1 1 domestic funds platform “enabling the funds industry for the future” cancún 21 may 2015
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Domestic Funds Platform
“Enabling the funds industryfor the future”Cancún
21 May 2015
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Market size*(Q4 2014 ; in EUR trillion)
CAGR** 2009-2014Net of FX fluctuations
+%
Source: Investment Company Institution (ICI), EFAMA* Market size of mutual fund market in Assets under Management** Compounded Annual Growth Rate
1.3+8%
0.5
0.1
+16%
0.9+14%
0.1
+14%
0.8+13%
0.6+7%
Strong global growth in funds
10+8%12
+7%+8%
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Growth slowdown / impediments
• Reduced investor appetite (domestic and foreign)
• Regulatory concerns on investor protection
• Capital invested elsewhere, possibly overseas instead of domestically
Marketinefficiencies
• Heavy administration
• Duplication
• Complexity
• Increased risk
• Increased cost
• Lack of standardisation
• Lack of transparency
Ad-hoc« infrastructure »
• Supporting infrastructure developed ad-hoc
• Driven by Fund Managers, Distributors and Administrators
• No central nor neutral market utility
Fast-growingfunds market
• Driven by emerging or fast-growing middle-class
Fast growing markets have similar characteristics…
…and are at a stage where a central infrastructure can bring substantial benefits to
market participants!
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Emerging case for change
Source: Quotes from workshops with fund market participants
“Difficult and long validation and
reconciliation processes”
“No end-to-end process”
“Long periods of exposures until confirmation is obtained on unit
balances holdings”
“Need for structural improvement of the
market"
“Cash settlement decoupled from unit
settlement”
“Need for more scale and efficiency"
“Open up to international investors"
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A partnership of complementary strengths…
Local CSD
Euroclear
Funds expertise and know-how
Dedicated platform “instance” which can be customized to the local fund market’s needs
Hosting in Euroclear’s datacenter
Local operations Local client
relationship management
Integration into the local cash payment and regulatory systems
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…to provide a comprehensive service offering…
Order routing
Settlement
Distributor authorization
Register keeping
Reconciliation
Transfers
Corporate actions
Regulatory reporting
International access
Local language and terminology
Multiple communication protocols (channels and formats)
Business continuity on three aligned data centers
BUSINESS FUNCTIONALITIES
TECHNICAL FUNCTIONALITIES
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FundDistributors
Investors
Local cash payment system
Fund Managers
…integrated into the local funds market
(Third Party Administrator
s)
Local CSD