Asset Servicing Times Country Focus - Denmark

1. AST
ISSUE006
WEDNESDAY
ASSETSERVICINGTIMES 02.02.2011
www.assetservicingtimes.com
CONTENTS
Club Plus to review
custodial arrangements
Australian fund manager Club Plus Su-
perannuation is to review its custody
agreements
page3
Euroclear Bank to support
Brazilian securities
Euroclear Bank will provide settlement,
Citi to provide services in Kuwait custody and related post-trade services
for all Brazilian equities and domestic
fixed income securities.
KUWAIT 26.01.2011 page4
Big interview
Citi’s Global Transaction Services business will be account management, settlements, safekeeping, pre- AST speaks to Tom Davis, CEO of Me-
providing direct custody and clearing (DCC) services matching, registration, full asset servicing suite, income ridian Global Fund Services about the
to clients investing in Kuwait. collection and payment of dividends and interest, market changes the fund administration industry
claims, handling post-trade issues, cash management, has seen over the past couple of years.
Citi is now open to service the Kuwait Stock Exchange foreign exchange, reporting, market expertise and infor- page6
(KSE) taking Citi’s proprietary network, the largest in mation services to clients.
the world, to 59 markets globally, of which 33 markets
are in Europe, the Middle East and Africa. This move will encourage and facilitate further interna- Country focus
tional investment in Kuwait which will lead to a broaden- In a crowded and competitive market,
The announcement was made at KSE’s headquar- ing of KSE’s investor base. Danish custody providers are expected
ters in Kuwait in the presence of Hamed Al-Saif, di- to offer more and more as part of their
rector general of KSE, Anas Al-Saleh, chairman of “We continue to respond swiftly to investor demands service.
the Kuwait Clearing Company (KCC), Ziyad Akrouk, and this is a further step towards providing high quality
chief executive of Citi Kuwait, and Richard Street, custodial services and easier access to Kuwait’s capital page5
Citi’s head of securities and fund services for the market,” said Hamed Al-Saif. “We welcome Citi, as one
Middle East. Also present were senior management of the leading global custodians, on board to assist with
People moves
Find out the latest hires, and who is get-
from the three institutions. With this announcement, the continued globalisation of KSE’s investor base and
ting promoted within the industry.
Citi will start offering custodial services in the mar- to help increase foreign investment in Kuwait’s capital
ket for KSE-listed securities. These services include: market.” page9
Cavendish picks Linedata HSBC implements AWD
Cavendish Administration will use Linedata Icon to build a fully integrated HSBC Securities Services Transfer Agency has implemented globally the
portfolio administration, fund accounting and reporting solution for its opera- image and workflow system AWD.
tions.
AWD is designed to facilitate operational efficiency gains in high-volume
With over £1 billion of assets under administration, Cavendish is implement- functions such as shareholder subscriptions and redemptions, and account
ing Linedata Icon to be able to expand its business, service more funds and opening. It also complements the TA client service and distribution support
extend its service offering. model on a global basis.
readmore p2 readmore p2

2. NewsInBrief
agement, fund accounting, portfolio valuation, individual processes and relieve our staff of
Citi to provide services in collective fund pricing and reporting solution repetitive tasks is just as important.”
Kuwait which has been subject to a recent programme
continued from p1 of innovation and development to meet market Christian Widmer, CEO and chairman of Profi-
expectations and regulatory demands. data, added: “IFM’s business model is compa-
Akrouk emphasised the significance of this mar- rable to that of a Master KAG. It places the high-
ket for the bank, saying: “Providing direct cus- “Fund administrators need to be able to deliver est demands on a fund administration. XENTIS
tody and clearing (DCC) services in Kuwait is an a streamlined, first class service in today’s envi- has stood the test in similar environments in
integral part of Citi’s plan to enhance its services ronment. Their clients are extremely demanding various countries. From those projects, Profi-
in the country and falls in line with Citi’s long and expect the best,” said Mike de Verteuil, Line- data have gained sound and comprehensive
stated objective of contributing to the meaning- data’s group business development director. experience which we will now apply to the im-
ful development of the region’s financial mar- plementation at IFM.”
kets in cooperation with solid partners such as “We have invested in Linedata Icon to ensure
KSE and KCC.” it delivers the flexibility needed and efficiently
handles the complexities which characterise
Dealis completes migration of
Direct custody and clearing plays an integral today’s fund administration market. By using DekaBank funds
role in the capital markets by providing the clear- Linedata Icon, Cavendish will be able to extend
ing and settlement services required for broker its service offering to a greater number of funds
dealers and global custodians to support trading and meet their clients’ exacting due diligence re- Dealis Fund Operations, a joint venture com-
and investing activities around the world. quirements. We’re proud to be supporting Cav- pany owned by Allianz Global Investors and
endish’s growth in this area.” DekaBank with EUR 340 billion under adminis-
Lee Waite, global head of direct custody and tration, has successfully migrated 1,300 mutual
clearing at Citi, said: “Reaching 59 DCC mar- and special DekaBank funds onto its investment
kets is a milestone for our business and shows
HSBC implements AWD management platform, SimCorp Dimension.
continued from p1
Citi’s unrivalled ability to respond to and support
our clients who will benefit from dedicated DCC “Following the successful migration, we are now
The new technology was introduced over a
client service teams providing local expertise offering our system platform to other fund com-
period of two years. HSBC clients now benefit
combined with globally consistent services.” panies in Germany and Luxembourg,” said Ro-
from more efficient processing, reduced risk
man G. Trageiser, spokesman for Dealis. “New
and a standardised service across the various
Waite added: “We continue to expand our serv- customers benefit from our independence and
TA locations.
ices in the region and are encouraged by the ability to innovate. Owing to SimCorp Dimen-
opportunities in Kuwait as well as the rest of the sion, we guarantee a highly flexible and cost-
Gina Slotosch, head of global product manage-
Middle East. This is another important achieve- effective response to individual customer needs,
ment, transfer agency, HSBC Securities Serv-
ment in our development strategy to embed our market demands and regulatory requirements.”
ices, said, “AWD is supporting us to deliver a
securities and fund services capabilities within consistent offering to our clients and provides
the region’s world-class exchanges.” Since the formation of Dealis in late 2008, up
the scalability for future growth. It will help us
to 50 funds per week have been lifted onto the
to optimise our business efficiency around the
common SimCorp Dimension platform in an
Cavendish picks Linedata world and to complete our transformation ini-
automated migration process. These include
continued from p1 tiatives. Our clients will benefit through stream-
260 former Cominvest funds transferred by
lined processes which will lead to an even better
mid-2010, just a year after that company’s in-
Cavendish was previously using proprietary customer experience.”
tegration into Allianz Global Investors. Dealis
tools for its portfolio administration and sepa-
now administers approximately 2,500 funds on
rate systems for fund accounting and wanted to
migrate to a more sophisticated solution.
FM selects Profidata’s XENTIS the platform.
“This project’s success is an important signal to
“Linedata led a workshop with us to explore,
IFM Independent Fund Management in Vaduz, the market, especially in these times of general
map and evaluate our existing systems and
Liechtenstein, has selected XENTIS, the invest- consolidation,” said Dr. Jochen Müller, manag-
processes,” said Anthony Lee, director, Caven-
ment management platform of Profidata, to ing director of SimCorp Central Europe. “The
dish Administration. “This new system is com-
support its fund management middle and back- Dealis case shows that SimCorp Dimension is
prehensive and can fully support our ambitious
office disciplines. the right platform, even for very large volumes.”
growth plan and significantly improve our capa-
bilities along the way. We believe that Linedata
Icon will enable us to build upon the excellent Luis Ott, managing director at IFM said: “As a Bank of China allocates global
level of service that we currently provide to bank-independent fund management company,
investment management companies and the we offer our clients the greatest possible flex- custody mandate
funds they manage.” ibility in structuring their fund products. Hence,
flexibility must be a key feature of the software BNY Mellon Asset Servicing has been selected
With 45 clients in the UK and beyond, Linedata platform on which we run our fund administra- by China Construction Bank as the global cus-
Icon is a complete back office investment man- tion. Also, having the means to automate client- todian for the upcoming QDII fund in China to
2

3. NewsInBrief
AST
be launched by Bank of China Investment Man- “We also recognised the efficiencies in consoli-
agement Co. (BOCIM). dating our custody and transition management
requirements into one provider.”
The new fund will be called BOC Global Stra- ASSETSERVICINGTIMES
tegic Fund (FOF) and is expected to launch in
March 2011. BOCIM is a joint venture fund man-
Citi wins new Banco de Brasil
agement company between Bank of China and mandate
BlackRock. Editor: Ben Wilkie
Citigroup’s Global Transaction Services has
benwilkie@assetservicingtimes.com
“The pace of QDII approvals is expected to con- been appointed by Banco do Brasil to provide Tel: +44 (0)20 3006 2710
tinue in 2011,” said Chong Jin Leow, head of a full suite of investor services including trus-
Asia, BNY Mellon Asset Servicing. “This is wel- tee, custody, administration, transfer agency
come news. With QDIIs outperforming domes- and cash management to Banco do Brasil’s
Marketing: Steven Lafferty
tic equity funds in 2010 for the first time since new Irish domiciled Qualified Investor Fund, BB design@assetservicingtimes.com
the financial crisis, thanks to an improving glo- Unit Trust Ireland, an open-ended umbrella unit
bal economy, it is likely that more Chinese will trust authorised in Ireland by the Central Bank Publisher: Justin Lawson
seek to increase their international exposure via of Ireland. justinlawson@assetservicingtimes.com
QDIIs in 2011.” Tel: +44 (0)20 8249 0235
José Ewerton Motta Nunes, head of distribution,
Banco do Brasil, said: “By selecting Citi, we are
Fax: +44 (0)20 8711 5985
BNY Mellon’s Leow added: “As Chinese asset
obtaining access to their high calibre technol-
managers continue to diversify their portfolios Published by Black Knight Media Ltd
ogy, expertise, global footprint and local knowl-
through increased investment overseas, de-
edge. Citi was able to provide us with a state-of-
mand for global custody and related services 16 Bromley Road
the-art solution that was flexible and matched
from institutions like BNY Mellon is on the rise. Beckenham
the needs of our company.”
We are a strong partner to Chinese asset man- Kent
agers, bringing our global experience and deep BR3 5JE
Richard M.F. Ernesti, global head of investor
understanding of the infrastructure needed for UK
services client & sales management, Citi, said:
QDIIs to help them achieve their international
“By winning this important mandate, Citi has re- Company reg: 0719464
growth ambitions.”
ceived a strong acknowledgement from Banco
Copyright C 2011
do Brasil – one of the oldest financial institutions
Black Knight Media Ltd.
Club Plus to review custodial in the world – for our investor services solutions
All rights reserved.
and products. Banco do Brasil will benefit from
arrangements our network and breadth of services to help it To subscribe please visit
seize the advantages of the current investment www.assetservicingtimes.com
Australian fund manager Club Plus Superan- environment”.
nuation is to review its custody agreements.
SIS Fund Services Completes
The $1.3 billion fund currently uses NAB Asset
Services as its master custodian, a relationship that Type I SAS 70 Examination
goes back to the fund’s launch three years ago.
ISIS Fund Services and its wholly-owned sub-
The CEO of Club Plus, Paul Cahill, is running sidiary, ISIS Fund Services USA, have recently
the tender and said companies must meet over completed a Type I SAS 70 examination as of
100 requirements across a broad range of cus- October 31, 2010 that was performed by a big
tody operations. four independent accounting firm. ISIS intends
to obtain a Type II SAS 70 in 2011.
“We sent out a document asking for information,
AICPA SAS 70 is a recognised reporting stand-
based on what they return we’ll then determine
ard that allows service providers to disclose in
that then,” he said.
detail their control activities and processes to
their clients and their customer’s auditors in a
Northern Trust selected by uniform reporting format. The independent Type
Kensington & Chelsea I SAS 70 examination for ISIS consisted of an
evaluation of the description of controls related
to fund accounting (which includes new fund set
Northern Trust Global Investments has won the
up, transaction processing, cash and position
mandate for transition management services for
reconciliations, valuations, cash receipts and
the Royal Borough of Kensington and Chelsea.
disbursements, NAV calculations, performance
and management fee processing and financial
Northern Trust will also run a $129 million in- statement reporting), investor services and in-
dex portfolio for the next six months. The bank formation technology (which includes logical
already provides custody services for the Bor- and physical access security, change control
ough’s $721 million in assets. management, and system back-up and recov-
ery processes).
Royal Borough of Kensington and Chelsea
head of financial services Paul Kidd said: “We “Completing a Type I SAS 70 is an important
appointed NTGI based on their track record of and critical step for ISIS to take to compete in an
performance in providing custody services to us ever more challenging fund administration envi-
since 2009, as well as their strong reputation for ronment. The annual performance of the SAS
transition management. 70 examination demonstrates our commitment
3

4. NewsInBrief
to quality, confidentiality and maintaining a high A number of Euroclear Sweden clients, repre-
level of internal control,” said Brian Desmond, senting the fund management, transfer agent
ISIS COO. and fund distribution community, have signed up
as pilot users. These include: Carnegie Fonder,
SGSS mandated to provide Catella Fondförvaltning, Nordnet AB, Öhman
asset servicing for Allianz
Fonder and Öhman Fondkommission. For all your
Björn Pettersson, head of administration at Carn-
Societe Generale Securities Services (SGSS)
has been mandated to provide a range of serv-
egie Fonder, is very positive about the initiative.
“We welcome and take an active part in the de-
Securities Finance
ices to Allianz Global Investors Investments
Europe in France and Italy. AllianzGI IE, Allianz
velopment of Euroclear Sweden’s fund services.
We believe the initiative will create more efficient,
needs
SunGard has
Global Investors’ European investment plat- secure and standardised administration of the ul-
form, offers tailor-made investment solutions to timately, the end investor,” he said.
institutional and retail clients across Europe.
This new fund service at Euroclear Sweden is
In France, AllianzGI IE has renewed its existing a core part of Euroclear’s overall objectives for a solution
mandate with SGSS for depositary bank serv- investment fund processing; a fully automated
ices provided since 2003. pan- European investment fund solution giving
www.sungard.com/securities nance
In Italy, AllianzGI IE will rely on SGSS to provide all Euroclear clients easy access to domestic
depositary bank fund administration and trans- and international funds, as well as a choice of
fer agency services for its full range of funds. services and connectivity options.
This mandate, which is subject to regulatory
approval, concerns over 60 funds and 9 billion Euroclear Bank to offer post- I need to see credit limit breaches when I
euros of assets. trade services for Brazilian book a trade - I don’t have truly real-time
SGSS has been selected, in particular, for its securities global position management - I have to
managerial capabilities within the framework of provide locate authorization codes to my
its pan-European platform, which are necessary Euroclear Bank will provide settlement, custody day traders - I have to maintain the correct
to serve the needs of investment managers with and related post-trade services for all Brazilian level of debit/margin balance all the time - I
pan-European reach, such as AllianzGI IE. equities and domestic fixed-income securities
from January 31. am unable to bene t from hot stocks tied
Euroclear Sweden to automate up in my margin/debit balances - I have
Transactions in these securities will be sent to multiple systems that don’t talk to each
fund-transaction processing Euroclear Bank’s local agent for processing in other - Integration is a nightmare! -
one of the three Brazilian central securities de-
Euroclear Sweden has announced the launch of Managing multiple technology vendors
positories (CSDs).
its inaugural service to automate and standard- take too much of my time - Many of my
ise fund-transaction processing. Fund manage- The three CSDs are Câmara de Custódia e Liq- operational activities are highly labor
ment firms, fund distributors and transfer agents uidação (CETIP) for corporate bonds, Compan- intensive - I only have time to sort out the
in Sweden may now benefit from automated hia Brasileira de Liquidação e Custódia (CBLC
large billing discrepancies - I am missing
fund-transaction order routing between relevant BM&F BOVESPA) for equities, and Sistema Es-
parties and settlement of the cash-related part pecial de Liquidação e de Custódia (SELIC) for corporate actions that impact the
of the transaction on a straight-through process- government bonds. Euroclear Bank previously pro tability of a trade - I have to work very
ing basis at Euroclear Sweden. signed Memoranda of Understanding with CE- long hours to sort our billing discrepancies -I
TIP and CBLC in 2007 and 2008, respectively. can’t take risks when choosing the supplier for
Euroclear Sweden’s fund service will be extend-
my mission critical solution - I need to see
ed to include automated fund-unit settlement
Frédéric Hannequart, chairman of the board of credit limit breaches when I book a trade - I
and asset servicing by mid-2011. In subsequent
Euroclear Bank, said: “Brazil’s capital markets don’t have truly real-time global position
phases, fund investors will also be able to hold
are attracting growing international investor
their fund units in the same Euroclear Sweden management - I have to
interest. Our clients will now be able to settle
account where they already hold their equity
transactions in Brazilian domestic securities maintain the
and fixed-income positions. Euroclear Sweden correct level
through our agent, Citibank, in the Brazilian
also aims to provide registry services for fund of debit
market. This is a very important development in
management companies.
reinforcing our commitment to the Latin Ameri- margin
Anders Löfgren, head of product management can region and in extending the scope of our balance all
at Euroclear Sweden, said: “The Swedish fund services to clients. We will continue to work with the time -
market, which includes over 1,300 funds with an the Brazilian authorities and market infrastruc- I can’t do
estimated value of EUR 200 billion (SEK 1.9 tril- tures on the development of useful services to
lion), is a sector where Euroclear Sweden can Euroclear Bank clients involving Brazilian do-
add value by reducing back-office processing mestic securities.”
costs and risks through automation and stand-
ardisation. The consolidated and comprehen- Brazil is the third Latin American market where Euro-
sive fund service that Euroclear Sweden will of- clear Bank offers services for domestic securities.
fer is filling a gap in transaction processing that
should cut client processing costs, compared As of September 2010, the total foreign hold-
with conventional manual processing proce- ings in Brazilian securities amounted to EUR
dures. We also intend to leverage Euroclear 240 billion (of which EUR 65 billion are fixed
Bank’s cross-border FundSettle service in pro- income and EUR 175 billion are equities). In ad-
viding Swedish firms with access to over 50,000 dition, there are EUR 120 billion ADRs (Ameri-
foreign funds and trading counterparties from can Depositary Receipts) and EUR 15 billion in
over 30 markets via Euroclear Sweden.” Eurobonds denominated in the Brazilian Real.
4

5. TomDavis
Oversight management
Tom Davis, CEO at Meridian Global Fund Services, talks to Asset Ser-
vicing Times about how the fund administration industry has changed
EXCLUSIVE
AST: Could you tell us a bit about your- all hedge fund performance, market conditions, and with the implementation of Dodd Frank it
self and Meridian Fund Services? and redemptions, we saw a decrease in the as- will be interesting to see the impact that legisla-
set values of the funds we administered. tion has on fund governance within the US in
Tom Davis: Well, I’m Bermudian and have been terms of the funds organised there.
involved in fund services for my whole career, But then everyone realised that “unregulated”
mainly at Bank of Bermuda and then later at Ol- hedge funds weren’t the main culprits behind AST: How is Dodd Frank and other
ympia Capital. Meridian Fund Services, which the financial crisis - the regulated banks were. legislation affecting your business?
had been formed in 1996, was affiliated with an High net worth investors tended to exit the mar-
investment management company in which my ket rather than the institutions, but we started Davis: People are looking at a division of du-
brother was a partner. In 2000, I joined the firm to see them come back. By the second half ties. Fund administration prior to the downturn
and separated out the fund services operations of 2009 the tide had turned, and at the end of was seen as a calculation process, something
from the investment management activity and I the year and throughout 2010 we have seen a that gave credence to what had already been
took over Meridian’s fund services operations. strong recovery for both the funds we adminis- calculated in house.
ter and the funds that are starting up.
In 2004, we opened our fully operational New But now investors want to see fund administra-
York office because we wanted a presence in In the US, fund managers that traditionally per- tors involved in the reconciliation and valuation
the city - I feel you still need face to face con- formed their NAV calculations in house are now process. We’re seeing a growing industry of
tact with the principals at the hedge fund firms. I being forced to outsource that work and we firms that specialise in hard to value securities.
found someone to help me set it up, Randy Troy, have been able to take advantage of that new Administrators are serving as the independent
who had previous experience as a controller standard in the industry. check and balance that institutional investors
at a sizeable hedge fund. The New York opera- AST: Is the recovery coming from have recently been demanding.
tion is a very strategic component of our overall the growth of existing funds, or is it
operations, and has been particularly important new entrants to the market? AST: Are economies of scale there
over the past couple of years. in the fund administration industry?
Davis: I think most of the recovery is money go- Do you have to be a big firm with a
In 2006/7, finding high calibre accountants in ing to established managers, but we are starting global footprint to succeed?
New York and Bermuda was proving very dif- to see new managers entering the market. As
ficult. As a result, we set up an operating pres- Davis: It’s starting, or restarting, to look that
the prop trading desks in banks start to shrink or
ence in Nova Scotia in January 2007, which way. Back in 2008/9, it was all about survival,
disappear, traders are moving on and setting up
was, and still is, headed by Patrick Donnelly, a but in 2011/12, administrators will be asking if
their own hedge funds. However, we don’t tend
twelve year veteran of the hedge fund admin- they need to consolidate, if they need to ex-
to see as much business from those manag-
istration industry. We didn’t want to go down pand, and what they need to do to compete.
ers as they generally have existing relationships
the India route, as Canada is closer, has great with service providers arising from their careers I don’t think you necessarily have to have $100
educational institutions, and is more familiar to at the banks. billion under administration to compete, but
persons working in our industry. We also have probably $15-30 billion to have the scale you
an office in the Cayman Islands and our IT is run In addition, although we are starting to see new
need. Larger clients don’t want to be too big a
out of Massachusetts. managers entering the market, the amount
proportion of your assets. They appreciate the
needed to properly launch a fund is increasing,
We did look at expanding into Europe in 2007 extra level of service a smaller administrator
because the costs of the infrastructure needed
but even then we could see the chilly winds usually provides, but on the other hand their in-
to support a fund have increased.
heading our way, so we held back. It’s still an vestors are seriously looking into the financial
option for us though and we’re keeping an eye AST: Do you feel the reputation of integrity of the administrator - that’s the level of
on the development of legislation over there - the industry has been harmed over due diligence we’re seeing.
the jurisdiction of choice itself will be decided the past couple of years?
I think we’ll see that the main reason for consoli-
based on availability of resources and the local Davis: Within the offshore market, there has dation is to provide a global solution. For Merid-
regulatory environment. always been an emphasis on due diligence, ian, we can expand on our own, or we can find a
We mostly operate within the hedge fund indus- anti-money laundering, and governance. The European group without a North American plat-
try but there are some different programmes offshore fund industry gets so much bad press form and through a strategic alliance or merger
we administer that have a relationship with our and has become the whipping boy for anything offer a combined service. We need to look at
hedge fund clients - for example, in Bermuda, wrong with the financial industry as a whole. Asia too. So there will be more consolidation,
we perform administrative services for a pen- So we have almost had to assume that every but will it be on the same scale as the banks? I
sion fund that uses hedge funds. Historically dollar we work with is laundered until we can don’t know.
we have only been appointed to service hedge prove otherwise. The regulators in the US have
constantly been looking at what we do in this AST: What’s your view of 2011?
funds because the mutual fund sector tends to
be very institutionalised and as such the large respect and challenge us to prove that we have
Davis: Everyone is optimistic. There’s still risk,
players dominate the industry. real substance in places like Bermuda and the
and we’re not out of the woods yet, but the out-
Cayman Islands, not just informal structures
AST: How do you feel 2010 was for the look is positive. The hedge fund market in par-
that could be used to hide the origins of dodgy
industry and for Meridian in particular? ticular is quite exciting. The hedge fund industry
cash. The infrastructure is already in place and
came out of the correction of 2008 extremely
we are ready to meet the challenge.
Davis: For us, 2010 was a good year. In the well. And the role of the fund administrator is
second half of 2008 and the first half of 2009 we In the last couple of years fund governance is also very exciting. But it’s not the same role as
did not lose many funds, , but because of over- also being scrutinised by institutional investors we have historically seen. AST
5

6. CountryFocus
Denmark
Denmark’s custodians are increasingly needing a regional outlook to suc-
ceed in a very competitive and fast-changing market
EXCLUSIVE
Denmark has long been a well-regarded domi- failing link away from the Danish scene and has consultation process at this very moment.”
cile for funds, and the back office has a reputa- made the market more attractive from a cross Many international financial institutions tend
tion for efficiency and high value at relatively low border cost perspective. It might also have con- to class Denmark as being simply part of the
cost. It’s also seen some changes over the past tributed to a safer and more predictable market greater Nordic market, along with Sweden, Nor-
few years, and expects greater automation and even if all current European clearing models way and Finland - and occasionally with the Bal-
efficiencies over the coming years. leaves a few things to be desired on that ac- tic states of Estonia, Lithuania and Latvia.
count. A related effect of CCP is that banks have
The introduction of CCP in 2009 was undoubt- developed more sophisticated and advanced But there are distinct differences. While Finland,
edly the biggest event in the post trade market risk management models, partly in response to Sweden and Denmark are all members of the
for the past five years. “This has completely the nature of a clearing environment but equally European Union, it’s only Finland that is a euro
re-shaped the operative models and also the so in response to market supervisory powers country, and Norway is not a member at all.
revenue situation,” says Ulf Noren, global head requirements and own managements ditto for
of sub custody at SEB. “Going from a situation counterparty risk control. But there has been significant consolidation.
where exchange trades where settling bilater- The stock exchanges of the four countries are
ally in 1:1 relationship to a situation with netting “A surprising effect of the CCP introduction (even closely linked as part of the OMX Group, and
has not made great wonders to sub-custodian’s if apples not necessarily are compared with ap- the major regional players all offer a one-stop
gross revenues. On the other hand, this devel- ples here)is the lowered settlement rates - an is- custodial service for the area. The likes of Nor-
opment has been supported by us as it takes on sue that is addressed by an informal CSD/Bank dea and SEB all have a significant presence
6

7. CountryFocus
but there is still room for local providers such But there are also regulatory issues that prevent “The industry do make their voice heard but it is
as Danske Bank. Big international players also the growth of the mutual fund market. Under really hard to do so without intermediary forces
have a role, with Northern Trust, State Street Danish law, the manager of a locally domiciled like European industry associations or MoFs etc.
and others all making a mark. fund is a company that is appointed by the asso- The key regulatory initiatives to shape this indus-
ciation of investors in that fund. The depositary try going forward are in our view: Securities Law
“The Danish sub-custody market is dominated by bank or custodian must be a Danish bank and is Directive, EMIR, CSD Regulation, UCITS IV & V,
two regional players, SEB and Nordea, in addition often the promoter and distributor of that fund. AIFMD, PSD, SEPA, MiFID II, Basel Rules and
to one local player of some size in the sub-custody the Dodd Frank Wall Street Reform.”
business, Danske Bank,” explains Noren. “This is
a trend that has been evident since 2003/2004 Issues
and it shows no signs of stopping. While the back office in Denmark is well-regard-
It can be difficult for a domestic player to punch
ed, problems do remain, says Noren: “There are Noren: We will contin-
a number of key issues specifically in Denmark:
its weight, says Noren. “For cross border busi- ue to see local Danish
ness into Denmark, most definitely so. We will
continue to see local Danish banks and smaller
“First is the comparably weak performance of
the CCP - is key features like partialling per-
banks and smaller re-
regional banks continue losing business to the
two Nordic larger players. This is not saying that
formed in an ultimate way and has the CCP/
CSD set-up added value or introduced new ob-
gional banks continue
local players are not doing a formidable job,
they are just victims of a trend that has been
stacles to efficiency? losing business to the
ongoing for more than a decade and picked up
speed some seven or eight years ago.
“There is also the discussion on punitive actions two Nordic larger play-
by the CSD for settlement fails, something SEB
generally does not want to see as a first resort, ers. This is not saying
“As a result of this, regional players have invest- only as a last one when the avenues on effi-
ed heavily into the regional service provision and ciency improvements have been fully explored- that local players are
primarily so into bridging the differences between more on that in the below
the four Nordic markets. This focus has also
not doing a formidable
been noted by infrastructure and regulators local- “We also have to deal with the full implementation
ly, meaning that regional suppliers to a very high of the practical terms of the shareholder directive.
job, they are just vic-
extent now also have taken the role as speaking When true voting procedures can be introduced tims of a trend
partners (and thereby to some extent also influ- without excessive segregation, a lot will be achieved
encors), something that is of crucial importance in the perception of Asset Servicing Quality
to the foreign client base. At what pace will this
continue? If nothing else changes, I would say
that this will be a quick process but as we stand “When buying services in Denmark, the focus
in front of some really big changes in the post is still very much on price and reciprocity. It is The future
trade universe, of which T2S is the biggest, I pre- though encouraging to notice that the quality el-
dict pace to be moderate for the next three or ements have travelled higher up on the agenda. As to the future, Noren remains positive: “I think
four years. This is naturally due to a need for the So has thought leadership. As margins in the in- that 2011 & 2012 will continue to be financially
international client base to work out their future dustry have become very low, buyers are scru- challenging and that whatever is happening
European strategy and the sub-custodians’ abil- tinising efficiency elements. No one can afford thereafter very much will be dependent of how
ity to show viable proof that they have the right to pay for inefficiency and no one can afford op- the regulatory scene plays out. On a positive
thinking and will survive. Very few will.” erational mistakes. We believe that this will lead note, I think that a few banks (in which league
to new operating models being introduced inde- SEB intends to stay) will benefit from positional
pendent from the strong mega drivers like T2S. changes primarily driven by T2S (whether or not
We also think that providers who can demon- T2S happens according to plan). This will enevi-
Noren: A related effect strate sustainable models will be rewarded. Be-
ing able to speak the cross border clients voice
tably lead to further consolidation and pair that
with infrastructural changes, you will see a fu-
of CCP is that banks will also be of ever increasing importance. “ ture where every card must be played carefully.
have developed more
sophisticated and ad- Regulation
“For Denmark specifically, I would like to see
practical implementation of the shareholders’ di-
rective, I would like to see a harmonised practice
vanced risk manage- As part of the European Union, Danish funds and
custodians are going to be affected by the raft of
for the treatment of hold & release functionality
among the three sub-custodians so that proper
ment models new legislation, but practical changes have yet to predictability can be introduced and standard au-
filter through, says Noren: “It has not had a great toborrowing functionality implemented across the
visible impact yet. It will though. We have never line. I would like to see true efforts being made
Funds seen this amount of regulation in our sector be- by legislators/practitioners allowing proper use of
ing either implemented or in its final decision omnibus accounts and I finally would like to see
Unlike neighbouring Sweden, where virtually stages. Post trade development has become a the CSD encouraging increased efficiency efforts
everyone is an investor, Danes simply don’t in- process that to a great extent is politically driven. rather than implementing punitive fees and worst
vest in mutual funds - less than 20 per cent of For service providers it poses a number of chal- of it all, a mandatory lending pool!” AST
the population has a stake in mutual fund. And lenges: Management time has to become more
the situation is unlikely to change. and more devoted to this, investment budgets
will to a greater extent be consumed by manda- next issue:
There are tax advantages for Danes to use in- tory development and the compliance issue is
stitutional pension schemes and buy financial becoming really big. I suspect a fairly substantial Fund Administration
products through insurance companies. Bonds
and cash savings accounts are also popular.
number of organisations will struggle in declaring
that they are truly compliant.
Luxembourg
7

8. Ten markets, ten cultures,
one bank.
For further information please contact:
Global Head of GTS Banks: Göran Fors, goran.fors@seb.se
Global Head of Sub-Custody, GTS Banks: Ulf Norén, ulf.noren@seb.se
Global Head of Client Relations and Sales, GTS Banks: Patrik Thiis, patrik.thiis@seb.se

9. PeopleMoves
Industry Appointments
RBC Dexia has appointed Sébastien Dan- securities and financial technology to his new novative products – such as our asset valida-
loy as managing director for Luxembourg. role at Swift, where he was previously head tion-price verification service – that help fund
This appointment will be effective on 2 May, of product management. He joined Swift in managers satisfy today’s investor audience.
2011 and is subject to regulatory approval. 2004 from the consultancy Capco, where he
Danloy will be responsible for building the busi- was involved in large front-to-back automa- “Alan will lead a global team focused on lev-
ness by focusing on market strategy, strategic tion programmes in the various securities eraging and integrating capabilities across our
client management and effective engagement areas. His professional experience also in- business – from administration and risk report-
with local industry, government and regulatory cludes work at Euroclear, where he led prod- ing to cash and collateral management. New
bodies. Danloy will report functionally to Tony uct management for communications services. offerings like prime custody and rising demand
Johnson, global head, sales & distribution. for middle-office outsourcing will also drive
“The securities market is a very strate- growth in the years ahead,” Ruane added.
“Our Luxembourg operations are central to the gic and active area for Swift,” said Gottfried
promotion of our onshore/offshore strategy, Leibbrandt. “Fabian’s understanding of the
Since June, Flanagan has served as interim
which is designed to help clients expand globally, global securities market coupled with his
head of AIS global product management, while
as well as servicing them in their home markets,” extensive Swift background make him a per-
continuing in his role managing the group’s
said José Placido, CEO of RBC Dexia Investor fect fit to lead a team that will deliver new
private equity administration product set.He
Services. “We look forward to Sébastien capital- levels of value to the securities industry.”
also was primary lead for the European inte-
ising on his long list of accomplishments and ex-
gration of the PNC Global Investment Serv-
perience to achieve RBC Dexia’s goal of max- Separately, Swift recently named Brett Lan-
icing business, acquired by BNY Mellon in
imising growth across our European footprint.” caster as managing director, securities
July 2010, and has been instrumental in de-
initiatives, Americas. Lancaster joins from
veloping plans for the BNY Mellon and GIS
Prior to joining RBC Dexia, Danloy served as The Depository Trust & Clearing Corpora-
banking entities in Ireland and Luxembourg.
global head of sales & relationship manage- tion (DTCC) where he was vice president of
ment for Société Générale Securities Services. the Global Corporate Actions business unit. Phoenix Fund Services has appointed Sophie
In this role, he was responsible for manag- Panchal head of hedge fund sales. In this new
ing sales & relationship management activity In his new role at Swift, Lancaster has re- role she will be working closely with Anthony
across all countries and business lines and for sponsibility for driving securities initiatives in Wolfe, Phoenix’s business development director.
defining and implementing the sales strategy.. the Americas, such as corporate actions, col-
lateral management and electronic trade con- Panchal has 14 years experience in finan-
Fabian Vandenreydt has been named head firmation messaging solutions. He is a mem- cial services, covering roles in financial man-
of securities and treasury markets at Swift. ber of the Swift Americas management team agement, investment research and more
and will report to Chris Church, chief execu- recently selecting hedge funds and creat-
He will report to Gottfried Leibbrandt, head of tive, Americas and Global Head of Securities, ing portfolios for a fund of funds and for pri-
marketing. In his new role, Vandenreydt will SWIFT. Brett is based in Swift’s New York office. vate clients. Her career started at Goldman
work closely with Chris Church, global head of Sachs in London, embraced roles at Aon
securities at Swift, to support the overall growth Alan Flanagan has been named head of glo- Consulting and Nedgroup Investments and
of the securities business at the cooperative. In bal product management at BNY Mellon Alter- most recently UBS Wealth Management.
this capacity, he will focus on the development native Investment Services. He will continue
and delivery of value-added solutions to invest- to be based in Dublin and reports to Brian Ru- Anthony Wolfe, business development direc-
ment managers, brokers, central securities de- ane, BNY Mellon AIS chief executive officer. tor at Phoenix Fund Services, commented: “I
positories (CSDs) and asset servicers. Fabian am delighted that we have been able to attract
will also look at expanding Swift’s scope in trade “The alternatives industry will see continued someone of Sophie’s calibre to drive Phoenix’s
matching, in the areas of FX, equities, fixed in- progress in 2011 and will look to trusted provid- business growth in the alternative asset class. It
come and commodities. In addition, he will lead ers like BNY Mellon to service the array of com- reflects Phoenix’s commitment to building on our
initiatives targeted at the reference data space. plex new funds, structures and strategies being success to date in servicing hedge funds and in-
introduced,” said Ruane. “In his new role, Alan vestment managers who wish to take full advan-
Vandenreydt brings 20 years’ experience in will only sharpen our ability to deliver timely, in- tage of Ireland as a fund administration centre.”
Raising The Bar In Recruitment
Telephone: +44 (0)20 7959 2440 | Email: enquiries@hornbychapman.com
Web: www. hornbychapman.com | Postal: 68 King William Street, London, EC4N 7DZ, UK
9