The flood of 16,000 faxes per day that continue to flow between wraps, custodians and funds mangers will only abate when industry leaders decide what tasks in managed fund transactions have become commoditised, and agree to centralise them. This is similar to what
Australia’s banks decided years ago on cheque clearing, according to Ausmaq chief executive Rob Brown, who chaired a session at the conference appropriately titled ‘Taking a Leaf out of the Banks’ Books – Towards an Homogenous System for Funds Management Transactions’.
Some of the conversation revolved around SWIFT’s SWIFT Net Funds project, which currently has four major local institutions live with another five committed to go live by the end of this year, according to SWIFT’s commercial manager of funds, Tim Hamer. SWIFTNet Funds has introduced standardised messages covering the gamut of managed fund transactions – orders, confirmations, holding statements, account openings, transaction statements, NAV reporting, cash flow reporting, communication reporting and transfers.
Including such major players as Vanguard, BT Wrap, National Custodian Services and Ausmaq (a cost-effective source of connectivity for smaller funds managers), Brown said the SWIFTNet project was a good chance to eliminate faxes at the wholesale end of the industry because, in SWIFT, it used a messaging framework which most players, particularly banks, already utilised in other parts of their organisation.
Simon Ractliffe of Global Funds Network said IFSA should encourage the executives of all the largest retail managers and platforms to collectively decide which “utility functions” they were happy to share, leaving them free to “win business based on their brand and level of customer service”. He said IFSA’s co-ordinating role was important, otherwise a compelling utility from an individual vendor might emerge, attracting a few players but overall fragmenting efforts to further straight-through processing (STP). Platforms would also play a big part in any holistic, adviser-to-custodian solution, Tim Worner of Morse Consulting said in the panel discussion. “Platforms won’t go away, most of this talk that you can connect distribution directly with manufacturing is rubbish,” he said.
Platforms performed “hard administrative work” beyond the scope of desktop software, Worner said, and whereas SWIFT Net worked from the custodian end back toward the frontoffice, Worner predicted the most effective fax-killer would be built to fit with adviser business processes. He said consolidation to create “mega-platforms” would benefit STP efforts, as would industry agreement on commoditised processes which could be shared.