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Magazine Issues » July-August 2012

TRANSFER AGENCY: A tangled mess

Keith HaleConsolidating legacy systems into a global workstation is an ideal solution for transfer agents, but Nicholas Pratt asks if can really be acheived.

Major systems vendors in the transfer agency (TA) market are developing platforms to cover multiple domiciles or multiple fund types, or both.

Transfer agents have collected a patchwork of disparate systems over the years, each designed for specific fund types or domiciles. But as the cost of running multiple systems continues to grow, there is clear demand for more consolidated systems, says Aubrey Nestor, head of product, transfer agency at Bravura. "So as a provider we need to increase the range of asset types and variations of operating models that we can fit onto a single system.”

To date Bravura has focused on the major European markets – Dublin, the UK and Luxembourg – rather than trying to create one universal TA system. Its current system is able to deal with the main European domiciles separately but a lot of the configurations in place at a database level need to move down to operate at a domicile or even a share-class level to support the variations that fund types will have when stored on the same database. Bravura aims to have a multi-domicile implementation of its TA system, Rufus, within twelve months.

Having a single TA platform for all fund types and all geographies is still a long-term aspiration for the industry. In the short-term most firms will look to use add-ons when they enter a new market.

Because of this operational behaviour, most vendors are sceptical of the prospect of a single, global TA engine.

“The idea of a single engine for all markets is not something I agree with,” says Mark Judah, head of SunGard’s Asset Arena Transfer Agency.

“The cost of maintaining a single system and source code while also trying to support several markets would be too expensive and too challenging. A TA system needs to be able to support multiple platforms that all share common technology and this has led to the development of web-based portals that allow for particular add-ons in particular domiciles.”

The idea of using web-based portals to connect existing legacy systems rather than move wholesale to a new single platform has also been adopted by Comada, which has worked with hedge fund administrator Custom House Group to provide a web-based reporting tool for the TA function based on its MAT ware technology.

Rupert Vaughan Williams, co-founder of Comada, says: “You will never have a single TA system or even a few. It is a fragmented market and even if someone came up with a perfect single system, there would still be others out there in use. So as a systems vendor you need to embrace that and be able to work with any of the different technologies and tools.”

TA tableThis view of clients’ own internal workings is also shared by Linedata. “If you ask [transfer agents] what they would love, they would all say one single system,” says Noreen Crowe, product manager at Linedata. “But when you delve into it, what they need for the private equity, alternative, retail and institutional sides of the business are all so different that it is hard to find the one size that fits all.”

One vendor that has embraced the single global TA platform more than any other is Multifonds. In June, it released its Global Investor product, a multi-jurisdictional platform for both alternative and long-only funds.

Keith Hale, a business development executive at Multifonds, says transfer agents and administrators are adamant they want one product, one team and one system.

“Other vendors have customised the code from one installation to another. I don’t think that’s right.

“To be a software vendor is about creating economies of scale and making the systems rules-driven and parameter-driven – it is not easy but it is the right approach. That reporting layer on top is not sustainable and difficult to achieve even as a short-term fix. You can put lipstick on a pig, but it is still a pig.”

©2012 funds europe