The Tipping Point

The Tipping Point

5th May 2010

The Great Hall,

The Institute of Chartered AccountantsLondon

Strictly Confidential Copyright Calastone 2010 2

9.00 am Kevin Lee, CEO: 100% STP for 100% of the market in 2010

9.30 am Dan Llewellyn, Head of Market InnovationRe-writing the rulebook on Settlement, Re-registrations and Reconciliations

10 am Coffee break and networking

10.30 am ‘The Business Case for STP’: Panel discussion and Q&A

Moderator: Edward James, Head of Operations, Octopus Investments Panelists: Christopher James, Director, Institutional Services, Cofunds

Andrew Smith, COO, NucleusIvan Goldsmith, Head of Retail Administration, Axa-FramlingtonKevin Lee, CEO CalastoneDan Llewellyn, Director of Market Innovation, Calastone

11am Finish

Agenda


Why The Tipping Point?


Faxes = Risk and Cost

Strictly Confidential Copyright Calastone 2010

Challenges for the Industry

• 80% of fund processing costs are caused by 20% of the

market.

• Calastone’s commitment to a single pipe for the whole of

market includes that 20%.


• The Catcher’s Mitt (live demo)

• First 150 messages free for smaller fund managers

• Reconciliations & Settlement

• Free hosting of BIC Codes for all

distributors and fund providers

6

What’s New?


Transparent Tariff

7

• Underlying Principle : who benefits - pays

Main Benefit Fund Provider Distributor

Order Routing Fund Provider £2.70 - £1.50 Free of Charge

Settlement Service Equal 25p 25p/50p*

Payment Service Equal 10p 10p

SWIFT BIC Hosting Equal Free of Charge Free of Charge

Re-registrations/Transfers Distributor Free of Charge T.B.C.

• For Distributor clients not using Calastone


Calastone Pricing Model – Order Routing

• Price ranges f rom £2.70 to £1.50 per order

• Discount base on cum ulative volume regardless of client size

• Volume is never reset, so the price is guaranteed to reduce over tim e

• This will lead to a price of £1.50 an order for all clients eventually

• No additional annual fees, joining fees or hidden costs

8

Calastone client network

KeyLiveRoadmap 2010/11

Norway

US (via Sungard)

Taipei

Hong Kong

Australia

South Africa

France

9

LuxembourgUK & Ireland

Our flexible technology means that we can connect distributors with fund providers anywhere in the world.


You can follow an order from purchase through settlement: www.calastone.com/videoinfo.aspx

Execution Management System (EMS)

Live Demo

Order processing via EMS for boutique/offshore FMs

12

1. FundManagers (or TAs) can accept/reject

and price orders

2 (a) If the order is good, they accept

and a confirm is sent to the distributor.

2 (b) Orders can be rejected directly by

the fund manager (or TA)

3. The order is priced later that day.

80% of costs are caused by 20% of the market. We have a solution for the 20%.


To provide pre and post trade solutions to the mutual funds market that promote:

– User choice models

– Global interoperability

– Industry partnership relationships

– Reduced STP costs that benefit the whole market

– Clear and transparent tariff structures

13

Post-Trade Solutions: Our Objective


Proven Delivery

• Calastone Settlement offering announced 16th Nov

• Backed by major Industry players across the market

– Cofunds, FNZ, Nucleus– IFDS, Capita– Schroders, Hendersons, Gartmore

• Considerable second wave support

14


• Calastone Settlement offering announced 16th Nov

• Backed by major Industry players across the market

– Cofunds, FNZ, Nucleus– IFDS, Capita– Schroders, Hendersons, Gartmore

• Considerable second wave support

• Live 22nd March 2010

Proven Delivery


Calastone – Modularised Automation

16

Calastone Service Modules

Distributor AThird Party

Administrator ARe-Registration Module

Distributor B

Distributor C

Distributor D

Reconciliation Module

Income

ETV’s

Income payments and

ETV’s

Order Router Module

Third Party Administrator B

Third Party Administrator C

Fund Manager A

Fund Manager B

Fund Fund Manager

D

Fund Fund Manager

E

Fund Fund Manager

F

Fund Fund Manager

G

Fund Fund Manager

HSettlement

Module


Automated settlement is now available via Calastone with additional post trade services going live during 2010:

– Mutual fund settlement instruction matching and net settlement - Live

– Net settlement payment facility via SWIFT

– Re-registration, wrapped, unwrapped, nominee to nominee and own name

– Reconciliations, statement of holdings, transactions and valuations

– Income payment instruction with electronic tax information

– Corporate event information

17

Modularised Approach to STP


Primary market settlement module provides:

– Mutual fund settlement instruction matching

– Automatic calculation of net settlement position between buy and seller

– Net settlement payment facility via SWIFT

– Visibility of settlement exceptions via unmatched reporting

– Open architecture in re connectivity and message standards

– Full range of STP options from ISO messaging to File upload

– Market wide standardisation of settlement process

– Multi currency / Multi domicile

18

Mutual Fund Settlement via Calastone


Distributors

Fund Provider / Third Party Administrator

1. Order instruction

Order Router

Calastone Mutual Fund Trade matcher and Settlement Net Calculator

2. Business Accept3. Price Confirmation

5. Net Settlement requirement sent to distributor

OptionalRegister Status

4.Client settlement Input


5. Net Settlement requirement sent to distributor

6. SettlementConfirmation


Your format

Your format

Calastone Settlement Phase 1


Calastone Settlement phase 2

20

Order Routing Settlement and Matching Hub

Distributors

Fund Provider / Third Party Administrator

1. Order instruction

Order Router

Calastone Settlement•Trade matching

•Net settlement calculator

Calastone Settlement and Payment System

Distributors Bank

2. Business Accept

Fund Providers Bank

5. Settlement requirement sent to distributor

Payment instruction generation

Payment

Client driven payment instructionAnd confirmation



5. Settlement requirement sent to Provider



Payment hub

Registered Message

3. Price Confirmation

Payment occurs outside of Calastone Network


EMS Screen new settlement option

Confirm settlement positions via EMS


Fair and transparent tariff structure for all participants:

Fund Providers

25p per trade settlement instruction

Distributors

Schedule 1 - 50p per trade settlement instruction

Schedule 2 - 25p per trade settlement instruction when using Calastone order routing

No membership fees or hidden costs

22

Tariff Structure – Phase 1


Integrated payment service using Calastone SWIFT connectivity:

Fund Providers

10p per SW IFT ISO payment

Distributors

10p per SW IFT ISO payment

Added benefits– Free hosting of client BICs– Reduced number of payments– Access to Calastone EMS payment screens in order to view, release, authorise and

track payments– Ability to see if counterparty have released their payments– Future proofed technology re ISO20022 and Single Euro Payments Area (SEPA)

No additional Calastone membership fees (SWIFT costs not included 8eur cents on shore 23eur cents off shore)

23

Tariff Structure – Phase 2


Calastone Re-registration Pilot

24

Wrapper Transfer

Platform /Distributor 1 (Ceding Nominee)

Platform 2/Distributor (Acquiring Nominee)

Calastone Core ISO20022 Translation EngineFund Manager /

TPA

Asset Transfer

1. Inforequest

1. Info Request

2. Info response

2. Inforesponse

4. Confirmation

4. Confirmation

1. Transfer out

3. Transfer in conf

1. Transfer out

2. Transfer out conf

2. Transfer out conf

3. Transfer in conf

YOUR FORMAT

YOUR FORMAT

YOUR

FORM

T

YOUR

FORMAT

3. Instruct

3. Instruct


Calastone Reconciliations Module

25

Calastone Core ISO20022 Reconciliation Translation

Engine

Fund Manager A

Fund Manager B

Fund Manager C

TPA 1

TPA 2

YOUR

FORM

T

YOUR

FORMAT

YOUR

FORM

T

YOUR

FORMAT

Distributor 1

Distributor 2

Distributor 3

Distributor 4

Distributor 5


Benefits

26

§ Need for automation and STP solutions in different areas of the mutual funds market

§ Platforms, retail distributors and fund managers all have different wants and priorities

§ Calastone STP modules enable market participants to develop and adopt solutions in line with their own development priorities

§ Calastone ’s core translation service will normalise all market input into ISO20022 so that participants do not have to incur back office development costs

§ Development of Calastone ’s STP modules are in line with agreed Mutual Fund UK and Global Market Practise

§ By adopting Calastone STP modules market participants will be able to future proof their technology spend regarding message standards and interoperability .

§ Clear and transparent tariff structures


Summary

27

• The Catcher’s Mitt Free to all fund managers

- Providing 100% STP for distributors

• First 150 messages Free for smaller fund managers every month

- No barriers to entry

• Reconciliations Free to all fund managers

- Providing 100% coverage with one connection for the distributor

• Settlement – Primary market service – no technology requirements available to all

- Nett payments, Group 1 & 2.

• Free hosting of BIC Codes for all distributors and fund providers

- 100 % STP for distributors

- Global reach for all


Panel discussion

28


Kevin Lee, CEOKen Tregidgo, Director of Business DevelopmentDan Llewellyn, Director of Market InnovationAlexander Hofmann, Sales DirectorSebastien Chaker, MD Luxembourg

Main: +44 (0)20 7367 5900

King’s House6th Floor36-37 King StreetLondon EC2V 8BB

29

Contacts

www.calastone.com

The Tipping Point

Documents

Transcript of The Tipping Point