June 2008 Ireland Hedge Fund Services 2008 - Hedge Fund Services 2008 ... Merchant Banking. ......
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Funds servicingsector set toweather the storm
Anticipating theneeds of fundsand investors
Service providerscontinue expansionoutside Dublin
Ireland Hedge FundServices 2008
IRELAND Hedgeweek Special Report Jun 2008 www.hedgeweek.com | 2
In this issue03 Robust funds servicing sector set toweather the stormBy Romil Timbadia
05 Anticipating and surpassing client needsBy Philip Craig, Fortis Prime Fund Solutions
08 The automatic revolution is upon usBy Don McClean, UBS Global Asset Management
10 Challenges for hedge funds seekinginstitutional assetsBy John Alshefski, SEI
13 Global providers offer unlimitedopportunitiesGary Enos, State Street
14 Service providers continue expansionoutside DublinBy Romil Timbadia
16 Across the board assistanceDonnacha OConnor, Dillon Eustace
19 No complacency will make future forfunds industry brightRonan Nolan, Deloitte Ireland
22 Banking plus adminBy David Aldrich, The Bank of New York Mellon
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The credit crunch tsunami has touched allsectors within the financial services industry,with each being affected in one way or theother. Even Ireland has felt the impact, albeitto a much lesser extent than the US or theUK. While there is no doubt that the IFSC(International Financial Services Centre) andthe Irish funds industry have performedspectacularly in the past decade, many arerealising that a new age that has emergedwithin the financial services industry sincethe credit crunch last year.
However Irelands funds industry, whichhas been the envy of many competingjurisdictions, has not been impacted as
much. Gary Palmer, CEO of the Irish FundsIndustry Association, says, Since the creditcrunch and the liquidity issues of last year,no sector within the financial servicesindustry has been immune from its effects.The funds industry, however, has beenimpacted less, for one reason and that is unlike investment banks, the affectedassets are not held on the industrycompanies balance sheet.
Senior fund administration executivesagree that there will be a need for Irelandsfinancial services sectors, including thefunds industry, to keep their eyes on theevolution into the future and look more
Robust funds servicingsector set to weather
the stormBy Romil Timbadia
O V E R V I E W
IRELAND Hedgeweek Special Report Jun 2008 www.hedgeweek.com | 3
At Prime Fund Solutions, the part of Fortis Merchant Banking dedicated to servicing
the alternative and traditional investment community, we are committed to building
strong and lasting relationships within the global investment industry. Focusing on the
future needs and opportunities in any type of investment funds, ranging from traditional
through hedge funds to funds of hedge funds, we deliver cutting-edge services and
invest in state-of-the-art information technology. Providing a first class package of fund
administration, custody, clearing, securities lending and borrowing, cash management,
bridge and leverage finance, we are ready to face your challenges with you.
For more information please contact:
London (+44) 203 296 8682 - Dublin (+353) 1607 1860 - Luxembourg (+352) 42 42 81 07
New York (+1) 212 340 55 43 - Hong Kong (+852) 2823 0598
Prime Fund Solutions
Getting you there.
In todays ever competitive and fast pacedenvironment, service providers need to faceup to the challenge of rising operationalstandards that have been triggered by theinflow of institutional investors into theindustry. To survive in the alternativeinvestment fund servicing environment,service providers must keep pace with thechanging needs of clients and their clientsinvestors. Providing a quality service in atimely and accurate manner and monitoringkey performance indicators can help toensure the delivery of operational excellence.Indeed, service providers need to be aware ofmarket trends and must anticipate the impactof such trends on their businesses. Ultimately,it is the investors that dictate these trends.
Choosing the right service providerenables the client to focus on its front officeinvestment management activities rather thanfocussing on operational and back officeadministrative issues. The service providermust play the essential role of providingsupport to the fund managers to be able toclaim a value-added role. Investmentmanagers will typically prefer to outsource asmuch of the operational burden as possible,so as to benefit from economies of scale thatcan only be achieved through large operatinginfrastructures. Global fund service providerssuch as Fortis are able to invest in state-of-the-art systems and architectures that canlead to greater automation of processes.Global service providers are also able to takeadvantage of multi-region offices to providecomplete 24 hour coverage. The rightsystems are essential to gain efficiencies,which ultimately result in lower costs.
Fortis views client relationships aspartnerships and can therefore add value byoffering its clients access to a greater depthof professional talent and a broad range ofservices. The firm has focused on creating a
highly efficient model which is supported byexperienced and dedicated staff, best inclass systems, client support, relationshipmanagement and a host of other supportunits to deliver timely, accurate and qualityreporting to clients. Clients requiring morefrequent reporting are compelling serviceproviders to process information on a dailybasis. The systems used should have theflexibility to deliver added value reporting aswell as the ability to service clients frommultiple locations, if required.
For global service providers, systems areparamount to implementing a truly globalplatform where all client servicing processesand procedures are uniform across theglobe. Creating global uniformity provides theglobal service provider with a strongerfoundation in which to service clients in thelong run. Those who will survive asalternative providers are those who canprovide operational excellence, cananticipate and deliver on clients needs andfinally those who can develop and adapt tomarket changes as the business grows.
In addition to meeting the client needsfrom an operational perspective, serviceproviders will typically appoint relationshipmanagers to understand and anticipate futuredemands. The relationship manager shouldknow the client in terms of its funds andproducts, strategy, organisation, including keypersonnel and structure. Knowing the client isfundamental to assisting in the growth of theclient firm, which in turn should lead togrowth in the service providers business.Managing the client in an open andtrustworthy manner is key to a successfulrelationship. The client should alsounderstand the service providersorganisation so that both parties can mutuallybenefit from each others business needs,knowledge and capabilities.
F O R T I S
IRELAND Hedgeweek Special Report Jun 2008 www.hedgeweek.com | 5
Anticipating andsurpassing client needs
By Philip Craig
Philip Craig is RegionalDirector Europe, FortisPrime Fund Solutions
objectively on what may develop out of thecurrent circumstances. They say thatadditional efforts by government, regulatorsand industry can help Irelands fundsindustry grow even further amidst financialuncertainty and increased competition.
The Irish Financial Services RegulatoryAuthority (the Financial Regulator), renownedfor its pragmatic approach, has beenpreparing for this new shift in the industry.The Financial Regulator has alreadyachieved a stellar reputation globally. In mostcases this has been achieved by maintainingits principles-based system of regulationwhich has been shown to be both robustand responsive over the last few months.
In a recent event, CEO Patrick Nearyemphasised the importance of aninternational collaboration to form a strategypartly by the lessons learnt from the pastfew months. He said, Domestic legislationcannot, in itself, provide responses to themarket issues that have arisen; these arebest considered at an international level andthere are currently a number of studiesunderway lessons will then need to beaddressed on an international level by themarket participants, central banks andregulators.
The funds industry is also insulated byadditional regulation that it has. For example,the fund companies as well as the productsare regulated, whereas in other industries,the companies are regulated but theirproducts are not.
In an overall context, the FinancialRegulator is well-regarded by the industry.Don McClean, head of fund services, Irelandat UBS Global Asset Management, says,Ireland, from a regulatory point of view, is ingood shape. Our regulator encouragessuccessful business activity in a strictlyregulated environment its an attractiveenvironment for both investors and serviceproviders.
Ronan Nolan, a partner at Deloitte Ireland,adds that the regulator clearly reco