Fund automation levels off in key cross-border centres

ConnectingThe number of automated fund orders received by transfer agents (TAs) virtually stood still over one year at three-quarters of those covered by research.

A total of 75.6% of TAs in the cross-border fund centres of Ireland and Luxembourg received automated fund orders in Q4 2011 compared to 75.4% at the end of 2010.

The figures cover orders that were sent as ISO messages – in other words, using a commonly agreed messaging standard designed to boost efficiencies in processing – as well as proprietary processes, which tend to slowdown orders and may require more manual inputs.

But promisingly, the research showed that the adoption of ISO messaging had increased by 4.1% in the last quarter of 2011 compared to Q4 2010, marking a step forward in messaging standardisation that could save the industry and investors money.

Further, the rate of ISO adoption had increased to 90% for TAs when they set up new communication links, which the European Fund and Asset Management Association (Efama) said showed the relevance of its best practice guidelines.

Thirty-one TAs in Ireland and Luxembourg, representing more than 80% of the total incoming order volumes of investment funds for third-parties in both markets, participated in the survey, which was carried out by Efama in cooperation with Swift.

In total there were 25.1 million orders in 2011 compared to 23.5 million in 2010. The automation rate means that 18.8 million fund orders were processed automatically in 2011.

Peter De Proft, Efama director general, said: “It is important that this trend continues in the future to partially offset the additional costs incurred by the European investment fund industry in meeting the tide of new regulations being imposed on the industry.”

Fabian Vandenreydt, head of securities and treasury markets at Swift, said: “Adoption of ISO by new distributors and migration from proprietary FTPs [file transfer protocols] towards ISO is an industry well-deserved success.”

But he wanred: “At the same time the report shows that the total number of faxes has continued to increase in 2011 in absolute value. To address this industry challenge, major fund industry players are engaged with Swift on a large-scale “kill the fax” plan that should deliver tangible results in the coming two years.”

©2012 funds europe