NAB Custodian Services, Australia’s largest custodian, is out of the running for the prestigious Future Fund contract, leaving only overseas-owned custody groups in the race.

Future Fund operations staff, Gordon McKellar and Wendy Leong, told NAB Custody executives the news last week. They said the fund preferred a custodian with more experience in administering alternatives, notwithstanding NAB’s administration of funds such as MTAA Super and Westscheme, two funds advised by Access Capital Advisers (ACA) which have among the highest exposure to unlisted assets of any Australian super funds. A decision on the winner of the Future Fund contract is expected within days. Northern Trust (in association with sub-custodian ANZ Custody) and State Street Investor Services are now considered to be frontrunners, although JP Morgan Worldwide Securities Services cannot be ruled out according to observers. The Future Fund is being advised by Thomas Murray, the London-based specialist custody consultant and bank ratings firm, which also advised the NZ Super Fund on its choice of custodian last year. NZ Super chose Northern Trust over incumbent BNP Paribas Securities Services (BNPPSS), citing similar reasons: the capabilities in administering alternatives. Both McKellar, the Future Fund’s head of operations, and Leong were senior executives at BNPSS until recently. NAB was the first Australian custodian to administer unlisted and alternative assets, for big industry funds Cbus and the former STA, in the early 1990s. Its largest client is QIC, which is one of Australia’s most sophisticated investors, employing alpha transport and derivatives strategies as well as running large private markets programs. The Future Fund custody contract is the largest ever awarded in Australia.

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