial service. Before, Congden notes, a stock broker would be regulated by an exchange, an insurer by the DGI. Within this there was self regulation. “With self regulation the industry decides what structure it likes,” he says, before adding, “it doesn’t give it carte blanche”. For the Bank of England, and the industry, to operate correctly, the Bank should be re-empowered and privatised. The banking consortium would act as financiers, giving necessary capital for the central bank. Congden argues that one reason that the Bank has failed is its small capitalisation - “around GBP2 billion” - where it needs to get Treasury approval to loan money. Congden says the Federal Reserves asks for about 6% of bank’s capital, using only half of that. The Bank of England would need to ensure a profit could be made. But there would be additonal, regulatory benefits of this system too. “Banks would resent incurring losses to pay for lending of last resort if one of its members needed financial help,” he says. “If you have a situation in which all the banks were shareholders, then a situation such as over the last five years where HBOS had a number of irresponsible property loans and Lloyds TSB was very careful, Lloyds TSB would know there would be a high risk, and that they would have to support a lender-of-last-resort loan to HBOS. In advance, they would tell the Governor and flag up what is happening. “The Bank would have to go to HBOS and say, ‘you’re breaking rules, we won’t lend to you when there’s a crisis’. So there are checks and balances within the system. No bank wants to bail out another bank. It’s putting is a structure that gives the right incentives.” n

First in our series looking at New Model Banking - the role of the central bank.

“The FSA has become extremely unpopular”

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Profile ISJ Investor Services Journal

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Cross assets, cross continents

“What is it that the market wants next?” asks Jon Robson from underneath the orange electronic snake of ticker that curls around the Thomson Reuters building in London’s Canary Wharf. “What they want is to see the whole picture of a trading environment.” This environment, spurred by globalisation and technology, can be almost anywhere, changing the way international markets can operate. People are no longer tied to exchanges for market updates. “Twenty years ago, you would go to an exchange and see the price of a security; when you left, you couldn’t see it.” Robson, head of Enterprise Strategic Business Unit of Thomson Reuters’ Markets Division, oversees a breadth of data services to provide this “picture” of market activity for an equal breadth of clients: from traders and risk managers to hedge funds, stock exchanges and wealth managers. His career has spanned a number of continents, start-ups, innovations, acquisitions, and one of the biggest mergers in financial services between Thomson and Reuters at the beginning of 2008. Thomson Reuters’ suite of enterprise-wide solutions can sit within a bank and, importantly, is neutral enough to work with the bank’s existing technology. “Why not provide a means for investment banks to link all those systems,” he asks, and compares this central system to a “dashboard”. A firm need not undergo an entire overhaul of their software, he says, which has significant cost and training implications. But for trading, portfolio valuation, pricing, compliance and all the other functions that may have their own gadgetry, Thomson Reuters aims to connect them all. But information is only one component of knowledge, and Robson

Profile: Jon RobsonThomson Reuters

is enthusiastic about the consultancy that can be provided. “We can create a customer advisory board focusing on specific areas where information and experiences can be shared,” he explains. “The global community needs to come together in order to run well ordered markets.” Providing business solutions, and not just products, has been a mainstay

of Robson’s career. One of his first significant positions within the financial technology space was at BIS Banking Systems, now Misys, across Europe and Asia. It began a significant career stint in the Far East. “I was asked if I’d like to go to Asia and I thought it would be for a few weeks, not a few years.” As a successful company, it serviced

growing companies – “You needed both the product and the business solution – how can we get you into business as fast as possible?” He moved to Telerate – the market

data provider of benchmark data on fixed-income securities, currencies and derivatives - and then become EVP for Dow Jones Markets in 1997. The same year was appointed as a non-executive on the board of inter-dealer broker Icap. Soon after he set up MoneyLine, a hosted Internet-based service that combined real-time trading data with historical content and was officially launched

in 1998. The company was a success in both Europe and Asia, with content

partners such as Dow Jones Newswires, S&P and Interactive Data. “People needed a means of communicating with the market,” he explains, “and MoneyLine was able to provide that.” By September 2001, the company was in a position to acquire Telerate. This created MoneyLine Telerate. He joined Reuters at the beginning of 2003 as global head of fixed income, and as a further foray into the fixed income space, the firm bought MoneyLine Telerate at the end of 2004 in an estimated USD175 million deal. Robson then became president of Reuters America, leading the business to high profits in its United States, South America and Canada, and head of Reuters Focus Group Accounts program.He relocated to London in 2008. This year, he sees potentially more business servicing hedge funds. “The level of service prime brokers were offering changed - there are new opportunities for us to provide those services as hedge funds require applications data and content.” n

Jon Robson is President of the Enterprise Markets Division at Thomson Reuters

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ISJ 267x203_30Jan:BP2S Ad 25/2/09 14:06 Page 1







“The global community needs to come together in order to run well ordered markets.”

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Outsourcing ISJ Investor Services Journal

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The financial crisis has not changed the capacity that technology and new ideas can enhance institutions, even if purse strings are pulled ever tighter. The outsourcing of parts of the middle-to-back office is one such example where new software, new partnerships and new structures of process can unite to help cut costs of institutions still hopeful for an upturn this calendar year. Providers of outsourcing services can range from boutique technology developers to larger, post-trade lifecycle specialists to banks. BNY Mellon is an example of the latter. The bank, conspicuous by its absence in the headlines of the financial crisis, has developed a broad range of asset services targeted at its peer group and asset managers – essentially a custody mandate of administrative services without a pension fund attached. Daron Pearce, head of UK and Ireland, says the growth of outsourcing demand has grown with the credit crisis, particularly for asset management firms. Though it may seem more intuitive to have external outsourcing partnerships during the good years, and revert to protective, in-house operations in the onset of a market downturn, the reverse is the case. “In a positive market environment where you are not struggling to cover your cost, the doctrine is to have everything in house,” he says. “We’ve seen it twice in the last decade. There was a significant downturn in the stock market after the dot.com bubble of 2001, markets were depressed and we saw a lot of deals come to market. Then from

2005 to 2007 there was nothing in the outsourcing space of any significance.” In the last six months, however, the company has been “awash with opportunities again”. “There has been a direct correlation between a fall in markets and rising number of outsourcing deals.” Shannon Goode at SS&C Technologies notes that asset managers pay fixed costs to deploy technology and the staff to run it, and this is unattractive in difficult market conditions in which the revenue from the assets they manage is variable. “As these assets go down, fees to manage go down, but their cost to support that remain fixed. Going to an outsourcing vehicle tends to match the variable cost structure.” Goode says the impulse to outsource has increased since the beginning of this year. In the few months up tot he end of 2008, he says, managers were frozen in the initial shock of the market decline. “I used the analogy that they were like deers in headlights – they weren’t doing that a lot as I think people were surprised at how drastically the market went down. But I’m seeing quite a but of pick up in this quarter, people saying, ‘okay, time to make the move.” Smaller firms, in which the decision maker is often the princoipal, are often able to move faster and strike

outsourcing deals, adds Goode. Larger firms can take a longer time due to a more entrenched bureaucratic process. . What asset managers call the back office, Pearce adds, a custodian would call the middle office, and opportunities are there to offer the full service. “In our asset servicing model we’ll support everything that’s post trade execution. So if you look at the trader lifecycle and trade confirmation, to compliance, to settlement, custody, client reporting, performance analytics and transfer agency fund accountancy.” Long running link-ups of this sort have further benefits, and there’s a strong relationship between providing an outsource service and providing a custody service. “If you create that accurate book of records, there are a number of things you can do with that enable us to have cost synergies that a single asset manager couldn’t possibly match,” says Pearce. “For example, a fund manager managing a mutual fund needs to produce a daily NAV position on that fund for publication. You need to have a portfolio valued for the ongoing management of that fund, a position of the custody book and you need to provide a transfer agency record for investors. “If you outsource all those services

OutsourcingCost saving and a well of expertise is driving the growth of out-sourcing the middle and back office, finds Ben Roberts

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to a single provider, they’re not going to create four different instances of the book of record. We will have a single instance with which we price a mutual fund that will be consistent with the custody record based on the same data to provide automatic triangulation and reconciliation with the transfer agency record.” Robin Kneale, head of strategy, Securities Processing Solutions, International, Broadridge, adds that apart from cost, outsourcing service opportunities can be sought from new entrants to the market - small traders, broker dealers or portfolio managers without a comprehensive middle and back office. “It’s fair to say that in the UK those that have outsourced have tended to be small- to medium-sized companies,” he says. In today’s market environment there have inevitably been fewer start-ups, he says, though the growth in merger activity may lead to new revenue streams for providers. “Merged companies would not necessarily have a common infrastructure for transaction processing and so may consider outsourcing,” he says. “Also, banks might often have a single infrastructure for all the different parts of the bank in terms of trading and brokerage. When a part of that bank splits from the rest, it will no longer have that facility.” Broadridge’s outsourcing division, Ridge Clearing & Outsourcing Solutions, specialises in clearing and settlement services. Ridge’s services are a significant line of business for the firm. By bringing together a lot of clients we can make their volumes of trades processing cost effective, explains Kneale. A transaction-based fee structure is typical, he adds. The Ridge service is fully established in the US market where it serves over 100 correspondents and is now growing its presence within the UK market through its FSA-authorised entity. The rest of Europe has the potential to be a longer-term target, adds Kneale, though the clearing space is a competitive environment. In Germany, for example, a number of transaction banks provide clearing.

Transparency is a consideration in outsourcing as with fund administration. Though a client will hand over its back office to a third party, it wants to retain a view on processes, says Kneale. Geoff Harries, director of product strategy at CheckFree, a solution provider for transaction banking that includes fee billing and order entryoffers a capability largely through the investment management community, says: “There’s a whole trade lifecycle - from trade capture, enrichment, validation, verification, routing before you get to settlement - to ensure stock or cash moves effectively. Ultimately, anything we do in giving greater visibility or transparency of where a trade sits in its lifecycle would allow people to better management their cash position as they would be able to see with more certainty if it has been confirmed or unconfirmed.” Pearce adds that outsourcing is part of a circular function: from the asset manager client to the outsourced custodian back to the asset manager. The [asset manager] execute the transaction, they tell us about the transactions, we confirm with their brokers in the market, we settle it either ourselves or instruct others to make a settlement and report back the updated position so they can continue to trade their portfolios. So it takes out all the traditional asset management back office.” To complete the picture, outsourcers will themselves outsource to service providers. Harries says CheckFree supplies to “seven out of the top ten” global outsourcers. “We deliver [our trade lifecycle solution] to a number of the largest asset servicers in the world who use it to support other investment managers.” He adds that outsourcing mandates can be very specific, often reflecting the deficiency in expertise inthe operations of those looking to outsource. Further, he has found that frms will often outsource by asset class. “While they might be happy to run their equity operations, they may not want to run their derivatives operation.”

Software as a service (Saas) is a significant development in investment firms looking to outource at a low cost. Essentially, software is developed and operated by companies like Calypso and SmartStream, and leased to clients. Smartstream’s Transaction Lifecycle Management (TLM) system has been particularly progressive in the area of trade reconciliation, and in March 2009 extended it via SaaS of this product to small and mid-sized businesses. The offering helps firms of this size to boost automation levels. “Customers of all sizes, but particularly those in the mid and lower tiers, no longer have to compromise on the tools they use to improve efficiency, lower transaction costs and reduce operational risk,” said Philippe Chambadal, the new CEO of Smartstream, at the launch of the TLM OnDemand system. Smartstream discovered through research that 65% of financial sector companies were used SaaS in more than two key business areas, compared to 52% of all companies in the survey. Alastair McGill, marketing drector at Smartstream, told ISJ that a SaaS outsourcing offering for smaller firms would help “level the playing field”. Pars Perawal, UK Investment Management, Real Estate and Alternatives Leader, at PricewaterhouseCoopers, said at a recent press briefing in association with the CBI expects outsourcing to continue. Daron Pearce at BNY Mellon emphasises that asset management will inevitably want to focus on its core function. “They are paid entirely by the value of the asset they value and those value are massively depressed right now”. Harries also anticipates an increase in outsourcing activity. “If someone’s looking at a new asset class they want to mover into – ten years ago youd naturally create an operational cap to support it in house. That’s really not the case anymore. I think people would have to rationalise carefully why they’d want to develop an in-house capability today if they can procure that service from established providers. ” n

ISJ Investor Services Journal Outsourcing

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13

Hedge Fund Technology ISJ Investor Services Journal

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Like a game of Cluedo (Clue for North American readers), cautious investors want to know the motive, weapons and whereabouts of hedge funds. Managers and CIOs can rightly expect inquiries, if not outright insistence, as to the investment methodology. The funds will look to systems providers to help them achieve the kite marks of transparency and compliance – no matter how onerous the new regulations might be. Frequently the demand for transparency comes from investors. Fred Jacobs, head of business development for alternative investment services at SS&C, describes investors - though inmportant before the crisis - have been elevated to the level of “king”, and have been scrutinising a hedge fund’s service provider. “The more you require a fund to do from an operational standpoint the better it is for some one like us that has all the bells and whistles,” he says. Hugues Delage, product manager at Horizon Software, which provides portfolio management, valuation and pricing and risk management systems for hedge funds, finds the sector particularly demanding. “In some ways, whatever works for hedge funds will work for traditional funds as well, but you have to be clear that a system that is good for UCITS III compliance will not work for hedge funds. You need much more specificity, with a broad range of instrument types,” he says. But budgets for such services are undoubtedly under intense pressure. “There is a great deal of cost reduction going on across the sector at the moment. People will sacrifice flexibility right now if it gives them a cheaper license and lower maintenance costs. They are looking for plug and play architectures that can be set up without

huge bespoke costs,” adds Delage. ‘Hosted’ services – ‘pay as you go’ models where the software provision is combined with a web-based solution - are growing in popularity as funds look to avoid large up front payments nor pay for maintenance. However, Delage says paranoia over data remains a powerful “brake” on moves to application service provider (ASP) style solutions. “People get paranoid about their data being held hostage by the service provider. But hedge fund managers are under tremendous cost pressure, so ASP is coming up for discussion more,” he says. The challenge is to find or agree pricing mechanisms with the clients for the more complex derivatives. Delages cite Brazilian swaptions as an example. A swaption, or swap/option confers the right, but not the obligation, to enter into a swap within an agreed time frame. “Strange” foreign exchange derivatives are another area - Horizon has its own quantitative analysts who build models for pricing these and other instruments. “What you need is both the ability to propose mathematical models that work, and flexible architecture that allows you to use other people’s model libraries, if this is the way they want to go. With our system you can plug and play different models as you require.” Value at Risk modelling - the probability that a portfolio’s mark-to-market loss over a time period would exceed its value - and stress testing are two further considerations. “In a high volume market, VaR can introduce errors, so many investors these days will require a hedge fund to produce stress tests for them before they invest – so they can see events like Lehman or 9/11 modelled for them,” he says.Different sized hedge funds also have

Hedge with an edgeAnthony Harrington surveys the technological

solutions available to hedge funds.

variations in their demands. Fred Jacobs at SS&C says smaller funds need “a lot of hand holding” as they often don’t haven’t fully hired their staff so you’re helping the with structural Infrastructure such as reviewing offering documents and helping to establish procedures procedures. He adds, however, that small funds may still be trading the esoteric items of larger players, despite having fewer strategies. Larger fund families often have multiple strategies - long/short, bank debt and fund of funds, for example - that demands a complete platform from the service provider. Servicing larger funds often leads to developments on the service side, in fact. “One of our largest clients asked to account for German tax, so we wrote that into our systems.” John Bourse, managing director of SkyRoad, another portfolio management systems provider, says that there is tremendous demand from both risk managers and traders for complete visibility on risk positions. “The risk manager is looking at macro type risk moves and the trader wants to analyse intra-day risk. We can provide this and we can also consolidate it across traders,” he says. This last point can be very important: a hedge fund may have three traders all using very different strategies, but with the same exposure to the same stock. This needs to be consolidated so that the risk manager can see the overall risk to the firm posed by that accumulated position,” Bourse says. As with Horizon, SkyRoad’s valuation model can be extended to embrace additional trading models, including the client’s own trading model. SkyRoad’s approach is pure ASP, using Citrix terminal server to deliver services to the client’s desktop

SS&C Fund ServicesRecognized as the source for independent fund accounting and administration for hedge funds, fund of funds and private equity.

Phone: +44 20 7614 9696 · Web: www.ssctech.com · Email: [email protected]

1in∙de∙pen∙dent

Definition:Free from the influence, guidance, or control of others.

F SSM

F SSM

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SS&C Fund ServicesRecognized as the source for independent fund accounting and administration for hedge funds, fund of funds and private equity.

Phone: +44 20 7614 9696 · Web: www.ssctech.com · Email: [email protected]

1in∙de∙pen∙dent

Definition:Free from the influence, guidance, or control of others.

F SSM

F SSM

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anywhere in the world the client has broadband access. “The value-add we bring, apart from the day-to-day services, is to help the client to understand the life cycle flows of trades,” says Bourse. “If a trade is unwound or terminated, it shows them the relationship between the trading system and the prime broker, for example, or the administrator. “How does our system help a hedge fund to become more transparent to its investor base? We provide the consolidation. We capture all the activity of the fund and centralise and consolidate it, which makes it much easier for the hedge fund to be as transparent to its investors as it wants or needs to be,” he says. Bourse says though it is too early to identify the new regulatory framework, transparency will be a big part of the picture. He also expects funds of funds to either want to do more of their own trading, or to demand more transparency from the funds that they invest in. “We expect this to be a very big trend in the next year or so,” he comments. Part of the challenge for systems providers is that hedge funds come in all shapes and sizes. This has been a hindrance to the ASP style services becoming widespread. As Bourse points out, most ASP solutions demand that the client fits the standardised solution. His approach is to adapt the solution to the client and the base system is highly configurable. However, he argues that technology is only half the battle. “You need people with a great deal of experience of the hedge fund industry and of operational and risk system type processing,” he says. “If the provider makes a wrong decision about how a trade should be processed, it can be very expensive for all concerned.” Data feeds such as volatility information are still sought, particularly when a swaption strategy needs to price an option. Solving this problem means working with the client, explains Bourse.

“A typical system would just have a field on the screen for the trader to enter the volatility, but volatility changes all the time. We work with the client to agree where that information is going to come from and how we are going to compute it,” he says. Each instance of the software is unique, so that if there is something proprietary about a client’s calculations, it is only implemented in that particular client’s system and none of SkyRoad’s other customers get to see it. Stuart Calder, director of Linedata Services, says whatever shape future regulation takes for hedge funds, having increased control over the exposure the fund is taking on derivatives will be a “given”. “Regulators are really going to want to know what steps funds are taking to manage and support their risks and derivatives will be a big part of this. “This new era has really accelerated the demise of the spread sheet as any kind of a critical tool in risk or compliance. From now on funds need vendors with fully fledged risk and compliance technology,” he comments. “Risk and compliance, in many ways, are two sides of the same coin. Going forward, hedge funds are going to have to operate like mini institutions, or like long-only funds,” he says. In fact, he adds, long-only investors have started to take shorter positions and use derivatives, while a number of hedge funds have adopted long strategies. “The big difference between the sectors is that hedge fund strategies and portfolios are still much demanding, as are the types of instruments traded. We have all been looking to make our platforms much more derivatives aware and they all need to run off reliable versions of the data.” Hedge funds have seen massive outflows as investors, spooked by the downturn and by the failure of some hedge fund strategies, have looked to repatriate their money. Assets under management in the sector have shrunk by as much as 50%.

However, Calder points out that the outperformance of hedge funds over equities in February 2009 was one of the highest it has ever been. “One of the problems in forming a view on the sector is that there is no definitive global measure. Last week I saw one estimate that put assets under management (AUM) in the sector at USD1.8 trillion, and I saw another in the same week that put AUM at under USD1 trillion. That is a huge margin of error,” he comments. Robin Strong, director of market strategy at Fidessa LatentZero, which provides solutions for global asset managers management industry and smaller investment managers and hedge funds, reveals consultants such as Mercer and Watson Wyatt say their clients are increasingly focused on “demonstrable business control”. This means industrial quality compliance and risk control and hedge funds who want to attract investment need to be able to demonstrate in a very practical way that they have the systems in place to satisfy the concerns of investors, he comments. He gives as an example a rule which says that all bonds should be at least single-A rated. A manager who thinks a B-rated bond might be a good investment could enter into a CDS swap that would guarantee the B-bond as an A-bond and that could either be allowed or disallowed according to the rules set up in the system. “Hedge fund managers need to have all of this integrated on a pre-trade basis so that they can get a warning that will prevent the trade from happening, if it is outside the parameters allowed by the fund – and blocking the trade at the outset is a much better solution than having to make a forced sale when you discover that it is outside the rules. “Today, it is all about how you actively manage your risk exposures. Institution managers used to put their money into funds with good track records. Now they put their money into funds with good controls and good track records.”n

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ISJ Investor Services Journal Russia

15

Another Russian failure will be the last thing the strained Western financial sector wants right now, especially with a backdrop of a G20 Summit that may help mend diplomatic rifts if not produce cogent regulation. The World Bank last month forecast an economic contraction of 4.5% for the country on the back of the decline in oil price, though the Russian government itself estimates a more moderate 2.2%. The OECD expects a sharp reduction in real gross domestic product throughout this year with a pick-up in 2010. Inflation - 13.9% at the time of writing - should decline by the end of this year. It has led to an abrupt volte-face for the Western banks that clamboured for market exposure before 1998. This decade, they crept slowly back to Russia without the pomp but still with hope of profits - attracted in particular by the 70% devaluation of the rouble. When Lehman Brothers collapsed, custodians such as Citi, ING, and Societe Generale saw capital flight from Russia at around USD12-16 billion a week. But Dr Elizabeth Stephens, head of political risk analysis at Jardine Lloyd Thompson, sees many differences between 2009 and the problems eleven years ago: “The big difference between today and the defaults in 1998 is that today the Russian government is trying to stabilise the value of the rouble. It has been relatively successful but we have to put it into context with falling value of other currencies.” The Russian stock market has fallen 70% since February, there has been a huge destruction in value for investors and billions of roubles have been wiped off the value of shares. “It’s not just financial fears but also

Foreign investors and service providers alike still face challenges in Russia.

fears regarding government action,” says Stephens. “This has in some sense precipitated the crisis in Russia. The controversies of Shaklin and BP/TNK have become the litmus test for foreign investment into Russia, highlighting the rule of law, or the lack thereof.” Yet where investors go, custodians must follow. The country now has a number of domestic players, such as Rosbank (owned by Societe Generale), and VTB, along with the established global brands of Citigroup and JPMorgan. Domestic custodians usually service domestic players, and foreign custodians - such as ING - tend to their

own book, or act as sub-custodian to Western peers. This divide originated during the 1990s, when new entrants to the market failed to be satisfied with the local infrastructure.

Perhaps most significantly, the country lacks a central securities depository - one characteristic that tends to divide ‘developed’ and ‘emerging’ markets. Ian Twine, network manager at HSBC who has overseen the Russian operation for nearly four years, says there has been talk of a CSD since 1998. Now the date of implementation has been set for 2013, though in light of this forecast he says simply: “don’t hold your breath”. For the two main depositories in the country - the DCC and the NDC - any single system would leave one of the two “with their nose out of joint”. No CSD puts a premium on trading. Traditionally assets are held in the name of the sub custodian in the local market as the trading process falls short of the kind of standards set by the US 1933 Securities Act. These assets are therefore held with the accounts with the company registrars. If a security is traded between two funds that have different sub-custodians, and therefore different registrars, there has traditionally been a high re-registration fee, often as high as 20 bps for the value of the transaction. Twine claims to have occasionally seen registration fees of up to USD40,000. Just a few years ago, explains Twine, there were as many as 500 of these registrars making a lot of money from charging this fee. The only way to avoid this cost is to register the securites with one of the two main depositories. Twine says his team has been looking at using the DCC to hold client assets. HSBC is close to agreeing with ING, its sub custodian, a legal agreement whereby it can offer its London clients delivery-versus-payment, a vital and common element of Western market as a precaution to counterparty risk. However, he says, it would mean the client would have to register the assets with the DCC. These depositories carry risk as they are undercapitalised, he says, though

“Foreign players don’t have enough understanding of the local clients”

Rami Bourgi, SGSS

Climate not changed

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ISJ Investor Services Journal

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Russia

When did you establish a presence in Russia?

We bought a smaller bank three or four years ago that had its base in St Petersburg. Out of that we built a number of business areas, and last year we opened up a sub custody service for foreign institutions entering into Russia. We have two businesses, the global and sub custody.

What is the make up of the clients?

It was a smaller operation focused on retail business but also does corporate business. We have a big client base in Nordic countries that invest into Russia, it’s a big market for the mutual fund business. In servicing our

own custodian clients we over time will offer this to other custodian and broker dealers that invest into the market.

How are the mutual and pension funds invested ?

Mainly equities. There has been a high percentage of shares going into the energy sector. A fund or pension fund would invest in a broad rage of papers, we have several hundreds of underlying securities for our clients. How do you assess the market?

The Russian market has grown enormously if you look one and a half years back. After September, the Russian market has come down quite a lot and has been one of the biggest fallers in the world. Nordic customers activity has come down along with asset values. The interest is still there; it’s more long term. For

the time being, there has been slower investment into markets that have more ‘emerging market’ characteristics but it’s still an important market. The market infrastructure still lacks a number of items, such as risk mitigation, delivery versus payments, and there are still issues as to how corporate events are handled. It does not have a proper central securities depository. Delivery versus payment would mitigate the risk for the counterparts, a lot of the trading is done over the counter and the payment for trades are done in US dollars outside the country. It’s more complex to serve local clients - your setup needs to be different, everything from client procedures to reporting systems. Over time we’ll be looking to service local clients but that will be at a later stage. n

Russian presence: SEBGoran Fors, global head, custody sales

nothing settles on this basis because of the potential re-registration elements”. The market, though dematerialised, is still a manual process. “The instruction might come through onto the lender’s system as STP, but thereafter it’s a very manual process.” Twine compares the system to that of London in the 1980s. “I’ve been to a registrar in Russia and it is very much like in the UK then, where you queue up round the block and you

there is no re-regitration fee. “We don’t recommend the use of the DCC to hold client assets as they are not 17F5 compliant, but if the client is willing to take that risk and sign the addendum to the custody agreement we have in place with them, we will hold the client stock in the name of the DCC.” Twine adds that the risks associated with the depositories, along with the lack of internationally recognised audit, causes many investors to pay the registrar fee instead. However, he says, a few clients have signed this agreement and a few are discussing it. “If I go out to clients and say, ‘we can provide you with DVP’, I think evey client investing in Russia will be saying that’s what they want; they don’t to send two instructions – one for stock, one for cash – and they want settlement in three days.” The lack of set regulation for corporate actions is another stumbling block. If a company has an annual general meeting, it is frequently only obligated to pay dividends within the calendar year, rather than a typical Western standard of 30 days after the meeting. But according to Ramy Bourgi, head of emerging markets development, SGSS: “Foreign players don’t have enough understanding of the local clients because traditionally they have only catered for the global book.” The French bank’s partnership with Rosbank appears to be a sensible bridge between foreign and domestic. However, though custodians like SGSS are still winning mandates for future investment into Russia, the missing pieces of the infrastructure jigsaw is difficult to create any kind of momentum of foreign inflows. Setting up systems that are Swift compliant are therefore vital for winning future foreign mandates. Bougi says fewer registrars and a major central depository are vital additions for any emerged market. Twine says the concept of a contractural settlement day is “irrelevant” in the Russian market - “everything is dealt with on a T+3 basis, but predominantly

have paper allotment forms.” However, in four years up the present, a change to mindset, if not operations, is evident. Twine cites the liberalisation of the Rouble as an example. “We’ve seen more possibility for foreign investment in Russia. I suppose that’s down to the Russians themselves that they saw opportunity for them when Western financial companies want to invest in their country.” n

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Head 2 Head

Benelux fund administration

today only a limited number of providers that have these capabilities and they should benefit from their expertise in that area.

VAN HOUWELINGEN: This is difficult to answer, as ultimately that will have to be determined by the market. If an asset is illiquid, the ques-tion then is what is a fair price? In many cases you will find a vendor that is willing to provide a price – but if there is no party willing to buy that asset, then the price remains merely theoretical.

2. The investment landscape in the Netherlands and Luxembourg in particular – including for fund managers of pensions – have a strong investment preference for alternative assets, such as swaps

1. In declining markets, is it possible to strike a balance between relaxing fair value if needed in the short term with installing this principle in the long term?

DANLOY: Fair value is an absolute requirement. Until now, most fund administrators have been using book cost or counterparty pricing to value unlisted securities. These OTC and structured instruments were not independently valued and this has led to some artificial valua-tions. It is essential that fund managers and institutional investors accept to use third party independent valuations and that service providers offer this solution to their client base. OTC derivatives and structured product pricing are two elements that are key. There are

Head 2 Head

Leonique van Houwelingen, Head of Relationship Management, Netherlands at BNY Mellon Asset Servicing.

Sebastien Danloy is global head of sales and relationship management at SGSS. He has worked at the European Court of Auditors in Luxembourg, State Street and BNP Paribas.


Experts from two leading providers in the Benelux region examine fund administration. Belgium, the Netherlands and Luxembourg have weathered the financial crisis comparatively

well in a global context. But they are greatly varied markets, with numerous challenges for the provider of fund administration, from clients to regulators.

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34 35

Next issue: Custody networks

“Given today’s markets, it is generally understood that many of the traditional ‘leveraged’ hedge funds will disappear”Leonique van Houwelingen, BNY Mellon

and socially responsible invest-ments. What challenges does this pose for the administrator?DANLOY: As far as Societe Generale Securities Services is concerned, it does not pose any specific issues. We have the capabilities to service fund

managers with an end-to-end solutions covering listed and OTC derivatives. Several pension funds already leverage this particular expertise we have built in-house over the last few years. Compliance for SRIs is probably the one element that needs to be carefully looked at.

VAN HOUWELINGEN: The chal-lenge is always to keep pace with the creativity of the front office and ensure that our products and services are flexible enough to

be tailored to meet individual clients specific needs. Accord-ingly, we stay very close to our clients – indeed, our role today has become far more consultative in nature than has historically been the case, we are now far more embedded in our clients’ businesses. Of course, this also means that you have to commit to the required reinvestment in technology and intellectual capital year after year, and that is something many smaller or less focused providers are finding in-creasingly hard to countenance.

3. Post-Madoff there has been increased market emphasis on on independent adminstrator, particularly for hedge funds. Will independent administra-tion and audit become a manda-tory part of the Benelux region?

DANLOY: The lessons learned post-Madoff are that there is a massive responsibility for the depositary bank which ultimately becomes responsible for invest-ment decisions made by the fund managers. When you look at the fees charged by both parties, they surely do not reflect the reality of the responsibilities of each party and of the indemni-fications expected. That is the main point we can learn from this story. Whether the regulations will be strengthened and will no longer accept in-house adminis-tration service, this remains to be seen.

VAN HOUWELINGEN: In the Neth-

“It is essential that fund managers and institutional investors accept to use third party, independent administration”Sebastien Danloy, SGSS

will demand total transparency and that is difficult to obtain. On top of that the risk appetite of investors has obviously changed significantly and therefore UCITS funds will become more attractive

5. The FvGR pooling structure has been an influential factor in Luxembourg and the Nether-lands. Have you seen increased client demand for reporting on underlying funds, and how significant is the challenge in providing this?

VAN HOUWELINGEN: There is in-deed increased client demand for and an attendant trend towards more transparent reporting, with clients starting to move away from master trust unitisation. Moreover, investment managers are also driving this trend as they seek more efficiencies through the establishment of pools such as FvGRs.

The challenges are two-fold. Number one, technology: your systems need to allow the admin-istration of the securities at the investment level, the pool level and the participants level. Most of the larger global custodians now have the systems in place to provide this level of administra-tion.Secondly, data – when it comes to collating the data from all investment managers, in particu-lar the specialised investment boutiques, the fact that these managers earmark their invest-ment information as confidential may pose a challenge. Global custodians like ourselves have an advantage here as are seen as independent and neutral.

One additional challenge that will not go away is that the local tax authorities in the different markets involved will have to recognize the tax transparent status of the FvGRs. n

erlands, and in particular in re-spect of Dutch pension funds, we have definitely seen a trend to-wards increased regulation to en-able the supervisors to gain more insight into funds’ accounts. We will see more regulation aimed at ensuring similar oversight to that seen in the UCITS context, to protect the individual pension premium payer. It could be that independent administration and audit will become mandatory, but even now stakeholders will typically ask for independent auditing of a fund’s accounts.

4. How will increased regulatory attention affect hedge funds’ activities in the region and their investment operations with more mainstream funds such as UCITS?

DANLOY: Hedge funds are in the radars of regulatory around Europe. A general framework on a global basis needs to be agreed if we want to see any significant changes in that area. It is not so much the hedge funds itself which are an issue in my view but the fact that hedge fund managers were not necessar-ily regulated. This is the area in which international coordination and action is required.

VAN HOUWELINGEN: Given today’s markets, it is gener-ally accepted that many of the traditional ‘leveraged’ hedge funds will disappear. Regulators

FactLines The net assets of Luxembourg UCIs increased by 0.76% in January 2009 to a figure of 1 571.534 billion euros (source ALFI).

BNY Mellon has more than 25% of the pension market in The Netherlands.

Total asset size for the pension funds in The Nether-lands is over EUR 700 billion.

Belgian pension funds suffered a negative return of 20.5% in 2008, the Belgian Association of Pension In-stitutions (BVPI) has revealed. For reference in 2002, losses were averaged at -12.1%

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Securities LendingISJ Investor Services Journal

Cash collateral pools and their reinvestment rarely escaped the investment headlines last year. Two lawsuits against Northern Trust – from the University of Washington and BP - based on the losses incurred on their securities lending caught the eye. More recently, it was reported that as much as 90% of US pension plans have been hit by valuation in the cash collateral pools, causing some custodians to impose redemption restrictions on the underlying index funds. Some custodians took cash as collateral and invested it in their in-house money market funds – which could be arguably seen as a conflict of interest. Should agent lenders be able to earn additional fee-based income, at their clients’ risk, by funnelling cash into their own vehicles? At least some of those funds, in turn, were invested in Lehman Brothers or Lehman Brothers-related paper, now worthless, or in other ‘toxic’ assets such as mortgage-backed securities. As a result, clients had to hope their custodian would protect them from unindemnified losses. For some it did

Reinvesting the wheel

work - Northern Trust’s decision to help its clients cost the bank USD515 million. But the cash hit taken to protect client wealth is probably worth it to protect its reputation and its relationships. But it is the providers rather than the users of the service who are the convenient scapegoats. Mark Payson, managing director at Brown Brothers Harriman, says: “In some programmes, the focus was pushed too far away from securities lending and towards securities financing, which stresses the potential proceeds from cash reinvestment.” Securities lending is still a relatively low-risk product if the right approach is taken, he adds. “There may have been a disconnect between the philosophies of the agent and the beneficial owner in some cases. Looking back, some beneficial owners may wish they had asked more questions, and reviewed the acceptability of their securities lending programme more often. Most beneficial owners were not looking to be involved in a high-risk strategy, but in some cases, this was what resulted.” After a rebate is paid to the broker for the use of its cash, the spread between

that rebate and what has been earned by the investment of the cash represents the client’s earnings. Cash collateral and cash reinvestment have been around since the inception of securities lending, but many, if not most, of the big issues arising from the latter. The important thing is to understand the many options that are available relating to the treatment of cash collateral. A very conservative approach will mean doing a government repo or a time deposit with a highly reputable bank (if such a creature can be deemed to exist in this day and age), cutting maturity and credit risk to an absolute minimum. A more adventurous approach might be to invest in a money fund, a registered product or a separately managed account with riskier guidelines, creating maturity risk and raising credit risk by introducing into the pool assets from further down the credit curve, such as GE commercial paper or paper issued by a very small company. The possibilities have been many and various, limited only by the imagination of the parties involved on the issuing side of the equation and the risk appetite (i.e. greed) on the investing side. While the collateral investment spectrum is broad, it is the areas of maturity risk and credit risk that have historically created the greatest problems for the securities lending market. They did so again last September. “Neither of these is related to the BBH programme,” Mark Payson is quick to point out. “We are arguably one of the only agent lenders not to have issues with the challenges presented by collateral reinvestment. We are on an island with a

The reinvestment of cash collateral in securities lending has been a mainstay of market debate,

finds Brian Bollen.

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Securities Lending ISJ Investor Services Journal

01 11 3112 22 3203 13 2304 14 2405 15 2516 2607 17 2708 18 2809 19 2910 3002 06 20 21

“One good lesson form the financial

crisis is that cash is not a

protected asset”John Donohue,

Carne Global

limited few and are happy to be on that island.” John Donohue, chief executive officer of Carne Group, advisers to the asset management industry, describes cash as the worst form of collateral, while hailing Treasury bills as the ideal. “One good lesson to be learned from the financial crisis is that cash is not a protected asset,” he says. For Oliver Madden, technical sales, securities lending, at RBC Dexia Investor Services Trust, the overriding lesson is that the market need to get back to basics. “There needs to be a clear understanding by every individual participant in securities lending and cash reinvestment of their own objectives and their own risk/reward parameters,” he says. “Those beneficial owners who continue to accept cash collateral will need to monitor the cash reinvestment more closely in future.” The underlying blame for what happened – and don’t we all like to point the finger of blame sometimes - lies somewhere between the two functions, comments Chris Oulton, chief executive officer of Prime Rate Capital Management in London. “Money market funds are investment products, not banking products, and inappropriate portfolio construction by investing in, for example, paper from a poorly rated issuer that is already on credit watch, would be beyond most fund parameters. You hope your custodian will hold the right mix of assets, but institutional investors are assumed to more sophisticated than their retail counterparts, and they should do their best to ensure the products they invest in are fit for purpose.” Some lenders in the marketplace would recognise now that perhaps they should have spent more time on the supervision and management of collateral reinvestment than they actually did, adds Paul Wilson, global head of client management and sales for securities lending at JPMorgan. “Since the events of last year we have seen an increased level of interaction,

engagement and supervision by many of our clients, which we think is a healthy development. We have seen a small number of people leave the securities lending programme, but we have also seen a number of those subsequently return to it. The industry did, after all, hold up pretty well for the most part. Most lenders came out of the Lehman default reasonably unscathed and together for those who want ed to exit, being able to do so will be important factors in deciding whether or not to return.” Here’s how it works. An agent lender lends out USD1 billion of client securities to a broker-dealer, takes USD1bn cash as collateral and reinvests that cash in a money market vehicle. At

some point the broker-dealer wants to return the securities, and receive its cash back. In recent times the industry has been challenged in the repayment of the cash for two reasons. One, some of the collateral reinvestment has been into pools containing Lehman Brothers commercial paper, or collateralised mortgage obligations, that have proved to be either completely worthless or not paid back dollar for dollar. Two, the broker doesn’t yet want to return the securities borrowed, but the falls in market values of the pool in which its cash has been reinvested mean that a $1bn of collateral is suddenly worth only $600m. When the lender does need to generate liquidity to repay the broker-dealer, there is a problem. Even with assets where the credit is

deemed to be still good, challenges arise from the pricing perspective. An asset that might be worth 100% if held to maturity might be worth only 80% in the event of a forced sale, undermining the long-standing principal selling point of money market funds: the belief that they will never break the buck, that is the net asset value of such a fund will never be below 100%. The impact upon securities lending of even unrealised losses in collateral pools cannot be underestimated. The losses are not indemnified by agent lenders and even ‘sophisticated’ investors are beginning to grasp the reality that there is, in the time-honoured cliché, no such thing as a free lunch. “If they didn’t fully understand the risks before, money market participants are now beginning to understand the potential for losses,” says Mark Payson. “Contractually beneficial owners have always owned the risk associated with collateral reinvestment; however, I think what is coming into question is whether they knew the suitability of where that collateral was being reinvested in relation to their own risk profile. While lenders own the collateral risk, agents also have a responsibility to educate lenders on what those risks are.” Even when there is no legal obligation to step up to bail out lenders, the question of the continuation of profitable relationships suggests that agent lenders would be well advised to dig deep. Whatever an agent lender’s decision, the issues impacting securities lending collateral pools are in many ways a microcosm of wider market sentiment: risk has been severely underpriced and the market is now overreacting in the opposite direction. In such a febrile atmosphere, the likelihood is that owners will begin to treat securities lending with a greater deal of respect, and come to view it as an asset management product rather than as an adjunct to custody. Wayne Burlingham, global head of securities lending at HSBC Securities

28

GSL Summit| Global SecuritiesLending

Lending for Liquidity In parched markets, liquidity must be widely sought, and securities lending can be a vital source. Beneficial owners (pension and insurance funds in particular) can only understand the wider benefits of this liquidity if they are fully engaged with the lending process and understand the potential, the risks, and have opportunity to voice their concerns and views. GSL invites readers to an informative afternoon to discuss this topic along with wider issues of transparency, risk and returns at this crucial time.

The event is free of charge to attend but by invitation only. Please contact [email protected] or visit www.GSL.tv for invitation request.

DaTeThursday, 14th May 2009

LocaTionFour Seasons Hotel, canary Wharf, London

1:30 PMRegistration/coffee

5:00 PMDrinks Reception

neW DaTe

Thursday, 14th May 2009

GSL Sum Lend4Liq AD.indd 28 05/04/2009 19:0417-23 ISJ38 APR5.indd 20 6/4/09 14:51:12

28

GSL Summit| Global SecuritiesLending

Lending for Liquidity In parched markets, liquidity must be widely sought, and securities lending can be a vital source. Beneficial owners (pension and insurance funds in particular) can only understand the wider benefits of this liquidity if they are fully engaged with the lending process and understand the potential, the risks, and have opportunity to voice their concerns and views. GSL invites readers to an informative afternoon to discuss this topic along with wider issues of transparency, risk and returns at this crucial time.

The event is free of charge to attend but by invitation only. Please contact [email protected] or visit www.GSL.tv for invitation request.

DaTeThursday, 14th May 2009

LocaTionFour Seasons Hotel, canary Wharf, London

1:30 PMRegistration/coffee

5:00 PMDrinks Reception

neW DaTe

Thursday, 14th May 2009

GSL Sum Lend4Liq AD.indd 28 05/04/2009 19:0417-23 ISJ38 APR5.indd 21 6/4/09 14:51:13

22

56

Analyse This01 11 3112 22 32 4203 13 23 33 4304 14 24 34 4405 15 25 35 4516 26 36 4607 17 27 37 4708 18 28 4809 19 2910 3002 06 20 21


40 413938

Despite the launch of the SEPA Credit Transfers (SCT) scheme in January 2008, practical implementation remains low, with just 1.9% of the total credit transfer volume in the euro areas being SCT transactions. The European Central Bank (ECB) has therefore recently called for a migration end date for SEPA Credit Transfers and SEPA Direct Debits (SDD) to be set to ensure that the full benefi ts of SEPA are realised. The next stage of implementation – in the form of the SEPA Direct Debits is due to kick off in November, alongside the Payments Services Directive (PSD). Banks are rapidly realising the need to react and comply sooner rather than later to both these initiatives. With this deadline looming, many banks are likely to adopt a minimal compliance solution in the short-term that simply ticks the boxes.While understandable given the time constraints, this will only go so far. To be in a strong position to convert all domestic payments to SEPA

Why won’t a minimal approach to SEPA work in the long-run?Richard Davies, director, global payments, Logica

Analyse This: SEPA today

instruments, which the ECB is pushing for, banks must look longer-term. Banks are no strangers to updating systems to accommodate new regulations and standards. In the past, they have been inclined to implement tactical fi xes to legacy systems. Today, this strategy can lack foresight. Not only does it increase the cost of payments transformation, but it increases operational risk, as these infrastructures are not designed to cope with shifting regulations like SEPA. Banks looking to scale should use

their implementation of SEPA and the PSD as the catalyst to revamp their payments operations, considering the short-, mid- and long-term future. It is an opportune time to invest in a modern infrastructure with the capability to span regions, currencies and languages. Forward-thinking banks that embrace SEPA as part of their long-term strategy should implement a single framework that covers both credit transfers and direct debits. Furthermore, with the rules around SEPA likely to evolve over time, it is important to have a stable modern payments environment that can effectively adapt with these changes. There’s no question that the entire payments industry is striving to meet the PSD deadline. And while it’s a slow-starter, SEPA uptake will increase, especially as large corporates become more aware of the value of rationalised euro services and pressure banks into providing them. It therefore promises a signifi cant impact on payments revenues and can put banks in a more competitive position. n

“It is an opportune time to invest in a modern infrastructure”

Services in London, says lending should extract the “full intrinsic value” of securities but there should never be capital at risk. It has caused the bank to eschew cash collateral. “In specifi c cases agent lenders may have been too focused on just the extra revenue instead of the increased, associated risk,” he says. “But the pursuit of that extra revenue has left a large number of their clients, rather than themselves, sitting on potential losses from cash reinvestment. Moreover, many lenders are now locked into custody arrangements they cannot get out of without crystallising further losses.” He adds that a “pall” hangs over the securities lending market. “Some consultants have not helped by issuing bulletins spooking many, warning them to immediately stop lending unless certain conditions are met. I believe it would have been more appropriate to take a more positive view, to advise people to continue lending as long as certain conditions are met.” “It is not securities lending that was the problem, but the reinvestment of the cash collateral into poor quality assets. If we lend UK gilts, we typically take in UK gilts, safe assets [once again, this writer would add, safe for the moment; the failure of one gilt auction in March - at a time when unprecedented volumes of issue are in prospect – was brushed off the UK authorities as a technical issue, but it still registered on the fi nancial Richter scale, sending shivers down many a spine]. And as we comprehensively indemnify clients, if the borrower goes bust, as Lehman Brothers did, we simply replace the lost assets in question. In many circumstances we actually generate better returns than agent lenders who take cash collateral, i.e. it often isn’t even necessary to run the additional risk. People are now realising they have to stop chasing yield and focus more on risk.” And in the meantime, let the law suits - against custodians and global accounting fi rms – commence. n

Japanese Textile Stencil, 1900 — Mulberry paper with dye

At J.P. Morgan, we invest in what’s really important—whether protecting priceless works of art for future generations or building client relationships that stand the test of time. We take our relationship with you very seriously, to help you achieve your business goals, enhance efficiency and mitigate risk.

When you’re passionate about your business, the right relationship is essential.

J.P. Morgan clients benefit from the expertise of our entire global franchise.

Through this holistic approach, we harness innovative technologies and

firmwide resources to offer clients more choices, greater customization and

unmatched flexibility.

Innovation with superior results.

J.P. Morgan Securities Lending

A full spectrum of global capabilities, including discretionary,

principal and directed lending, as well as auctions and exclusives

Financial strength

Disciplined risk management

Innovation in product development

Access to resources and expertise of a leading financial

services franchise

V V To find out more, log on to jpmorgan.com/securitieslending, or contact:

Western Hemisphere William Smith at 212-552-8075Europe, Middle East and Africa Michael Fox at 44-207-742-0256Australia/Japan Stewart Cowan at 61-2-9250-4647Asia Andrew Cheng at 85-2-2800-1809

The Art of Relationships

The products and services featured above are offered by JPMorgan Chase Bank, N.A., a subsidiary of JPMorgan Chase & Co. JPMorgan Chase Bank, N.A., is registered by the FSA for investment business in the United Kingdom. J.P. Morgan is a marketing name for Worldwide Securities Services businesses of JPMorgan Chase & Co. and its subsidiaries worldwide. ©2009 JPMorgan Chase & Co. All rights reserved.

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23

Japanese Textile Stencil, 1900 — Mulberry paper with dye

At J.P. Morgan, we invest in what’s really important—whether protecting priceless works of art for future generations or building client relationships that stand the test of time. We take our relationship with you very seriously, to help you achieve your business goals, enhance efficiency and mitigate risk.

When you’re passionate about your business, the right relationship is essential.

J.P. Morgan clients benefit from the expertise of our entire global franchise.

Through this holistic approach, we harness innovative technologies and

firmwide resources to offer clients more choices, greater customization and

unmatched flexibility.

Innovation with superior results.

J.P. Morgan Securities Lending

A full spectrum of global capabilities, including discretionary,

principal and directed lending, as well as auctions and exclusives

Financial strength

Disciplined risk management

Innovation in product development

Access to resources and expertise of a leading financial

services franchise

V V To find out more, log on to jpmorgan.com/securitieslending, or contact:

Western Hemisphere William Smith at 212-552-8075Europe, Middle East and Africa Michael Fox at 44-207-742-0256Australia/Japan Stewart Cowan at 61-2-9250-4647Asia Andrew Cheng at 85-2-2800-1809

The Art of Relationships

The products and services featured above are offered by JPMorgan Chase Bank, N.A., a subsidiary of JPMorgan Chase & Co. JPMorgan Chase Bank, N.A., is registered by the FSA for investment business in the United Kingdom. J.P. Morgan is a marketing name for Worldwide Securities Services businesses of JPMorgan Chase & Co. and its subsidiaries worldwide. ©2009 JPMorgan Chase & Co. All rights reserved.

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ISJ Investor Services Journal ISJ Investor Services Journal ISJ Directory of Services ISJ Investor Services Journal

24

DnB NOR is the leading provider of Custody, Clearing and Remote Member Service in Norway. DnB NOR offers a full range of securities settlement, Corporate Action and cash management services for both foreign and domestic institutional clients. The bank has a strong commitment to the Custody business in Norway and the staff is highly knowledgeable and experienced. In addition, DnB NOR provides a wide range of value-added services for foreign clients such as 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.

ISJ Investor Services Journal ISJ Directory of Services

T: +47 22 94 92 95F: +47 22 48 28 46Contact: Bente I. Hoem, Head of Global Relations & NetworkE: [email protected]:www.dnbnor.com

Intesa Sanpaolo’s Transaction Services include :Sub Custody, Derivatives and Remote Membership Clearing• Global Custody and Depository Bank for mutual funds, pension funds, real • estate funds, private equity funds and hedge fundsFund Administration for mutual funds, pension funds, real estate funds, • private equity funds and hedge fundsPaying Agent for foreign funds and sicavs• Cash and Payment services like swift to checks, mass payments, checks and • cash letters

Banking Securities Services provides award winning local and regional custody services for investment professionals. We are proud to be the largest custodian provider in terms of assets and number of foreign clients in Central & Eastern Europe. ING has been providing Securities Services in CEE since 1994 and we will continue our ongoing pursuit of excellence through new technology. Innovation and client focus are the key drivers to service our clients the best way.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.


Piazza della Scala 620121 Milan, ItalyT: +39 02 8794 2466F: +39 02 8794 1519W: intesasanpaolo.comC: Riccardo LamannaE: [email protected]

For further information please contact Lilla Juranyi, Global Head Custody at + 31 20 7979 435 or contact her by email: [email protected]

Asset Servicing

Custody & Clearing

Consultants|Consultancy

Goal is widely-acknowledged in the fi nancial services sector for its innovative and creative solutions to highly-specialized niche processes.Goal’s research has shown that in excess of USD8 billion of withholding tax remains unclaimed each year by the rightful owners and benefi ciaries and that over USD12 billion is lost because rightful benefi ciaries are not participating in class actions, bankruptcies and disgorgements.

SMA Financial is the UK’s premier provider of SWIFT services and a long standing business partner of SWIFT. SMA’s vast experience in the banking and securities industry has provided high quality provision of SWIFT related consultancy, training, system care and bureau services which is second to none. SMA prides itself on their in-depth and highly experienced team of consultants chosen from the banking and securities industry. The introduction of the SWIFT bureau service has witnessed much success by providing cost effective and quality hosted connectivity services to many satisfi ed clients.

BHF-BANK is one of Germany’s most prestigious private banks dating back to 1854. As an advisory, service and sales & trading bank, we offer our discerning clientele a comprehensive array of customised solutions. BHF-BANK combines the strengths of a private bank with a long track record of capital market competence. Trust, an individual approach and impartiality - these qualities are at the very heart of the long-term guidance and advice we provide. Our bank’s activities are grouped within the divisions Asset Management & Financial Services, Financial Markets & Corporates and Private Banking. The bank’s longstanding experience in the German securities services market goes hand in hand with a corporate culture that values prompt acknowledgements and short decision-making channels. BHF-Bank offers tailor-made custody services to meet its clients’ particular requirements. It’s reporting services include a comprehensive SWIFT reporting matrix as well as its Internet-based reporting tool cds@web.

Assets under Custody: EUR309 bn No of funds: 409

T: +44 (0) 208 760 7130C: Stephen Everard or Saghar BigwoodA: 7th Floor, 69 Park Lane,Croydon, Surrey, CR9 1BGE: [email protected] or [email protected] or [email protected]: www.goalgroup.com

Simon MurbyManaging DirectorSMA Financial LimitedTelephone : +44 (0)20 7940 4200Bramah House,65-71 Bermondsey Street,London. SE1 3XFWebsite: www.sma.co.uk

C: Cornelia Keth T: +49 69 718 3738F: +49 69 718 6050E: [email protected]: Moritz OstwaldT: +49 69 718 6838E: [email protected]: Strahlenbergerstraße 45, 63067 Offenbach a.MainGermanyW: www.bhf-bank.com

ISJ Directory of Services

24-32 ISJ38 APR5.indd 24 6/4/09 13:44:48

ISJ Investor Services Journal ISJ Investor Services Journal ISJ Investor Services Journal ISJ Directory of ServicesISJ Investor Services Journal

Nordea is the leading fi nancial 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 leading custody services provider in the region. Nordea provides high quality, tailor-made custody services for local and foreign investors dealing with Nordic and Baltic securities. Due to the unique history of being formed from four established banks, Nordea is the only Nordic custody provider with strong local presence and expertise in all four markets. Nordea combines Nordic competence with local expertise, and 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-fi t 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.

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 5,500 professionals in 16 markets, help clients grow their business and sustain enhanced performance through effi ciency improvements and robust risk management processes. Equally-own by RBC and Dexia, the company ranks among the world’s top 10 global custodians with USD 1.9 trillion in client assets under administration.

Contact:Nina GrothHead of Sub-custody and ClearingTel: +45 3333 6124E-mail: [email protected]

www.rbcdexia.com

T: +44 (0) 20 7653 4096F: +44 (0) 20 7248 3946Contact: Antony JohnsonHead, Sales & Relationship ManagementE: [email protected]: 71 Queen Victoria Street, London, EC4V 4DE, UK

25

Financial Asset Services is the custody and investments-servicing division of Standard Bank, providing a unique suite of services to sophisticated investors in South Africa and eight sub-Saharan markets.

Standard Bank has assets under custody to the value of ZAR1.56 trillion and an overall market share of approximately 40%.

Standard Bank’s unique selling point lies in its consultative approach to relationships combined with the bank’s commitment to custody and investment administration services.

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 560 bn EUR and provide services in more that 75 markets, 10 of them under the SEB name (Sweden, Norway, Finland, Denmark, Luxembourg, Germany, Estonia, Latvia, Lithuania and Ukraine). We offer a full range of securities services including corporate action and information services, securities lending and services to remote members of the Nordic and Baltic stock exchanges. 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 effi cient. With a history of over 150 years in the securities industry; we know the market and our clients well.

ISJ Directory of ServicesISJ Investor Services Journal

Santander is Spain’s leading fi nancial institution and the largest bank in the euro zone by market capitalization. Our commitment and contribution to the securities industry is well established after more than a century of providing services in this fi eld.Santander’s cutting edge technology enables it to offer a comprehensive array of innovative services in a broad range of markets. Santander currently has full local capabilities in Iberian and Latin American markets along with a franchised presence in many others. Santander`s experience and product range ensures that every aspect of the securities business is fully contemplated.

T: Europe: (34) 91 2893932 / 28T: USA: (1212) 350 39 02 W: santanderglobal.comE: globalsecurities@ gruposantander.com

A:Standard Bank Financial Asset Services 3rd Floor 25 Sauer Street Johannesburg 2107 T: +2711 636 6615E: [email protected]: www.standardbank.co.za

T: +46 8 763 53 04F: +46 8 763 69 30C: Goran Fors, Global Head of Custody ServicesE: [email protected]: www.seb.se


Société Générale Securities Services offers institutional investors, asset managers and fi nancial intermediaries a comprehensive range of fi nancial securities services: custody, clearing & trustee services, fund administration, asset servicing and transfer agency. SGSS currently ranks 3rd European custodian and 9th worldwide custodian (Source: Globalcustody.net) with EUR 2,580* billion in assets held and valuates 4,354* funds representing assets of EUR 405* billion (as of June 2007).

Sébastien DanloyGlobal Head of Sales,Investor ServicesSociété Générale Securities ServicesT: +33 (0)1 41 42 98 65E: [email protected]: www.sg-securities-services.com

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26


Interactive Data Corporation (NYSE: IDC) is a leading global provider of fi nancial market data, analytics and related services to fi nancial institutions, active traders and individual investors. The Company’s businesses supply real-time market data, time-sensitive pricing, evaluations and reference data for millions of securities traded around the world, including hard-to-value instruments. Many of the world’s best-known fi nancial service and software companies subscribe to the Company’s services in support of their trading, analysis, portfolio management and valuation activities. Through its businesses, Interactive Data Pricing and Reference Data, Interactive Data Real-Time Services, Interactive Data Fixed Income Analytics, and eSignal, the Company has approximately 2,300 employees in offi ces located throughout North America, Europe, Asia and Australia.

SmartCo is a leading provider of data management solutions for the fi nancial industry.SmartCo’s software, Smart Financial Data Hub, covers all the data area, including fi nancial instruments, market data, third parties, funds, transactions, and provides full connectivity, a powerful and user friendly front-end, traceability, quality control, data enrichment and customisable workfl ow. Our solutions are based on SmartPlanet, an innovative technology focused on data management, and able to meet evolving business requirements.SmartCo offers to its customers the ability to respond in the fastest way to regulatory and business changes.

ISJ Directory of Services ISJ Investor Services Journal

www.interactivedata.comT: 020 7825 7800F: 020 7608 3514Brendan BeithEuropean Sales [email protected] House 13-17 Epworth Street London EC2A 4DL UK

For further information: www.smartco.fr or [email protected]

SmartCo37 rue de Liège75008 ParisFranceT: + 33 1 58 22 29 60E: [email protected]: www.smartco.fr

Established in 2002, IMFC Fund Services B.V. is a boutique hedge fund administrator and a trustee with its offi ces in Amsterdam and Sydney. IMFC offers third parties administration and related services to all type of onshore and offshore funds combining high quality, independency, technology, timely calculation with fl exibility, experience, custom-made solutions and competitive rates. Our services include: fund set-up and corporate services, NAV calculation and other accounting services, R&T agent and other investors and compliance services.


For more information visit our website: www.imfcfundservices.com

www.imfcfundservices.comt +31.20.644.4558f +31.20.644.2735 Mrs. Consuelo Nardone: [email protected] Rivierstaete Building, Amsteldijk 166, 1079 LH Amsterdam, Netherlands

Fund Administration

Standard Chartered leading the way in Asia, Africa and the Middle East. Standard Chartered has a history of over 150 years in banking and is in many of the world’s fastest-growing markets with an extensive global network of over 1,200 branches (including subsidiaries, associates and joint ventures) in over 50 countries in the Asia Pacifi c Region, South Asia, the Middle East, Africa, the United Kingdom and the Americas. As one of Asia’s leading custodians, Standard Chartered has an impressive track record across the 16 Asian markets in which it provides securities services. It serves global, regional and local custodians and broker-dealers, as well as local and regional fund managers. The Bank plays a key role in promoting the development of these markets and keeping the international investor community informed of industry developments across the region.

C: Neil Daswani, Global Head, Securities ServicesT: +65 6517 0022E: Neil.Daswani@sg. standardchartered.comW: www.standardchartered.com

Swedbank provides client-focused custody services to domestic and international securities lending (including auto-borrow facilities), derivative clearing services, proxy voting, full corporate actions and income service. Flexibility is an important aspect of Swedbanks products and services. Our dedicated Client Relations Managers and Account Managers are focused on personalized processing and reporting solutions. Other Features:

ISO9001:2000 quality certifi cation.• Swedbank Markets Online (SMO) internet information and reporting tool for • Custody and Securities Lending.Nordic Custody alliance with DnB NOR (Norway), OKO Bank (Finland) and • Amagerbanken (Denmark) to offer regional custody product.

Institutional Assets under Custody: USD 70 billion

T: +46 8 5859 1800F: +46 8 7237 147C: Neal Meacham, Head of CustodyE: [email protected]: Stockholm SE 105 34 Sweden

Data Services

Market Data & Analytics provides high-value real-time market data, indices and back offi ce services. Information from diverse sources are provided to its customers, tailored to their specifi c information needs. Accuracy and reliability are ensured by collecting the data from the Group’s own trading platforms, such as Xetra® and Eurex® and cooperation partners like STOXX Ltd. and the Irish Stock Exchange. Avox®, a majority-owned subsidiary, validates, corrects, enriches and maintains business entity data. With an operational model, unique in the industry, Avox® enables clients to comply with regulatory requirements and to achieve a holistic view of the risk exposure towards a client.

Avox Redwither Tower Redwither Business Park Wrexham, LL13 9XT United Kingdom T: +44 (1978) 661 813 F: +44 (1978) 661 668W: www.avox.info

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ISJ Investor Services Journal ISJ Investor Services Journal

27

ISJ Investor Services Journal ISJ Directory of ServicesISJ Investor Services Journal

As one of the world’s leading third-party fund administrators, PNC Global Investment Servicing has over 35 years of experience delivering personalised solutions to asset managers, distributors, and fi nancial advisors worldwide. PNC services an international client base from service centres in the United States, Luxembourg, Ireland and Poland, additional offi ces in London and New York, and a presence in the Cayman Islands.

Drawing upon an extensive track record of profi ciency, dependability and responsiveness, Swiss Financial Services acts as administrator as well as registrar and transfer agent of funds investing in a broad range of fi nancial instruments. These include futures, foreign exchange, equities, options, bonds and other funds.

We perform accounting and administration services for diverse fund types domiciled in, but not limited to, the United States, Bahamas, Cayman Islands, B.V.I. and Ireland.

Société Générale Securities Services offers institutional investors, asset managers and fi nancial intermediaries a comprehensive range of fi nancial securities services: Clearing, Liquidity Management, Custody and Trustee, Fund Administration, Asset Servicing, Fund Distribution Services and Issuer Services. SGSS currently ranks 3rd European custodian and 7th worldwide custodian (Source: Globalcustody.net) with EUR 2,731* billion in assets held and valuates 5,158* funds representing assets of EUR 499* billion (at end March 2008).


Fund Services is a dedicated fund administrator providing customized and flexible services for traditional and alternative investments. Our comprehensive range of services for investment funds includes fund set-up, registration and support around the world, fund accounting, NAV calculation, risk control and reporting. We have practical experience with registering funds in 28 jurisdictions.We provide a flexible offering from the full range of services, including Private Labelling, to selected functions. Through our leading fund administration architecture, multi-source pricing and powerful compliance tools, we offer a tailored, cost effective service. www.ubs.com/fundservices


C: William J. SalusA: PNC Global Investment Servicing, 301 Bellevue ParkwayWilmington, DE 19809 USAT: 302.791.2000E: [email protected] C: Fergus McKeonA: PNC Global Investment Servicing Riverside TwoSir John Rogerson’s Quay, Dublin 2, IrelandT: +353-1-790-3500E: [email protected]

Luxembourg: Jean-Paul Gennari, tel. +352-44-1010 1Switzerland: Markus Steiner, tel. +41-61-288 4910 W: www.ubs.com/fundservices C: Andre ValenteT: + 41 61 288 6269 E: [email protected]:UBS Global Asset Management - Fund Services, Brunngässlein 12, PO Box CH-4002 Basel, Switzerland

Swiss Financial Services (Ireland) Ltd. Block 4B,Cleaboy Business Park, Old Kilmeaden Road, Waterford, Ireland T: +353 51 351180F: +353 51 871595

Adrian Maher E: amaher@swiss-fi nancial.ie

Sébastien DanloyGlobal Head of SalesSociété Générale Securities ServicesT: +33 (0)1 41 42 98 65E: [email protected]: www.sg-securities-services.com

Hedge Fund Administration

Apex Fund Services Ltd is a global hedge fund administration solution for hedge funds and private equity clients located in 12 separate jurisdictions across the globe. The company uses the software solution, PFS PAXUS, which is a fully integrated hedge fund accounting system combined with web-based reporting to allow clients and investors to access their information 24/7 securely online. We will tailor all solutions to meet your needs and our continuing focus on the quality of service and the relationship with each and individual client ensures that we retain our ethos of providing a personalized service rather than a generic solution. Highly qualifi ed 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.

C: Peter HughesGroup Managing DirectorT: +1 441-292-2739F:+1 441-292-1884E: [email protected] BohanGroup Manager of OperationsT: +353 21 4633366F: +353 21 4633377E: [email protected]

Custom House, which is one of the world’s largest independent alternative investment and hedge fund administrators, was awarded a SAS 70 Type I in May 2007 and a SAS 70 Type II in December 2007.Custom House offers a round-the-world, round-the-clock service from its offi ce in Dublin and representative offi ces in Chicago and Singapore, enabling it to provide, not only complete global administration services, but also the ability to produce daily dealing NAVs.Custom House is authorised by the Irish Financial Regulator under Section 10 of the Investment Intermediaries Act, 1995, which authorisation does not extend to the Chicago and Singapore representative offi ces.

Custom House Administration & Corporate Services LimitedA: 25 Eden Quay, Dublin 1, IrelandT: +(353) 1 878 0807F: +(353) 1 878 0827C: dermot.butler@ customhousegroup.comC: david.blair@ customhousegroup.comwww.customhousegroup.com

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Newedge Global Prime Brokerage Group is a global, multi-disciplinary, solution-providing team dedicated to delivering superior services to alternative investment industry participants including hedge funds, commodity trading advisors (CTAs), fund of hedge funds, family offi ces, and institutional investors (insurance companies, banks and pension funds). The Newedge prime brokerage team offers a global range of brokerage services covering a wide range of asset classes including equities, bonds, currencies, commodities, and their related listed and OTC derivative products. We also offer an innovative portfolio-based cross-margining solution, a dedicated account management desk, hedge fund start up services, quantitative information on the hedge fund industry, capital introductions services, and recently prime brokerage services to Sharia compliant hedge funds. Newedge is wholly owned by Calyon and Société Générale, with both companies having 50% ownership.

Prime Brokerage


Data Explorers (www.dataexplorers.com), based in New York and London, is the world’s most complete resource for data, analysis and insight into securities lending and short selling. The company’s proprietary data gives an unrivalled, comprehensive view on share lending and short-selling activity. With data sourced directly from securities lending desks of over 100 of the top lending fi rms and representing most of the global securities lending market, Data Explorers has built a reputation with leading fi nancial institutions as the source for short intelligence that informs their decision-making and their coverage of market sectors and companies. Please visit our Blog: dataexplorers.com/news, Twitter, twitter.com/dataexplorers, Video dataexplorers.com/daily-briefi ng and LinkedIn linkedin.com/companies/data-explorers sites.


Securities Lending

EquiLend is a leading provider of trading services for the securities fi nance industry. EquiLend facilitates straight-through processing by using a common standards-based protocol and infrastructure, which automates formerly manual trading processes. Used by borrowers and lenders throughout the world, the EquiLend platform allows for greater effi ciency and enables fi rms to scale their business globally. Using EquiLend’s complete end-to-end services, including pre- and post-trade, reduces the risk of potential errors. The platform eliminates the need to maintain costly point-to-point connections while allowing fi rms to drive down unit costs, allowing fi rms to expand business, move into different markets, increase trading volumes, all without additional spend. This makes the EquiLend platform a cost-effi cient choice for all institutions, regardless of size.


Philippe Teilhard de Chardin, Global Head of Prime BrokerageT +44 20 7676 8536Vincent Tournant, Head of Business Development T +44 20 7676 8171Duncan Crawford, Head of Capital Introductions T +44 20 7676 8504E: [email protected]/primebrokerage

UK: 2 Seething Lane, London, EC3N 4AT T +44 (0) 20 7264 7600, F +44 (0)20 7392 4004 US: 75 Rockefeller Plaza, 19th Floor New York, 10019, USAT +1 212 710 2210 F + 1 212 710 2212 Julian Pittam T +44 (0) 207 264 7616 E:[email protected] New York: Ken Read T +212 710 2210 E: [email protected] www.dataexplorers.com

www.equilend.comEquiLend Europe Ltd.14 Devonshire SquareLondon, EC2M 4TE+44 (0) 207 426 4426T: UK- +44 (0)20 7743 9510C: Michelle LindenbergerE: [email protected]: 17 State Street, 9th Floor New York, NY, 10004T: US- +1 212 901 2224C: Michelle LindenbergerE: [email protected] W: www.equilend.com

Fund Services holds a leading position in the area of hedge fund administration with specialized teams around the world. We offer a complete range of services including accounting, NAV calculation, shareholder services, banking and credit facilities. With specialist expertise in both single manager and fund of hedge fund administration, services can be provided for both onshore and offshore funds. Through our comprehensive range of services and products, leading edge technology platforms and superior client service, we work in partnership to offer the solutions you need.

Cayman Islands: Darren Stainrod, tel. +1-345-914 1076Eire: Don McClean, T: +353-1-436 3636US: Concetta Mastrangelo, tel. +1-212-882 5523Hong Kong: Michelle Chua, tel. +852-3712 2387 W: www.ubs.com/fundservices C: Darren Stainrod, T: ++1-345-914 1076E: [email protected]: UBS Fund Services (Cayman) Ltd, PO Box 852 GT, Grand Cayman, Cayman Is

International Finance Centres

The British Virgin Islands has created a progressive and transparent environment for the establishment and regulation of mutual/hedge funds and their functionaries. By the end of Q3 2006 the BVI had recognised or registered more than 4,000 funds, and licensed some 700 managers and administrators, making the BVI a leading domicile of choice for investment business. Benefi ts of conducting investment business in the BVI include:

Fast-track registration and licensing system - funds can be registered in a few days.• Presence of qualifi ed, experienced legal, accounting & administration practitioners.• A well-developed corporate professional infrastructure.• Modern, robust and cost-effective regulatory and corporate regimes.• BVI private and professional funds fall outside the scope of EU Savings taxation Directive.• Segregated Portfolio Companies - also known as Protected Cell Companies - can now be • formed as mutual funds under the BVI Business Companies Act 2004.

British Virgin Islands International Finance CentreHaycraft Building1 Pasea EstateRoad TownTortolaBritish Virgin IslandsT: +1 284 494 1509F: +1 284 494 1260W: www.bviifc.gov.vg

Payments & Settlements

VocaLink is the payment transaction specialist. Trusted by the world’s top banks our automated payment system processes over 90 million transactions per day. The VocaLink switching platform powers the world’s busiest ATM network and provides end-to-end management of Europe’s largest ATM estate, while the Real-Time Payments platform provides the central infrastructure for the UK Faster Payments service. The VocaLink EuroCSM delivers reach for our clients throughout the SEPA and beyond with a range of value-added services that leverage our know-how and technical capabilities. VocaLink is the partner of choice internationally, working with BGC to process Sweden’s automated payments. Find out how we can help your business at www.vocalink.com

VocaLinkDrake HouseHomestead RoadRickmansworthHertfordshireWD3 1FX

T: +44(0)870 1650019F: [email protected]: www.vocalink.com

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FINACE® is the only fully integrated solution today which supports the future business model within the area of Securities Finance and Collateral Management. The architecture of FINACE® is based on a stable, leading edge technology platform, which was developed with performance and robustness as the focus of design. With fl exibility at its core, customer-driven extensions and modifi cations can be quickly and easily applied to the standard component set.

eSecLending is a full service securities lending agent and administrator of customized securities lending programs. Their program has been adopted by many of the world’s largest and most sophisticated asset gatherers including pension funds, mutual funds, investment managers and insurance companies. They are a third party industry specialist providing lenders with customized programs, high touch client service, comprehensive risk management, and superior risk adjusted returns. The fi rm takes a highly consultative approach with their clients by structuring separate, non-pooled programs and utilizing a competitive auction to determine the optimal route to market for their clients’ lendable assets. Having built their business to incorporate investment practices such as the use of specialists, multiple-managers, unbundling, price transparency, and competition, their approach ensures best execution and also provides clients with greater control over their programs, allowing them to more effectively monitor and mitigate risks and counterparty relationships.

Santander is the only Spanish fi nancial institution with a team exclusively dedicated to securities fi nance & with the purchase of Abbey in 2004 has expanded its capacity on a Global basis with trading teams in London (UK) & Connecticut (USA).Santander’s leading local capabilities in Spain, Portugal, UK, USA & Latin America, along with its solid balance sheet & combined with the state-of-the-art technology, provides its clients with the broadest range of solutions in securities lending & fi nancing, including availability across all assets classes, as well as access to uncommon emerging markets.

Eurex is one of the largest derivatives exchanges and the leading clearing house in Europe. Wherever you are located, we provide you with access to the benchmark futures and options market for European derivatives. Eurex also offers short term funding products, such as Eurex Repo. Eurex Repo is among the forerunners in providing integrated trading and clearing for repo transactions. Eurex’s latest innovative marketplace is called Eurex SecLend. Eurex SecLend. Europe’s leading investment banks participate as borrowers in the Eurex SecLend marketplace, acting as principal brokers, dealers and intermediaries. They all benefi t from Eurex’s leading state-of-the-art trading and processing services. For Eurex, service and technology innovation is not just a buzzword. New trends are being transformed into inventions through the adoption of advanced trading practices. Find out more on www.eurexseclend.com.

JPMorgan’s Securities Lending program is unparalleled due in no small part to the Firm’s breadth of capability, fi nancial strength, professional expertise and seamless operations. Our program enables investors to access a broad spectrum of lending markets, with a diverse borrower base, offering a broad indemnifi cation against borrower default, while achieving very competitive bids for their securities - all of this in an environment designed not to compromise the activities of their fund managers. As one of the founding members of EquiLend, a global automated platform for borrowers and lenders, JPMorgan is at the forefront of technology and is ideally placed given its integrated lending, custody and accounting platforms.


T: US- +1 617 204 4500T: UK- +44 (0)20 7469 6000C: Christopher JaynesE: [email protected]: www.eseclending.comA: 175 Federal Street, 11th FL, Boston, MA 02110, US

A: 1st Floor, 10 King William Street, London EC4N 7TW, UK

W: www.eurexseclend.comT: +41 58 854 2066F: +41 58 854 2455E: [email protected] Zurich Ltd., Selnaustrasse 30, 8021 Zurich, Switzerland

T: +41 (0)44 298 92 00F: +41 (0)44 298 93 00A: COMIT AG, Pfl anzschulstrasse 7,CH-8004 Zürich, SwitzerlandW: www.fi nacesolution.comwww.comit.ch

New York: William Smith T: 212-623-5664 E: [email protected]: Michael Fox T: 44 207 742 0256E: [email protected]: David Brown T: (61-2)92504606 E: [email protected] W: www.jpmorgan.com/wss

W: www.gruposantander.comT: (3491) 289 39 42/54E: securitieslending@ gruposantander.com

Around the world, securities fi nancing is managed on SunGard’sproven solutions for international and U.S. domestic securities lending and repo for over 250 clients. Through our Loanet, Global One, Martini and Astec Analytics products and services, we provide comprehensive business solutions and information with worldwide reach for equities or fi xed income securities fi nancing. These solutions – all in an integrated, exception-based processing architecture – includes order routing, pre-trade analytics, trading, position management, operations, accounting, settlement and reconciliation.

Email: securities.fi nance@ sungard.comContact:EMEA: +44 (0) 20 8081 2779America’s: +1 (646) 445-1179Asia Pacifi c: + 62276400Visit: www.sungard.com/securitiesfi nance

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Financial Tradeware provides integrated solutions for medium to small sized Investment Management fi rms, Fund Managers and Hedge Funds, covering the full trade life cycle. It is part of the Dharma Group of companies and benefi ts from the joint contributions and experiences within the group of market traders, business analysts, fi nancial services professionals and skilled Microsoft Certifi ed programmers. The company has developed a suite of applications that integrate and Straight Through Process (STP) real-time trading, back offi ce administration, accounting and compliance. Ultra.net®, S-Messenger® and H-Fund® arwe the company’s fl agship 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) services for Corporates and Hedge funds.

ISJ Directory of Services ISJ Investor Services Journal

GL TRADE is your global fi nancial software solutions company, operating in over 50 countries and serving 1,600 clients. We are the leading provider of multi asset front to back solutions, connectivity and information services. We deliver trading solutions that ensure our clients success on securities, listed derivatives, commodities, fi xed income and foreign exchange. Dedicated to post trade securities operations, GL RIMS is your comprehensive real time securities post execution processing solution, covering middle offi ce, settlement and accounting requirements. Its wide use of automation enables global capital markets organisation to achieve maximum STP. It is a fl exible, highly scalable and easy to install platform with a new Service Oriented Architecture feature that allows smooth and effi cient connections with other third parties within a company.


Isis Financial Systems provides mission critical investment management software and services to many large and small companies. Our customers perform a broad range of functions including fund accounting, derivative and hedge funds, wealth management, and pension and endowments, etc…. Our integrated solution services the front, middle, and back offi ces of these companies with software that accommodates most any security type. Built on a contemporary three tiered architecture our application helps fi nancial companies improve operating effi ciencies, increase accuracy and reliability and improve customer service.IsisFS has the experience and IMS has the tools to improve your operations and save you money.

W: www.f-tradeware.comT: +44 (0)20 7493 2773F: +44 (0)20 7495 4858C: GrahamBrightE: [email protected]: 31 Dover Street London W1S 4ND UK

Contact:Isis Financial Systems14 Felton StreetWaltham, MA [email protected] (00-1) 781-209-0262

www.gltrade.com

GL TRADECheapside House134-147 CheapsideEC2V 6BJ London UKTel: +44 207 665 6200Email: [email protected]

DST International is the world’s premier vendor of technology solutions to the global investment management community with over 700 clients in 55 countries, and 1500 employees in 19 of the world’s leading financial centres. Our wide range of asset management solutions meet the needs of fund managers, dealers, settlement staff, custodians and record keepers operating as international asset managers; from front office simulation, opinion management and modelling functions, through data management, dealing and settlement to custody and corporate actions. The suite of products can be used either as stand-alone applications or brought together in flexible combinations according to specific needs.

T: UK +44 (0)20 8390 5000Boston +1 617 482 8800Hong Kong +85 225 812 880F: +44 (0)20 8390 7000E: [email protected]: DST House, St Mark’s Hill, Surbiton, Surrey, KT6 4QDW: www.dstinternational.com

Eagle Investment Systems LLC is a global provider of fi nancial services technology, serving the world’s leading fi nancial institutions. Eagle’s Web-based systems support the complex requirements of fi rms of any size including institutional investment managers, mutual funds, hedge funds, brokers, public funds, plan sponsors, and insurance companies. Eagle is committed to providing enterprise-wide, leading-edge technology and professional services for investment accounting, data management, and performance measurement. Eagle’s product suite is offered as an installed application or can be hosted via Eagle ACCESS, Eagle’s application service provider. Eagle Investment Systems LLC is a division of The Bank of New York Mellon Corporation. To learn more about Eagle’s solutions, contact [email protected] or visit www.eagleinvsys.com.

W: www.eagleinvsys.comT: +44 (0) 20 7163 5700F: +44 (0) 20 7163 5701A: The Bank of New York Mellon Financial Centre160 Queen Victoria StreetLondon EC4V 4LA

Technology

BI-SAM is a leading provider of analytics software, client reporting and data management solutions to the investment management community. Our integrated and innovative solutions have already been adopted by many renowned asset managers in France, Belgium, Luxembourg, UK, Hong Kong and Singapore who have assets under management ranging from 10 to 450 billion Euros. The B-One suite of products covers: performance measurement, performance attribution (equities, balanced and fi xed income), risk attribution (ex-post and ex-ante), as well as multi-lingual client reporting and factsheets. This suite of products can be used either as stand-alone applications or ASP hosted solutions. The Company has approximately 45 employees in offi ces located in Europe (Paris, London, Luxembourg). Offi ces in Asia and North America are under consideration. The Company is headquartered in Paris.

A: BI-SAM Ltd1 CornhillLondon EC3V 3NDT: +44 (0)20 3008 5834F: + 44 (0)20 3008 5831E: [email protected]: www.bi-sam.com

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Information Mosaic is a global provider of advanced custody, corporate actions and wealth management solutions to the global securities industry. Information Mosaic’s business professionals leverage decades of fi nancial industry expertise and technical knowledge to deliver complex projects on time and within budget. Since inception, the company has utilized the most modern technology to develop solutions to run on a scalable, single platform. Today, Information Mosaic supports clients from offi ces in Boston, Dublin, London, Luxembourg, New York and Singapore. Currently, six of the top 10 global custodians deploy Information Mosaic solutions worldwide.

IGEFI is the foremost provider of software solutions for international fund promoters, third-party service providers and fund managers. Its prestigious client-base is testimony to our commitment, service and quality with more than 200 expert staff supporting clients from seven offi ces worldwide including Bangalore, Boston, Frankfurt, Geneva, London, Luxembourg and Paris. MultiFonds is operational in more than 20 countries worldwide and support investment funds assets in excess of US$ 2 trillion. MultiFonds Fund Accounting and MultiFonds Transfer Agency are developed on a “one system-one database” philosophy and provide signifi cant advantages including reduced overhead and IT support costs and single look and feel reporting for global clients.


For more information on Information Mosaic, please visit our website at www.informationmosaic.com Global:[email protected], US: [email protected]: [email protected]: [email protected] Enquires:jfl [email protected]

A:IGEFI Group Sàrl - 7, Rue des Primeurs,L-2361 StrassenT: +352 26 44 211 F: +352 26 44 21 44E: marketing@igefi .comW: www.igefi .comC: Mr. Jesper Steiness - Head of Business DevelopmentEurope & AsiaE: jesper.steiness@igefi .com

For more than a decade, administrators, managers, and advisors have reliedon KOGER for dependable software tools backed by extensive industryexperience and expertise. Now, for those who want to reduce costs and streamline business processes, Koger offers Fully Integrated FundAdministrator, a vertically integrated suite serving the back-offi ce software needs of the fund industry.Fully Integrated Fund Administrator consists of three core programs:~ NTAS, the New Transfer-agency System~ E*TAS, Electronic Transfer Agency System~ GRID, Global Reach Interface DaemonOther programs, such as PTAS, KIT, and KORS available separately, complement the core competency of Fully Integrated Fund Administrator.

T: 001-201-291-7747 F: 001-201-291-7808C: Mr Ras SipkoE: [email protected] USA12 Route 17 NorthSuite 111ParamusNew Jersey, NJ 07652, USAW: www.kogerusa.com

Misys provides integrated, comprehensive solutions that deliver signifi cant results to over 1,200 fi nancial institutions globally. Our buyside solutions help asset servicers, asset managers and hedge funds handle the latest complex products, streamline processes, reduce costs and improve STP. Misys Summit is our award winning, multi-asset class solution that boasts 18 years OTC derivatives market expertise. With extensive OTC buyside coverage and the 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.

[email protected]

Odyssey Financial Technologies is an industry leader in the global provision of wealth and asset management solutions and services to the Private Banking, Mass Affl uent and Retail Banks as well as Institutional and Fund Managers. Over 200 fi nancial institutions in more than 30 countries have chosen Odyssey solutions. Odyssey focuses on providing a comprehensive range of components for portfolio management (PMS), advisory process, customer relationship (CRM), compliance, risk, analytics and Enterprise Data Management (EDM). The components are deployed on a single scalable wealth and asset management platform, facilitating the enterprise-wide implementation of solutions and data management. Founded in Luxembourg in 1995, Odyssey today has offi ces in the key fi nancial centers, including London, New York, Singapore, Zurich, Frankfurt, Brussels, Geneva, Madrid, Toronto and Tokyo. Odyssey’s operational head offi ce and main development centre is located in Lausanne, Switzerland. Throughout this knowledgeable network Odyssey employs over 600 professionals.

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 vanilla to the most complex derivative products. Coupled with a high degree of fl exibility and customization, Mx Asset Manager features a multifaceted design catering to the needs of both service providers (prime brokers, administrators, asset servicing providers) and direct clients (portfolio managers for mutual, pension or hedge funds, insurance companies). With so many new challenges presented to 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.

C: Hélène Desbiez Business Development ManagerT: +33 1 44 05 32 00E: [email protected]: www.murex.com

London Offi ce:Martin House5 Martin LaneLondon EC4R 0DP U.K.

T: +44 (0)20 7621 5800F: +44 (0)20 7621 5899

E: [email protected]: www.odyssey-group.com

Technology

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ISJ Investor Services Journal ISJ Investor Services Journal ISJ Directory of Services

SimCorp Dimension is a powerful, comprehensive and truly seamless investment management system. It can handle NAV and other calculations, with complete related accounting, for a huge variety of fund structures and product types, including regional specialities. SimCorp Dimension has been designed from scratch as an enterprise-wide system, handling all aspects of the investment management process and related administration functions, consistently. Data is recorded once into a core database so that reporting is made easy, there is no reconciliation of data and no duplication of procedures.-By cutting latency in securities processing, our clients are recognising new effi ciencies, reducing costs and increasing throughput-By streamlining their customer on-boarding processes, our clients are gaining faster access to fees, increasing customer satisfaction, gaining greater cross-sell opportunities.

Founded in 2002, Redi2 Technologies is a leading provider of fee billing solutions to the global fi nancial services industry. Redi2 offers fl exible, feature-rich solutions that help fi rms streamline operations, improve cash fl ow, reduce costs, enhance client service and meet compliance obligations. Redi2’s fl agship fee billing and revenue management solution Redi2 Revenue Manager helps fi nancial professionals more easily manage the fee billing process, including client setup, multi-currency fee and accrual calculations, invoice and advice generation, accrual reconciliation, adjustments and reversals. Our open APIs and support for industry-standard relational databases ease integration with third-party solutions, including accounting, performance measurement and CRM systems.


Netik’s team have spent the past 25 years perfecting the art of bringing together market, reference, portfolio accounting, performance and risk data from disparate sources into a single version of the truth (SVOTTTM). The result is a highly scalable and sophisticated business data model that has been designed to process all securities and offers a complete model for traditional and alternative markets.


Redi2 Technologies, Inc.1771 Broadway St.Oakland, CA 94612T: +1 (510) 834-7334E: [email protected]: www.redi2.com

For more information please visit: www.netik.comor email: [email protected]

T: +44 (0)20 7260 1900 F: +44 (0)20 7260 1911 C: Elizabeth Gee, sales director of SimCorp DimensionE: [email protected]: www.simcorpdimension.comA: SimCorp, 100 Wood Street, London EC2V 7AN

peterevans is a leading provider of front to back offi ce solutions for the fi nancial services sector. With 23 years experience peterevans takes a sophisticated and dynamic approach to assist customers in reducing costs and witnessing an increase in margins by seamlessly replacing costly and restricting legacy platforms. peterevans works in a collaborative manner and sees clients as partners to help meet all the demands in today’s marketplace. The xanite product suite offers a highly confi gurable, fl exible and fully integrated, browser based, comprehensive front to back solution that complies with message standardization and settlement harmonization. Deployed as a single application or integrated as components into your existing platform. Each of the xanite modules can be delivered via an ASP or self-hosted. Covering: wealth management, custody corporate actions clearing and settlement private client and on-line stock broking.

peterevansNew Broad Street House35 New Broad StreetLondon EC2M 1NHT: +44 (0) 29 20 402200E: [email protected]: www.peterevans.com

Princeton Financial Systems (PFS), a 100% subsidiary of State Street Corporation, is a leading provider of portfolio management and accounting systems, investment compliance, data management, and reporting solutions to the global investment industry. Our solutions are used worldwide by over 430 leading investment managers, custodians, insurance companies, pension funds, hedge funds, and banks, which manage combined total assets of over $5 trillion in more than 40 countries.These include ABP, AEGON, AIG, Allianz Global Investors, BNP Paribas, CaIPERS, CACEIS Investor Services, Citi, Commerzbank, Credit Suisse, HSBC Insurance, Metropolitan Life Insurance, Nationwide, Northwestern Mutual, Prudential, RBS, Société Générale Securities Services, and State Street. MIG21, PFS’s award-winning investment compliance and risk monitoring solution, optimizes pre-trade and post-trade compliance checking, the administration of regulatory, prospectus, and internal investment guidelines along with the consequent resolution workfl ows. PFS, headquartered in Princeton (NJ), has offi ces located throughout the United States, Canada, Australia, Singapore, and China as well as in United Kingdom, the Netherlands, Luxembourg, France, Germany, and Switzerland.

Pirum provides a full suite of automated reconciliation and straight through processing (STP) services supporting Operations within the global securities fi nance industry. The company’s on-line SBLREX service encompasses daily contract compare, monthly billing comparison, mark-to-market & exposure processing, pending trade comparison, income claims processing and custody reconciliation. Subscribers to Pirum’s services signifi cantly increase their operational effi ciency and reduce their risk by using Pirum’s solutions, as staff are able to focus on fi xing the exceptions instead of using their time to check and process routine business. These automated processes are more scalable and risk controlled too, allowing signifi cantly higher volumes to be managed without corresponding increases in operations headcount.

T: +44 20 7220 0961F: +44 20 7220 0977C: Rupert PerryE: [email protected]: Pirum Systems Limited37-39 Lime StreetLondon, EC3M 7AYW: www.pirum.com

For more information, visit Princeton Financial’s website at www.pfs.com or www.pfs.aquin.com.T: +1 609-987-2400F: +1 609-987-9320C: Lorne Whitmore, Vice President, Global Sales & Product ManagementE: [email protected] A: 600 College Road East, Princeton, NJ 08540, USAW: www.pfs.com, www.pfs.aquin.com

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The North American Securities Lending Forum

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Presented by

DE+GSL Sec Lend Forum ISJ38.indd 40 6/4/09 18:40:11

SEB is the leading provider of custody and clearing services in the Nordic/Baltic region.

Business is built on long standing partnerships with our clients. Our commitments are efficiency, reliability and providing the highest service quality.

For further information please contact: Global Head of Custody Services: Göran Fors, [email protected]. Head of Sub-Custody Client Relations: Ulf Norén, [email protected].

Nordic/Baltic Excellence

ISJ_SEB_Eye_Map_203x267.indd 1 07-07-13 07.58.43

ISJ 038

Documents

Transcript of ISJ 038