In a global roll-out, JPMorgan Worldwide Securities Services ( JPMorgan WSS) will go live with automated managed fund transactions through the SWIFT network in the second half of the year, joining HSBC Securities Services, RBC Dexia and Vanguard Investments, who became cornerstone users of the technology in Australia last month. The transactions cover applications, redemptions, confirmations, status reports and reporting, which are sent using SWIFT Funds ISO20022- compliant messages across the SWIFT network.
SWIFT estimates that manual transaction processes cost $20 per trade, while the initial price of a domestic automated trade is $0.12, with the non-profit SWIFT taking a tiny clip as a message fee. Five other companies have committed to making the upgrade – BNP Paribas Securities Services (BNP PSS), Barclays Global Investors, Macquarie Wrap, National Custodian Services and Ausmaq. It is understood Macquarie Wrap will make the change in 2010 and has already talked to managers about pricing incentives to transact with it through the new SWIFT messages.
BNP PSS confirmed that it would also go live in 2010. “We’re impressed with the risk and cost reductions provided by the system,” a spokesman for the custodian said. Westpac-owned BT Wrap was part of a group that piloted automation in September 2007, but has not progressed due to the distraction of integrating St George Bank systems. Within JPMorgan WSS, the global implementation of automated systems is being coordinated from the custodian’s UK office. “The pilot demonstrated that SWIFT works, that the messages are the right shape.
Now it’s down to uptake by the industry,” David Braga, head of product at JP Morgan WSS in Sydney, said. The Sydney arm of JPMorgan WSS currently sends and receives faxes “in the multiples of thousands” each month, according to Braga. A broad adoption of automation by funds managers would eliminate most of that paper correspondence, but in the meantime the custodian will run fax and automated systems side-by-side.
Certain communications, such as a manager’s notification of a new fund or change of broker, will still need to be conveyed by fax. Tim Hamer, commercial manager for SWIFT in Australasia, was confident that all members of the pilot would go live with automated processes in the near future. “People are working at different speeds. But they can take confidence in the fact that they’ve declared to each other they will be live by the end of this year,” Hamer said. “Our focus is on those players with higher volumes. Between themselves they can cut out, or automate, a lot of their daily transactions.