The creation of an industry utility for unit registry in Australia has been the subject of informal discussion among competitors in the fund administration business, which Bryan Gray hopes can soon be formalised through the Australian Custodial Services Association (ACSA) that he chairs. All of Australia’s major custodians run a unit registry service, but Gray suspects that no-one is providing the core registry function – record-keeping and the processing of fund applications and redemptions – because they consider it a point of a difference or a money-maker in its own right.
“Most providers have set up registry because a funds manager has outsourced custody and middle office to them, and then they’ve been asked to run the registry as well. The result is you’ve got everyone off doing their own thing, whereas if we came together and ran it as a utility we could really reap some scale benefits for our clients.” Unit registry of non-super unit trusts had never achieved the economies of scale which superannuation member administrators, blessed with the compulsory creation of new accounts, had enjoyed in Australia.
Gray admits there would be some difficulties in setting up a utility. “You’d need to run it as a business, so you’d have the question of who will own it, how its board is structured… you’d also find some funds managers were uncomfortable with giving up that frontline interface with their dealer group supporters or individual investors, so there’d be the question of exactly what functions the utility would perform.” Gray says the likes of a Computershare might be the natural provider of the unit registry utility. The ACSA chair plans to mention the idea in his address to the IFSA conference this month, and will seek to develop the idea in discussions with his colleagues through the Association.