ISJ041

Jul/Aug 2009Volume 6 No. 41GBP 25 - UK, ROWUSD 45 - AmericaEUR 35 - EMEAwww.ISJ.tv

Data Profi le - Centralisation

Panel - Global Custody

US pensions - New portfolios

Irish funds - Kinetic PartnersTHE GLOBAL SECURITIES SERVICES INDUSTRY MAGAZINE

Class Inaction

Where compensation for UK pension

funds falls behind

Front Cover Section ISJ41.indd 1 17/07/2009 18:00

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Editor:Ben [email protected]

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ISSN 1744-151X.

P.14 Class Actions P.12 US Pensions P.22 Irish fundsP.14 Panel Debate

Heads upISJ Investor Services Journal

infl uence regulatory decisions as he suggests? This magazine would hope so. Regular readers will recall the leader from June’s issue, outlining the initiative that these investors must take to and the demands they must make on the services they receive, in turn encouraging the greater transparency, accountability, and communication of banking operations that is supposed to defi ne a brave, new world. Investor action is explored in a different context in this issue. Class actions have become a global phenomenon, compensation a vital battleground against past malpractice. Despite the complexity and time that class actions can often contain, more collectives of investors are seeking payback in many markets. But not the UK. This issue’s cover feature assesses

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the effect that a prohibition on class action litigation has had on British pension funds’ appetite for seeking collective claims abroad, despite strong research that highlights the hundreds of millions being forfeited. US pension funds are in a state of portfolio upheaval. More major schemes are rebalancing their allocations, and though this has meant a fl ight to bonds, credit and liability-driven investing, there has also been renewed faith in long-term equities as well as other distance ‘plays’, such as private equity. It’s as if pension fund managers see the light at the end of the tunnel, but are still cautiously watching for a train. Read on, starting page 12. From now, ISJ is setting its sights on Sibos in Hong Kong - keep in contact to tell us your plans for this event. n Ben Roberts, Editor

25

Political and regulatory tension over the future of fi nancial institutions has rarely been higher this year than over the last four weeks. In particular, the fall out from the European Commission’s draft for its new regulation of hedge funds has typifi ed the traditional schism in philosophy for this investment vehicle between “Anglo-Saxon” capitalism and a continental European view dominated in the media by the French. To clamp down, or not to clamp down, on hedge and private equity funds? Lord Myners, the UK’s Financial Services Secretary to the Treasury, emerged as the undoubted “lead plaintiff ” making the case for hedge funds in a courtroom stuffy with public opinion. One signifi cant Myners comment was that if institutional investors can make clear which regulatory they want applied to fund managers and which would be costly and unnecessary, “this will send a powerful message to policymakers”. Is this a rallying cry to institutional investors? Can they express a strong, cohesive viewpoint – and can they

Editor’s letter

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Courtroom drama

P.04 News

18 22

STATS-SNAP Our graph illustrates the challenges in the middle and back offi ces in Japan. The market fragmentation and lack of standards may hint at the uneven development for complex products in Asia.

0% 10% 2 0%

Copyright 2009 © Oliver Wyman 15

Most respondents indicated that the state of STP in derivatives has not changed over the prior year, while 25% stated conditions for STP had improved, and 13% believed conditions had worsened.

When asked what factors were limiting progress in STP, respondents most commonly cited a lack of standards, complexity of transactions, and market fragmentation. These external factors reflect the nonstan-dard nature of many of the complex derivatives instruments traded in Japan. The internal factors most cited were data issues, as well as lack of automation for some functions. For example, most firms surveyed rely on fully manual exceptions handling for derivatives.

Figure 10: In the past year, how have STP conditions for derivatives changed for the middle and back office processes at your organization?

Source: Celent Japan STP survey

Figure 11: What are the common causes of a lack of STP for derivatives?

Source: Celent Japan STP survey

How have STP conditions changed in the last 12 months?: Derivatives

Unsure0%

Worse13%

Better25%

About the same62%

Common Causes of Lack of STP: Derivatives

0% 10% 20% 30%

Reliance on Internal Manual Processes

Inconsistent Data

Inflexible Systems

Insufficient upstream processing/data

Complexity of Transactions

Lack of Standards

Market Fragmentation

% of Respondents

Market fr agmentation

Lack of standards

Complexity of transactions

Suffi cient up stream processing data

Infl exible systems

Inconsistent data

Rebalance on internal manual processes

Common causes for the lack of straight through pro-cessing in Japanese banks for derivatives SOUCE: Celent

Month Winner Client Location Assignment Mandate size

July RBC Dexia Wilson Asset Mg’mnt Sydney Custody n/a

July BNP Paribas West LB AG. Hungary/Poland Local service provider n/a

June BNP Paribas EMCF Portugal Settlement outsourcing n/a

June State Street PensPlan Italy Investment Services USD100 m

Latest mandates

..................................................................................................................................................................................

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Contents

Letters

News and mandates The last month of updates in custody, clearing and settlement, securities lending, legal and

compliance and technology.

News analysis -Morocco a-go-goPlus, analysis of the repo market.

Class Inaction - Pension fundsMore countries around the world are amending class action laws, with the UK still far behind. Ben Roberts assesses the ability and appetite for UK pension funds to obtain compensation.

Reborn in the USA - US Pension Funds - Anthony Harrington explores the changes and sentiment among the US’s biggest schemes and the impact

on their custodians.

Global Custody - Panel Debate - Technology and client concerns are just two areas of global custody for this issue’s panel to ponder.

Data Profi le - Smart Co - Data Management Ben Roberts talks to Jean-Baptiste Le Dantec of Smart Co about data centralisation

New rules for a world leader - Irish funds and regulation John Hamrock of Kinetic Partners explains the success of the Irish funds industry.

Directory of servicesThe company listing.

Reborn in the USA, pension funds, page 12

Contents ISJ Investor Services Journal

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Sebastien Danloy, panel member, page 14

In this issue

People

Fund Administration

Custody

MEMBER - periodical publishers association

TO RENEW YOUR SUBSCRIPTION PLEASE TELEPHONE: +44 (0)20 7299 7700 OR VISIT... WWW.ISJ.TV

22 John Hamrock, Kinetic Partners, page 22

Denise Valentine, Aite GroupUS pension funds, page 12

Class InactionPension funds, page 12

COVER STORYLegal

16 25

Technology

BNP Paribas Securities ServicesTHE CLOSER WE ARE, THE BETTER YOU PERFORM

With our precise understanding of each market’s internal workings,you maximise your market and investment opportunities.

At BNP Paribas Securities Services, the closer, the better.

BNP Paribas Securities Services is incorporated in France with Limited Liability and authorised by the French Regulators (CECEI and AMF). BNP Paribas Trust Corporation UKLimited and Investment Fund Services Limited are authorised and regulated by the Financial Services Authority. BNP Paribas Securities Services London Branch is authorised by theCECEI and supervised by the AMF and subject to limited regulation by the Financial Services Authority. Details on the extent of our regulation by the Financial Services Authorityare available from us on request. BNP Paribas Securities Services is also a member of the London Stock Exchange.

securities.bnpparibas.com

ISJ 267x203_30Jan:BP2S Ad 25/2/09 14:06 Page 1

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COVER STORY

22

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BNP Paribas Securities ServicesTHE CLOSER WE ARE, THE BETTER YOU PERFORM

With our precise understanding of each market’s internal workings,you maximise your market and investment opportunities.

At BNP Paribas Securities Services, the closer, the better.

BNP Paribas Securities Services is incorporated in France with Limited Liability and authorised by the French Regulators (CECEI and AMF). BNP Paribas Trust Corporation UKLimited and Investment Fund Services Limited are authorised and regulated by the Financial Services Authority. BNP Paribas Securities Services London Branch is authorised by theCECEI and supervised by the AMF and subject to limited regulation by the Financial Services Authority. Details on the extent of our regulation by the Financial Services Authorityare available from us on request. BNP Paribas Securities Services is also a member of the London Stock Exchange.

securities.bnpparibas.com

ISJ 267x203_30Jan:BP2S Ad 25/2/09 14:06 Page 1

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information and systems across areas of their business that have similar functional requirements. This is simple to say, but not easy to achieve. The utopian picture might be to have common processes consolidated across the entire fi rm, for example margining, asset servicing, billing etc. The world of securities fi nance, however, still has so many variables and nuances that are not supported by general solutions. Organisations that have tried to shoe-horn securities fi nance into generic systems have commonly found this incredibly challenging, ultimately resulting in a service-quality reduction in the processing of the securities fi nance transactions. A more achievable solution is to have a specialist securities fi nance platform which is common to equity and fi xed income sides of the business. It should offer functionality for front, middle and back offi ce processing, as well as market data analytics giving market colour and performance measurement. Most solutions available today originated from either a repo or securities borrowing and lending background, and therefore have their strengths in one area or the other. Firms now have the opportunity to leverage a single solution from one proven supplier. (SunGard Apex.)

Jane Milner, product specialist, Securities Finance, SunGard n

The fi rst half of 2009 has been marked by the focus which policymakers and legislators have given to mitigating counterparty risks in OTC derivative transactions. This is entirely understandable given the counterparty risk concerns that

became amplifi ed through the collapse of Lehman Brothers. But it is important that counterparty risk concerns do not remain concentrated on the OTC derivative markets or on the sell-side, as the buy-side has made it very clear that reducing counterparty risk exposure is a high priority for it too. This is of particular importance for hedge funds, given the complexity of the settlement process which they are subject to. Currently, the settlement of hedge funds’ trades between their executing and prime brokers occurs as OTC transactions without any CCP guarantee. All parties, including the underlying hedge funds, are exposed to counterparty risk. The introduction of a CCP in this settlement chain substantially reduces counterparty risk between the prime and executing brokers, and thereby also substantially reduces the exposure of the hedge fund to its executing brokers. Through Omgeo’s recently announced partnership with EuroCCP, these counterparty risks can be mitigated with an institutional trade processing model that will route hedge fund/prime broker equity trades - as well as other OTC transactions - from trade matching through CCP netting and onward to settlement fi nality. In the second half of this year, when regulators and policymakers begin to prescribe actual solutions to address counterparty risk concerns, they should be cognisant of, and leverage systems that are already being developed by the industry, for the industry, and for the buy-side as well as the sell-side.

Leigh WaltersExecutive Director, Global Sales and Head of EMEA, Omgeo n

Asset managers are clearly under extreme pressures to both cut costs and defend revenue whilst at the same time demonstrating more effective risk control and meeting the challenge of more stringent compliance requirements. The custodians that have invested in attribution and risk management tools and can make these tools available to asset managers effi ciently and effectively will be the most successful. The key success factor for asset managers is clearly the retention of clients, even good managers go through periods of bad relative performance and obviously most managers are experiencing poor absolute performance right now. In such conditions asset managers must have a clear understanding of their own sources of return and risk and be able to articulate these sources to their clients. Custodians not able to assist their clients in this dialogue of understanding with the ultimate owners of capital will suffer the same fate as the asset manager, loss of revenue.

Carl Bacon, Chairman, StatPro n

Improving effi ciency and driving down costs are on the minds of most business managers today. One way to achieve this is through the consolidation of similar processes across business areas. Historically fi rms would commonly have separate lending desks for equities and fi xed income products, each supported by different systems. This silo’ed approach can lead to ineffi ciencies in processing, increased risk, lack of visibility and high costs associated with the support of a myriad of systems. Firms are now seeking the benefi ts of consolidating

To express your views, write to [email protected] or write a blog at www.ISJ.tv

Letters ISJ Investor Services Journal

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Dear ISJ Letters

Dear ISJ

Dear ISJ

LONDON - Citi’s Global Transaction Services business was appointed by East Capital, the asset manager, to provide custody, fund administration, cash management and transfer agency to its Special Opportunities Fund, launched in March. GTS was also appointed by Chemspec International Limited, a leading China-based chemical manufacturer, as the depositary bank for its NYSE-listed American Depositary Receipt (ADR) programme.

PARIS - BNP Paribas won the GE Real Estate Management France SAS mandate to provide depobank,custody, registrar services and fund administration for their OPCI funds.

In its annual Pension Survey, Capita Hartshead found investment strategy, employer funding and legislation compliance to be the top three concerns of UK pension fund trustees. Findings suggested that regular meetings, training and regular statement reviews, in that order of importance, would help alleviate investment worries.

WestLB AG and the central institution for the savings banks in North Rhine, Westphalia andBrandenburg, appointed BNP Paribas Securities Services as asset servicing provider in Hungary and Poland.

Custody

Fund Administration

The Nomura Trust and Banking Co. reached an agreement with Nikko Citi Holdings Inc. and Citigroup International LLC to acquire all of the shares of NikkoCiti Trust and BankingCorporation for around 19 billion yen. The Japanese bank is set to move it’s London offi ces from Canary Wharf to the City.

News

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A global player in asset servicing...Offering leading value in investor services demands constant

evolution. At CACEIS, our strategy of sustained growth is helping

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News ISJ Investor Services Journal

01 11 21 3112 22 3203 13 2304 14 2405 15 2516 2607 17 2708 18 2809 19 2910 20 3002 06

Legal

Technology

Clearing

Securities Lending

Regulation

SmartCo, founded in 2004 by financial softwareand consulting professionals working in finance,is a software provider specialising in datamanagement solutions for the financial industry.

The answer to the challenges of the financeindustry

- Improve operational performance and reduceoperational risks and costs by increasing data quality

- Reduce time-to-market, acccess new dataand speed up innovation

- Simplify your information system

- Integrate more easily new businesses

A sset

> FranceSmartCo37 rue de Liège75008 ParisT +33 (0)1 58 22 29 60F +33 (0)1 58 22 20 50

> USASmartCo101 Federal Street, Suite 1600Boston, MA 02110T +1 617 342 7406F +1 617 342 7415

[email protected]

Trading

asset managementCapit al Mark etCapit al Mark et

B anking

SmartCoData Management forthe Finance Industry

SmartCo Data Hub (SDH) is a complete solution forcentralized data management. It offers a durable and highadded value answer to strategic issues. SDH acts as arepository, a hub and a user-oriented data managementtool for data used or produced by financial institutions.

- SDH Securities hosts every type of asset and managereference data as well as market data. SDH integratesas many diferent internal or external sources of data asrequired, cleans it, normalizes it, enhances it anddistribute it to every user or system that needs it. SDHcomes with 2 optional additional modules for Indices/Benchmarks and Corporate Actions.

- SDH Business Entities centralizes and consolidatesall information about third parties with which the financialinstitution is directly or indirectly in business with (issuers,counterparties, customers, ..). It can be fully integrated toSDH Securities.

SFDH provides a very rich set of data managementfunctionnalities: full connectivity support, data mapping,automated quality controls, distribution functions, user-friendly front-end, cutomisable dataflow, full audit trailand permissioning, a robust and scalable n-tier architectureand run on most operating systems and with most RMDBS.

Think Data

International Fund Services (IFS), State Street’s hedge fund administration company, won the mandate to provide third party fund accounting, fund administration, tax and risk services to five master-feeder fund structures at a total of USD6 billion in assets managed by New York-basedCaxton Associates and affiliates.

KAS Bank N.V. is to acquire Deutsche Postbank Privat Investment Kapitalanlagegesellschaft mbH (PPI), the fund administration business of Deutsche Postbank Group, following a signed agreement in Bonn.

Citi extended its services to hedge funds with middle office suites to undertake ‘complete end-to-end servicing’ for the sector. .

AdvisorShares Trust, the actively-managed exchange traded fund (ETF) provider, selected BNY Mellon Asset Servicing to service its funds, including custody, fund accounting, fundadministration, basket calculation, and transfer agency services for AdvisorShares’ multi-managerand single-manager strategies.

NEW YORK - Bernard Madoff, the disgraced financier at the centre of a USD50 billion ‘Ponzi’ scheme, was sentenced to 150 years in jail by a US District Court. Madoff, 71, apologised to his victims.

International financial offshore law firm Conyers, Dill & Pearman has offered support for the recent alterations to the legal framework surrounding mergers and acquisitions involving Cayman-domiciled companies.

The lack of unified action by national watchdogs has led to “regulatory turmoil” that may put the UK´s Financial Services Authority at an international disadvantage, according to David Little of Rule Financial, the consultant. “The FSA has been

leading the regulatory world, but the others must follow,” he said at a securities lending conference in Barcelona last month . “All regulators aretrying to work out where to impose their will, and it is difficult for the FSA to act alone. This could lead to unintended consequences, such as that it might drive business away from FSA-regulated markets.”

Lord Myners, the UK Financial Services Secretary to the Treasury has demanded that the European Commission’s controversial draft proposals for alternative funds have “major surgery” before it ever comes into reality. “The UK is not in the business of blocking more stringent regulation, contrary to what some in Europe may say,” he said at an AIMA event.

The International Securities Lending Association (ISLA) appointed Kevin McNulty, a former managing director at Barclays Global Investors, as CEO from 1st August 2009.

The Australian Securities & Investment Commission (ASIC) lifted the ban on the covered shortselling of financial shares on the 24th May, 2009. The decision, however, will be reversed if market conditions sufficiently deteriorate.

SecFinex launched its central counterparty for securities lending to operate across the NYSE Euronext markets of Belgium, France, Portugal and the Netherlands. LCH.Clearnet is the clearing house.

LONDON -The head of European securities lending at Deutsche Bank believed prime brokers will not be bypassed if a central counterparty is introduced. Ben Sofoluwe explained that “if a central exchange was introduced to the stock lending market, hedge funds would still seek the multiple services that a prime broker offer rather than going to the exchange directly”. The point

was raised at the second Global Securities Lending Summit .

MOSCOW - The National Depository Centre (NDC), Russia’s only settlement depository servicing for all debtand equity securities of Russian issuers, and Vedeniye Reyestrov Kompaniy CJSC (VRK), aspecialist registrar, adopted an electronic data interchange (EDI) system in their information interactions.

The Singapore Exchange has introduced collateralisation of large securities settlements and is considering revisions to participant investment into its Clearing Fund. The collateralisation practicestrengthens the robustness of SGX’s risk management framework to weather different market conditions.

Société Générale Securities Services expanded its clearing activities to include some of the new European multi-lateral trading facilities. The move by the bank follows the increasing prominence of the new trading venues whose low trading cost continues to claim market share away from the traditional exchanges.

J.P. Morgan’s GlobeClear business now provides clearing and settlement services for members of the Equiduct Trading System, owned by the Borse Berlin AG.

StreamBase Systems, Inc. announced the release of StreamBase 6.3, the latest version of their award-winning Complex Event Processing (CEP) software platform. StreamBase 6.3 includes updates to the core CEP platform, and marks the launch of StreamBase’s Foreign Exchange (FX) Aggregation Framework.

EuroCCP, the European subsidiary of The Depository Trust & Clearing Corporation (DTCC), has slashed its clearing fees from six euro cents to five euro cents per side - the lowest fee level charged for clearing in Europe. This is as a result of the increased competition in trading,

specifically from new multi-lateral trading facilities such as Chi-X, and the growing demand for the all-in cost advantage of efficient, low-cost and robust central counterparties.

The European Multilateral Clearing Facility N.V selected BNP Paribas Securities Services for its settlement outsourcing in Portugal. BNP Paribas’ solution will allow underlying EMCF clients to trade Portuguese securities on multiple MTF platforms, and in Portugal, BNP Paribas will act assettlement agent for EMCF.

BATS Europe recorded its highest average daily market share for a month in June, handling 5% oftrading in the FTSE100, 6.19% of the CAC40, 4.15% of the DAX30, 4.25% of the AEX and 3.32%for all Europe.

Elsewhere BATS Global Markets, the holding company of BATS Trading and BATS Europe, is to launch a US equity options exchange - BATS Options - in early 2010.

Logica signed up 48 banks represented by The Banks’ Association of Turkey (TBB) to use the IT firm’s financial messaging service.

SunGard and RBC Dexia Investor Services have co-developed an automated fund trading and settlement solution to allow customers of the technology provider to access and trade with around 9,000 additional funds available in Europe on RBC Dexia’s platform through a single connection.

ACA Valores implemented tools from 4sight Financial Software, the technology provider for custodians, brokers and intermediaries. The bank uses 4sight Securities Finance (4SF)for its agency lending business, with the system providing cross portfolio availability, collateralmanagement, reporting and risk management. n

For more news, as well as features, events and video interviews, visit www.isj.tv

1-13 ISJ41 ML.indd 6 17/07/2009 12:30

SmartCo, founded in 2004 by financial softwareand consulting professionals working in finance,is a software provider specialising in datamanagement solutions for the financial industry.

The answer to the challenges of the financeindustry

- Improve operational performance and reduceoperational risks and costs by increasing data quality

- Reduce time-to-market, acccess new dataand speed up innovation

- Simplify your information system

- Integrate more easily new businesses

A sset

> FranceSmartCo37 rue de Liège75008 ParisT +33 (0)1 58 22 29 60F +33 (0)1 58 22 20 50

> USASmartCo101 Federal Street, Suite 1600Boston, MA 02110T +1 617 342 7406F +1 617 342 7415

[email protected]

Trading

asset managementCapit al Mark etCapit al Mark et

B anking

SmartCoData Management forthe Finance Industry

SmartCo Data Hub (SDH) is a complete solution forcentralized data management. It offers a durable and highadded value answer to strategic issues. SDH acts as arepository, a hub and a user-oriented data managementtool for data used or produced by financial institutions.

- SDH Securities hosts every type of asset and managereference data as well as market data. SDH integratesas many diferent internal or external sources of data asrequired, cleans it, normalizes it, enhances it anddistribute it to every user or system that needs it. SDHcomes with 2 optional additional modules for Indices/Benchmarks and Corporate Actions.

- SDH Business Entities centralizes and consolidatesall information about third parties with which the financialinstitution is directly or indirectly in business with (issuers,counterparties, customers, ..). It can be fully integrated toSDH Securities.

SFDH provides a very rich set of data managementfunctionnalities: full connectivity support, data mapping,automated quality controls, distribution functions, user-friendly front-end, cutomisable dataflow, full audit trailand permissioning, a robust and scalable n-tier architectureand run on most operating systems and with most RMDBS.

Think Data

1-13 ISJ41 ML.indd 7 17/07/2009 12:30

8

News Analysis ISJ Investor Services Journal

01 11 21 3112 22 3203 13 23 3304 14 24 3405 15 25 3516 26 3607 17 27 3708 18 28 3809 19 29 3910 20 30 4002 06

Morocco a-go-goMorocco is developing into a magnet for more international business, both from Europe and its North African peers, with a burgeoning stockmarket. Last month BNP Paribas signed a co-operation agreement with BMCI Securities Services - a Moroccan based service provider that is more than 66% owned by the bank - to provide the custodian’s international clients with custody, local clearing and global corporate trust services. BNP Paribas has used BMCI as its local sub-custodian for the last five years, explains Philippe Kerdoncuff, head of new markets development for BNP Paribas Securities Services. The latest tie-up is a classic ‘local-knowledge-meets-global-contacts’ bi-partite situation. “In Morocco we’re servicing the international players investing in Morocco secutities. Of course, BMCI already has domestic clients, but the main objective is to service international clients – the main custodians and some investment banks.” He explains that a custody client would be ‘booked’ with BMCI and supported by a dedicated local coverage team, but the global relationship management will be orchestrated by BNP Paribas Securities Services outside the country. The Casablanca Stock Exchange’s market capitalisation has quadrupled in five year, he adds, and listed equities is the key attraction for the institutional clients. “The growth has been strong. There have been a few IPOs in the market, the stock exchange is growing and developing to allow foreign companies to be listed, and also lots of international asset managers are investing in emerging markets globally.” Morocco is the fourth largest African market after South Africa, Egypt and Nigeria and the largest in North Africa. Kerdoncuff has seen a few Tunisian companies interested in a Moroccan listing, as well as increase in the technology spend by the Casablanca Stock Exchange, which is under the supervision of the Ministry of Finance and Privatisation with its share-capital is held in equal parts by brokerage firms. All of these factors have

The BNP Paribas-BMCI link up comes amid growing interest in the North African state

spurred the increase in activity in the market. “We will continue to look at the region, including Egypt.” n

Is this the year of repo? Conversations in conferences this summer about the money markets, government bond issuances and securities lending all seem to be converging to indicate bond-cash lending. ICMA found a significant dip in repo transactions overall in March, even though the repo trading in government bonds increased to 84.7% from 81%. and the market is eagerly awaiting the industry body’s follow up survey in September. But the central thrust for the increase in repo transactions is the relative security of these financing transactions away from the money markets. At the ISLA/RMA Securities Lending conference in Barcelona last month David Little of Rule Financial, the consultant, said banks are reassessing the role of their capital markets division in “the biggest strategic rethink” of modern times. In this context the repo markets gets “a strong tick”. David Rule, outgoing CEO of ISLA, also on the panel, agreed that the repo market could see strong growth. “In trying to look at the wider regulatory changes, it´s going to include an increase in capital management and less leverage. If UK banks will have to hold large gilt repo books, bond lending will perhaps become even bigger.” To GSL.tv at the event, David Rule said a key trend will involve money market funds in Europe catching up with the US, engaging in repo with only government bonds. “That’s bringing the buy-side into the repo market and increasing the supply of money in to the repo market, particularly the longer maturities. That [would be] very welcome as there has been a lack of money available to borrow three-month.” He credited the presentation given by Michele Stubbe, the head of the market operations analysis division from the European Central Bank, who highlighted the path in which the markets could be weaned off central aid. “The repo market will be key. I think the growth of a funds sector that is actively investing in repo, and indeed reinvestment of sec lending cash collateral in repo, will be key.” n

Repo growth

Comms techCommodity traders and their back offices will be spoiled for choice after a flurry of software launches and upgrades for trading and settlement systems. Brady, a trading, risk management and settlement solutions for metals and commodities, after signing new deals with Xstrata Copper as well as with a “leading global investment bank” active on the London Precious Metals Clearing Limite earlier this year, is now looking to Asia with the opening of its new Singapore office. This has already led to a precious metals deal with Japan’s leading trading company. In July, the company announced revenues of approximately 40% in the first six months of 2009 compared to the same period in 2008 - an increased operating profit for the first six months of 2009 compared to the first half of 2008. Misys extended its Confirmation Matching Service to cover base metals within its Metals Suite. The upgrade comes after SWIFT expanded its MT600 series messages to incorporate base as well as precious metals transactions. Then Trayport became the first OTC broker trading system to offer electronic submission of energy OTC trades to LCH.Clearnet’s systems, essentially a real-time straight through processing system - a step forward in supporting OTC Cleared markets. “Trayport are proud to be the first OTC broker trading system to offer electronic submission of energy OTC trades to LCH.Clearnet’s systems. Improving the OTC Cleared model is crucial for the evolution of the OTC European energy markets and our integration with LCH.Clearnet will ensure the process becomes far more automatic,” said Dan Smith, head of broker systems business at Trayport. n

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Class Actions ISJ Investor Services Journal

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Fears of another major investment bank default have been receding for the last few months, but the activity for investors of all hues to disentangle themselves from some of the beleaguered remaining institutions has increased. In the post mortem of the market crash and government bailouts, more investors are seeing yesterday’s losses as tomorrow’s potential compensation, and the emerging global phenomenon of class actions – a single lawsuit made by multiple claimants against the same entity – has seized headlines. A class action, otherwise known as ‘representative action’, is a lawsuit in which a large group of investors or consumers collectively bring a claim to a court based on common injury over a certain time period. In the US, one of the world leaders for this type of litigation, class actions are overseen by the Federal Rules of Civil Procedure Rule 23 and 28. A suit is typically fi led with a named ‘lead plaintiff ’ or multiple plaintiffs, to represent a ‘class’. There are two types of action, explains Stephen Everard, managing partner at GOAL group, a class action specialist law fi rm. “You can do a class action where you go to court, as with the US system, and the judge decides there’s a case to answer. Then it would follow the usual pattern of the forensic accountants to work out the losses suffered by investors - to see if the company had made full disclosure, where the share price would have been versus where it was, using peer index, daily infl ation tables, a whole raft of factors.” Suffi cient damages and losses incurred from the fi rst day the company should have disclosed through its did fi nally get round to disclosing would then be calculated. “The alternative is that a group of shareholders get together, normally brought together by one of the specialist law fi rms, and form a foundation and take a direct action.” Everard explains that a foundation approach benefi ts the defendant in the sense that the company can agree and negotiate on a settlement. “If it goes to court, that number is largely out of their

hands.” GOAL Group conducts detailed research to identify where a company’ share price might have been artifi cially raised on the back of fraud of lack of full company disclosure, as compared to an index of its peer group. On page 14, a chart displays the case of Enron, the energy group accused of fraud in 2001 due to years of mismanaged accounting and insider trading. As with defaulting banks, specifi c class action cases have come to represent wider, encapsulating issues. Where Lehman Brothers and its collapse defi ned the perils of sub-prime mortgage trading, Enron and the lawsuit against Royal Dutch Shell, the oil group, has summed up the ubiquitous talk of company opacity and responsible governance. On 29th May, the Amsterdam Court of Appeals approved issued a binding declaration ordering Royal Dutch Shell to begin payment of USD381 million to a foundation made up of more than 150 institutional investors from 17 European countries, plus Canada and Australia. It includes USD352.6 million in cash paid from Shell and an expected payment to non-US shareholders out of a USD120 million fi ne Shell paid to the US Securities and Exchange Commission. The action against Royal Dutch Shell relates to the company’s misrepresentations concerning details of its oil and gas reserves between 1999 and early 2004. All non-US investors who bought Shell shares during this period technically had a claim against the fi rm. A leaked email from Walter van der Vijver, then head of oil and gas exploration at the fi rm, to the chairman, bemoaning the need to lie about its reserves, sealed the case for a class action, and a suit was fi led in a US district court. Two years later, the oil company sought settlement for the non-US investors, and the scene moved to the Netherlands. The foundation structure of the combined claimants – which lawyers say is easier to facilitate out of court settlements – is slightly different to a class action. Dutch law does not allow aggrieved individuals

to petition the court for a class-wide settlement. Nevertheless, it was a situation whereby institutional investors smelled blood from a company and sought recompense. An increasing number of countries have been amending laws to facilitate class actions, which have been credited with improving the effi ciency of cases and reducing legal costs. On 1st June the Securities and Exchange Board of India (Sebi) decided to pledge fi nancial aid to collective lawsuits, leading to expectation of more cases that seek to take advantage. The regulator has restricted the funds to 25 Sebi investor associations and requires the collective claimants to prove that each case has affected more than 1,000 investors. Further, the Sebi funding will not exceed three-quarters of the total costs of the case. The decision follows an increased awareness and culture change towards investor compensation, a stark sign of the times from a country that has traditionally disincitivised such lawsuits. Australia, too, has seen an increase in corporate class action, spurred by strong legislation against misleading and deceptive conduct. In the UK, the inability to fi le class actions has produced the unorthodox situation in which UK investors can sue a UK company in a US court. Most recently and pertinently this year, two pension funds – based in Merseyside and north Yorkshire – fi led a class action against Royal Bank of Scotland. Like the Royal Dutch Shell, the funds claimed the bank had withheld information concerning the state of its fi nances prior to its nationalisation by the UK government in November 2008. Four months previously, the bank had undertaken a rights issue, raising GBP12 billion to shore up its balance sheet, the fi rst of the UK banks during that period to do so, before accepting a GBP20 billion rescue by the government. Stephen Everard explains that case meets the criteria for a US based case. “You typically need to have a place of business in the US, which the bank has;

Class InactionInertia over the UK’s class action laws leaves pension funds with signifi -cant obstacles to getting compensation, writes Ben Roberts.

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your shares need to be tradeable in the US too,” he says. Everard adds that if the case is successful it will have ramifications for further lawsuits against British banks, including Lloyds TSB and Northern Rock, two banks part- and fully-owned respectively by the UK government. “Although we don’t have class action legislation [in the UK] in cases against Lloyds TSB, Northern Rock, you’d be effectively be suing the government. That would be interesting.” The lawsuit ran parallel with another UK pension fund seeking compensation in the US, when the GBP1 billion Avon Pension Fund was appointed “lead plaintiff” — the institution fronting a group lawsuit on behalf of others, including the North Yorkshire Pension Fund — in a case against GlaxoSmithKline, the drugs giant on grounds of deceit and fraud. Despite this precedent, Everard and researchers at GOAL Group are also well aware that the UK should not expect a stampede of institutional investors seeking compensation any time soon. A recent report from the firm found that UK local pension authorities lost out on around GBP200 million from unclaimed compensation between 2000 and 2007. The report summarises that the emphasis of class action suits has shifted in the last two years from corporate governance scandals such as Enron – the US energy group whose accounting fraud led to multi-billion dollar settlements since its bankruptcy in 2001 – to losses related to the sub-prime mortgage lending fallout. Though Everard says there has been an increase in claims overall, organising and filing class actions among UK institutions is still far from automatic. Inertia and a lack of understanding have been two critical reasons. “There is a huge inertia, even to this day,” he says. “We do quite a lot of work for local government authorities, like West Midlands, and they’ve been very vocal and supportive to say they’ve received over USD500,000 in compensation for their fund. That’s a big fund, around GBP7-plus billion. I try to work with lots of other local authorities and they will recognise yes, we need to do class actions, yes, we know we should be doing more, we think our custodian does it but we’re not sure, or ‘we’ll get round to it’. Some I’ve talked to for about two years and they haven’t done anything.” However, class action lawsuits are likely to increase as governments and the exchanges want to be perceived as

“Class actions is becoming a global phenomenon. If the UK government doesn’t put it in, it doesn’t give shareholders a lot of choice”Stephen EverardGOAL Group

A survey by the National Associa-tion of Pension Funds found that funds are becoming more active in their contact with their investment managers and the companies in which they invest, though there is still room to do more. The NAPF survey found:

Getting engaged?

49% of respondents said they would be spending more time scrutinising investment managers on engagement issues post-crisis

44% of schemes have a direct engagement strategy

62% believed that work priorities conflicted with a pension scheme’s further engagement

25% believed their scheme’s engagement had some impact on a company’s board membership. 18% believed they had an effect on com-pany strategy.

ISJ Investor Services Journal Class Actions

pursuing good corporate governance: “If something goes wrong, they [investors want to] know there is the wherewithal to recoup losses.” For the UK, others agree with Everard as to the state of inaction. David Paterson, head of corporate governance at the National Association of Pension Funds, sees little appetite for increased litigation. “It’s not to say they [pension funds] are not concerned about RBS and the others, but the UK structure of governance - where a lot depends on an openness between companies and shareholders - is not a particularly good one to in which to have a litigation backdrop,” he says. Paterson identifies additional problems to the pursuit of class actions and achieving a worthwhile settlement. Class actions often take a long time to get to court; when they do, the period of time in which the class action is seeking compensation may be a few years in the past. Many things could have happened or changed since then to affect the clarity of the claim. “In the course of the five years since the fraud, the fund manager might have been changed, perhaps you’ve changed your custodian. There are quite a few things that make it a bit more difficult to launch a claim.” He adds that pension funds also face a crucial cost-reward decision. “You’ve got to look at the potential value to the fund. We’re talking about small amounts of money sometimes; is it cost effective to pursue the claim?” Everard echoes this concern, and reveals that only around 12% of the total loss within the class action period is typically recovered. But there are success stories out there, and GOAL Group has helped the West Midlands Pension Fund to recover around USD500,000. The fund, in turn, has been a vocal supporter of the class action process Pension funds must keep up to speed with the relevant bodies responsible for identifying claims on their behalf. This can be a mixture of the fund’s custodian and external law firms. Bedford Pension Fund, for example, uses Northern Trust and the US-based law firm Barrack, Rodos & Bacine to monitor developments. Geoff Reader, head of pension fund management at the fund, revealed to ISJ that the organisation has 11 outstanding cases seeking cash reimbursement. “Claims have been just on the back of our holdings,” he says. “So a manager has bought stock X and then that’s gone down in value - then more information comes

into the public domain that questions it should have been sold at a different price. That forms the basis of the class action.” He adds that domestic lawyers would be understandably keen for UK laws to change so they could “get a piece of the pie”.

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The last year has been one that US fund managers are highly unlikely to forget in a hurry. As recent findings from Conneticut-based consultants Greenwich Associates makes clear, it is likely to be followed by several years of sharply reduced investment returns from major asset classes. Rodger Smith, managing director at Greenwich Associates, says that it has been “a terrible time” for funds. “They not only saw their assets go down a great deal, but it happened over a very short time frame,” he explains. “The S&P was down 37% and some of the other markets, particularly emerging markets, were down 60%, so depending on where their portfolio was, fund managers had to deal with very significant paper losses,” he says. In interview-based research conducted between July and October 2008 by the firm, fund managers said they expected a slow growth environment for assets for at least the next five years. Greenwich Associates is currently in the process of conducting this year’s research. Smith argues, however, that it would be a mistake for pension funds that invest

over 20-to-30-years to dump stock and crystalise losses. Instead, he says, fund managers should be looking to rebalance their portfolios. “If you have a neutral asset allocation and one asset goes down and one goes up, you rebalance your portfolio by selling the up and buying the down,” he says. The logic of this is that if a stock has fallen by 50%, then it has to improve by 100% for you to break even. “The math is inescapable, so you are trapped waiting for a stock to outperform massively, just in order to get back to where you were.” However, if you rebalance the assets, so that you have the same amount of money invested in the stock at 50 of its value% as you did at 100%, then the stock only has to improve 50% to make you whole again. This is why rebalancing is such a powerful strategy. Smith estimates that around three quarters of the funds that Greenwich has spoken to have rebalanced their portfolios over the last 12 months. Rebalancing is not a simple exercise, however. “The real problem you face as a fund manager in a falling market is that even as you are rebalancing, the stock value keeps falling,” Smith explains. “You have to get a market rebound in order to get the

benefit of a rebalancing exercise.” However, with markets still in the doldrums, stock can be bought cheaper, and the ‘sell high, buy low’ maxim is encouraged amid rebalancing. The company’s latest research, carried through in May 2009, involved interviews with 152 large US corporations, public institutions, endowments and foundations, each with total scheme assets of over USD1 billion. Findings released to ISJ show that more than half of large US funds (51%) have reviewed or changed their investment policy as a result of the global meltdown and 51% plan further changes in the coming years. “In a nutshell, what we are seeing is institutional funds reacting to the financial crisis mainly by reducing risk exposure and cost, and by reviewing their investment policy,” Smith says. Some 47% of funds said that they had reduced their securities lending programmes through 2008 and the first quarter of 2009, while another 19% said that they planned to make reductions in future. Greenwich Associates found support for the idea that funds are investing into

Reborn in the USA

The end for Enron: GOAL Group research shows discrepancy between company price and peer index

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10/98 – 02/99Insiders sell2,253,958 sharesfor $67+ million

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Enron Timeline

Peer Index Enron Enron Stock Issuance Price TriggerKEY

1998

07/98

Strong Q2 income. EES continues to progress.

10/98

Strong Q3 income. Excellent progress on EES. Will move quickly to complete fi bre optic network.

11/98

Enron sells $250 million 6.95% notes through investment bank.

12/98

High return Int’l projects – major Erns gains for years. Dabhol will contribute to Erns in 99.

1999

01/99

Strong 98 income. Leading position in each business. Strong balance sheet. Well managed. EES successful – contracts worth $3.8 billion. WEOS strong. Very optimistic. 15% EPS growth.

02/99

Enron sells 27.6 million shares @ $31.34 through various investment banks.

03/99

Enron becoming ‘BlueChip’. Positioned for strong growth. Extremely strong franchise. Dabhol to be strong contributor to Erns. Mgmt effectively using off balance sheet non-recourse fi nancing.

04/99

Strong Q1 99 income – shows continued strength of business. EES added $1.7 billion in contracts. EES profi table by Q4. Well managed. Erns power building.

05/99

Well managed Co. Global powerhouse. Growth to exceed 17% per year.

Enron sells $500 million 7.375% notes through various investment banks.

06/99

No other Co. offers such impressive sustainable growth. Management team capable – knows how to mitigate risk.

07/99

Strong Q2 99 income. Hitting on all cylinders. Master of risk management. EES well positioned for signifi cant Erns in 00 and beyond. $200 billion of potential contracts. Outlook excellent. Erns to grow 15+% per year.

08/99

Enron sells $225 million 7% notes, preferred stock through various investment banks.

09/99

WEOS strong. 15-20% Erns growth. EES signing high quality contracts. Strong Erns growth in coming years.

£1.4 billion of Osprey notes sold through various investment banks.

10/99

Strong Q3 99 income. EES exceeds expectations. Optimistic about Broadband trading. EPS growth in excess of 15%.

11/99

Business excellent – strong growth prospects. Stock hurt by rumours. Enron right – future bright. Stock decline superb opportunity to buy top growth name. Enron did fi rst bandwidth trade – ‘Day One’ of a potentially huge Enron market. EPS growth 15-20%.

Investment bank sells $750 million Yosemite LEOs.

2000

01/00

Strong 99 income. Great year. Continued strong WEOS growth, breakout performance from EES and rapid development of EBS. EBS will drive growth – expected to accelerate. EES profi table. Momentum building. Monumental earnings potential.

02/00

Investment banks sell £200 million Yosemite LEOs.

03/00

World leader. EBS network unbeatable scale and scope – off to tremendous start. EES exceeded goals. To double contract volume in 00 to $16 billion. Profi tability expanding rapidly.

04/00

Strong Q1 00. Positive momentum. Trends sustainable. Will accelerate. Strong response to intermediation. Enron GE of New Economy.

05/00

Broadband market larger than estimated. Will reach $100 billion in 03-04 with 3-4% margins. Monumental earnings potential.

Enron sells $175 million 8.375% notes via investment bank.

06/00

Enron sells $325 million 7.875% notes via investment bank.

07/00

Strong Q2 00 income. Business booming – gaining momentum. EBS profi ts escalating. Ahead of expectations. VOD contract over $1 billion. New EES contracts - $3.8 billion. Never in better shape. Very excited about future.

Enron/Blockbuster VOD deal: ‘Killer App’. Unparalleled quality of service.

08/00

Investment banks sell $500 million Enron CLN.

09/00

EES growth remarkable. New contracts over $2 billion. Potential to double size of Co. Turned corner on profi tability. Great collection of large contracts. Well managed. EIN buildout on schedule. Full VOD rollout in 01.

Investment banks sell $1.65 billion of Osprey notes.

10/00

Strong Q3 00 income. Very optimistic about the strong outlook. Merchant investments hedged. EES at breakout pace. VOD deal value $1 billion – going fi ne. All components in place. EBS designed to take advantage of broadband glut.

11/00

Rumours of shortfall untrue. Business performing very well. Comfortable with $1.65 EPS for 01.

12/00

Strong growth to continue. Growth and strong Erns are reason to buy Enron. VOD launched. Unparalleled quality of service. Solid technical foundations.

2001

01/01

Strong Q4 00 results. Breakout performance. $16 billion in EES contracts. Outstanding year. Increasing profi tability. WEOS has signifi cant sustainable competitive advantage. Successfully launched VOD. Proven technology. Will increase profi tability. Increases forecasted EPS growth.

02/01

Fortune criticises accounting. Enron says sour grapes by analysts who have failed to get investment banking business. Enron no black box.

Enron sells $1.9 billion 0% convertible notes.

03/01

Business in good shape. WEOS, EBS intermediation great. Very optimistic for VOD. Everything fi ne. EBS business predicted on surplus of supply – declining prices for Enron. Balance sheet great. Financing vehicles have ‘de minimus’ share issuance requirements.

Strong, unique business. Tremendous growth. Will continue strong Erns performance. EES had breakout year – proven concept with profi table dealfl ow. $30 billion in contracts in 01. EBS model working. Intermediation growing exponentially. VOD successful. Enron in top tier of world’s corporations.

VOD deal terminated – Blockbuster failed to provide movies. Technology sound. Rapid growth intact. Stock sell-off overdone. All businesses doing very well. Will hit Erns targets.

04/01

Great Q1 01 results. WEOS outstanding. EES + EBS rapidly accelerating – each generating high levels of Erns. Very optimistic. Increases 01 EPS to $1.75-$1.80. 15% growth in 02. Growth sustainable for years.

05/01

Fundamentals improving. Enron’s fortunes have not peaked. Erns power continues to grow.

Investment bank sells € 200 million Enron CLN.

Investment bank sells $500 million Enron CLN.

Investment bank sells £125 million Enron CLN.

06/01

Fundamentals improving. Long term Erns growth will reach 25%.

07/01

Enron will hit or beat EPS estimates. Re: possible losses in Broadband and India – ‘All of these (questions) are bunk!’

Investment banks sell $475 million and € 515 million Marlin notes.

Strong Q2 01 income – strong growth and strong profi ts. EES to double profi ts in 01. Fundamentals excellent. No loss on Dabhol. Will have 01/02 EPS of £1.80-$2.15. Stock will recover.

08/01

Performance never stronger; business model never more robust; growth never more certain.

Skilling resigns. Co. never in better shape. Strongest ever. No changes in outlook. Performance accelerating. Nothing to disclose. Numbers look good. No problems. No accounting issues. Enron machine in top shape. The best of the best. Expect stock to recover.

09/01

Lay: ‘incredibly cheap stock’.

10/01

$1 billion writeoff; $1.2 billion shareholder equity reduction. Core fundamentals strong. Excellent prospects. Strong EPS outlook; liquidity fi ne.

12/01

ENRON BANKRUPT.

Total Shares Sold by Insiders: 20,882,957 shares Inside Trading Proceeds: $1,198,332,223

goal accelerating investor returns

group

$ Per Share

Chronology

PeerIndex

Aug ‘98 Jan ‘99 Aug ‘99 Jan ‘00 Aug ‘00 Jan ‘01 Aug ‘01 Jan ‘02

Total shares sold by insiders: 2,882,957 Inside trading proceeds: USD1,198,332,223

US pension funds have been making some tough decisions to adjust in difficult circumstances, writes Anthony Harrington.

Reader has reservations, however, as to the overall benefits of increased class actions, particularly during more fragile economic circumstances. “There’s only a certain amount of money in the world; if you take money away from companies for class actions - which affects shareholders – then personally, I’m not convinced that ultimately it might not be the best solution for the whole economy. So it may not be the best thing for everybody to be doing.” Everard at GOAL Group says: “Class actions is becoming a global phenomenon, not just the US. If the UK government doesn’t put it in then people will have to go through direct action through foundation. If the government doesn’t allow class action legislation, then it doesn’t give the shareholders a lot of choice. There’s only one route to take, so they will try to drive a direct action, a one-to-one or one-to-many arrangement.” n

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ISJ Investor Services Journal Pension Funds

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either opportunistic funds or alternative assets to generate outperformance. Some 36% of managers interviewed said that they planned to invest in opportunistic funds, while 23% said that they already have made the reallocation. Some 21% of managers said that they had already moved to more passive mandates, while a further 19% expected to do so through the coming year – an illustration of the drive to de-risk and reduce the scope of active management. More US funds have been moving out of international equity, with 31% of funds saying they are either decreasing or substantially decreasing their exposure to international equities. However, it is a mixed the picture is somewhat complex, with the drive for alpha pushing some funds back into emerging markets. For example, 21% say they plan to increase their exposure to international equities. In an era of ultra low interest rates, so the recent boom in liability driven investing (LDI) – apart from exceptions such as J.C. Penney’s defined benefit scheme - has been punted into the long grass. Instead, Smith says, funds strive to cap their liabilities as best they can. In some instances, this means closing the defined benefit plan altogether. “For salaried employees this is a fairly easy thing for US corporates to do. But we are also seeing reductions in employer contributions to defined contribution schemes,” he says. Denise Valentine, senior analyst at Aite Group, says that it has been clear for years that a significant percentage of S&P 500 companies had underfunded final salary pension schemes. Now with the 30% to 40% falls in asset values, these schemes have lots of company, she says. A particularly depressing factor, she says, is that both risky and cautious strategies got thumped by the downturn. “There are actually very few real options for schemes in the current economic environment. You can either cut benefits to limit liability or you can get involved in different kinds of investment to try to generate outperformance,” she says. There is some evidence that the flow of funds from institutions to hedge funds picked up sharply in May. However, Valentine urges caution in turning one month’s figures into a trend. “What we could be seeing are schemes who made this asset allocation decision up to a year ago, then held back on it in the face of growing market uncertainty. Now that things look as if they could be picking up again, they could be reactivating this earlier decision.

We need figures for a few more months before we can say that pension funds are definitely moving back into hedge funds,” she says. Valentine points out that pension funds tend not to move quickly when it comes to reallocating assets. “There is a long process of analysis, and a whole round of dog and pony shows with fund managers. “Then the data that comes back is analysed in depth. Trustees make a short list of possible hedge fund or private equity fund managers they might want to invest with, and they invite the managers back again for further discussions. Nothing happens quickly,” she says. CalPERS is an example: it recently completed its asset allocation review that lasted a few months, in which it reassessed its allocation to alternatives among other assets along the lines of liquidity. Valentine points out that private equity has long been a popular asset class with US pension funds - more so, in fact than hedge funds. “Pension fund trustees and managers understand that private equity is a long play, and they can wait ten years for their returns. However, the private equity market has really plummeted and people are desperate to get the market back into a growth cycle,” she comments. Sarah Angus, private equity analyst with global custody and securities lending consultants Callan Associates, says that a number of Callan’s pension fund clients today have very significant sums of uncommitted capital placed with property fund managers. “Typical allocations we are seeing being allocated to private equity from large funds are between eight and ten percent. Though some funds are going as high as 15%,” she comments. According to Snyder, fund managers believe there is value to be found in private equity, if you can sit tight for the long term. “There are still a number of players waiting for the proverbial bottom of the market. Transaction volumes in private equity are still very depressed and have been for the last six to nine months.” Angus points out that there are hundreds of billions of dollars in commercial property mortgages coming due for refinancing in the next few years. “Not all of these properties will have issues, but a good portion of them will and that will create real opportunities for investors,” she says. In the last year a number of funds have paused to re-evaluate their securities lending programmes. The California State Teachers Retirement System (CalSTRS), the

USD179.9 billion California Public Employees’ Retirement System (CalPERS) and the New York State Common Retirement Fund, all opted to withdraw financial stocks from securities lending. The trustee view was that if securities lending was assisting short selling, and if short selling was unduly driving down the price of financial stocks being held by the funds, then the funds were not acting in their own best interests and the fees gained could not cover the costs However, Laurie Zeppieri, head of securities Finance Product Management for the Americas at Citibank, says based on a number of academic studies, most regulators now realise that short selling has a number of beneficial impacts on the market. “It helps price discovery, and there is now a growing body of evidence that during the short selling ban, markets became more illiquid and were subject to the same or more volatility,” she says. Zeppieri says that there is now a great deal that agent lenders can do to add value for clients as they prepare to move back into securities lending. “It was only natural that some funds should pause and take time to both re-evaluate the objectives of their securities lending programmes and to get buy-in from their Boards for those objectives,” she says. Zeppieri adds that the bank is having a number of conversations with new prospects who want to commence securities lending. One of the issues for beneficial borrowers, she says, involves pooled funds. With cash collateral being the preferred collateral type, lenders found that some cash pools had invested poorly, basically jeopardising the lender’s collateral. In the light of this, a demand has built up for segregated accounts. Citi has long run an open architecture approach where clients can choose to have their own segregated accounts. Further, funds re-entering the securities lending market want a new approach on counterparty risk and recall risk. There is much the agent lender can do to help track the risk and to provide risk mitigation, particularly when the agent lender has the global scale that Citi does, she says. Aite’s Valentine says US pension funds will predominantly stay with the straight and narrow. “They are going to be sticking much closer to what they know and understand best. If they have had success in a particular area, they will return to it. Alternative investment managers are going to have to explain their strategies in great detail and provide a high level of transparency,” she concludes. n

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2. Do you have plans to enter new markets in the near future?

SMIT: We see the Middle East and Eastern Europe as regions with enormous potential. While our presence in both regions is not new, we have recently expanded our operations there to capitalise on the growing business opportunities. China is another region of huge opportunity, with its increased cross-border flows and growing pensions and insurance markets. Again, our presence in China is not new — State Street has operated in Hong Kong for more than 25 years and we have been actively involved in the Chinese financial landscape since 1997, working with many of the country’s leading financial institutions.

CHAKAR: Well, we currently service clients in 77 markets worldwide, so we already cover a lot of ground. That said, we are always looking at opportunities to extend our global reach and local servicing capabilities, whether that is via organic growth or alternatively through joint ventures or full-blown acquisitions. But, as already noted, we’d only move forward if everything adds up to our satisfaction.

DANLOY: After the number of countries we’ve incorporated in the emerging markets, I think we need some time to ‘absorb’ these countries. Not all the markets in which Societe Generale is present are part of this new concept, but we’ve started with a group of around 10 countries and we know there are some

CHAKAR: Strategic growth in Europe, the Middle East and Asia-Pacific has always been and remains part of our plans since we decided to put our two companies together back in 2007, and the market conditions over the past year – which have left many companies in a more precarious position and forced even the stronger players reassess what activities they can really view as core going forward – means that there are unquestionably interesting opportunities out there. And, given we have come out the other side of the crisis as a strong, liquid and well-capitalised organisation, one that is today has the highest credit ratings of any US bank, we are extremely well positioned to make the most of those opportunities. The big question, as always, is whether any potential takeover target is a good fit. That was certainly the key criteria for our own merger, and as I said, our performance through the crisis has certainly vindicated that approach. We’ve seen a number of would-be ‘bargains’ snapped up in the past couple of years, but the asset servicing business is not merely about accumulating assets – the quality or value of any book of business comes down to the interaction of various criteria: the mix of clients, the economics of servicing them, the

ISJ Investor Services JournalPanel Debate01 11 31 4112 22 32 4203 13 23 33 4304 24 34 4405 25 35 4516 26 36 4607 17 27 37 4708 28 38 4809 29 3910 30 4002 06 20 2118 19

Panel: Global Custody

Steve Smit is Senior Managing Director, Head of Global Markets Europe and Investor Services UKMEA at State Street.

Nadine Chakar, Executive Vice President and Head of Europe, Middle East & Africa (EMEA) at BNY Mellon Asset Servicing

Sebastien Danloy is global head of custody sales and relationship management at SGSS.

1. Linking with local banks has become a well-recognised tactic for custodians to enter new markets, particularly emerging markets. Have your plans for such expansion and collaboration changed over the last year?

SMIT: Our approach varies by market, but in the Middle East and Eastern Europe — two markets where we see significant growth potential — we are establishing local operations centres to signify our long-term commitment to these regions. We opened an office in Doha, Qatar, last August to expand our operations in the Middle East, where we have had a presence in Dubai since 1993. The region is an area of increasing opportunity, particularly given its prominence with sovereign wealth funds. The Doha office focuses on our Global Markets and Investor Services businesses, with an emphasis on sovereign wealth, central banks and emerging asset management companies. In addition to Qatar itself, the office provides a base for us to target markets including Saudi Arabia, Kuwait, Bahrain, Oman and the United Arab Emirates. In Eastern Europe, we are looking to increase our presence in the region as the financial infrastructure in markets such as Poland continues to mature.

opportunities for cross-selling and , yes, whether there is a clear ‘fit’ – both intellectually and commercially – with our own business model

DANLOY: A year ago the plan was to leverage the presence that the Societe Generale group has on a global basis and in emerging markets. The objective was to leverage the fact that we own quite a lot of subsidiaries across CEE and North Africa, and leverage the local presence and coordinate the product development and sales approach to custody services provided by these entities, knowing that all these banks we acquired all have some custody services available, mostly sold to local players and not to international players. That’s why, if you look at Morocco or Croatia or Czech, we are the best known custody provider for domestic institutions, so in those markets we are the number one provider for local players. So the aim was to have all these entities regrouped under the supervision of SGSS so we can do two things: one, upgrade service levels in line with the expectations of international players; and two, to actively promote these services to institutional investors and intermediaries outside the local markets.

New markets, client

relations and technol-

ogy are just three of

the subjects pondered

by this month’s panel

on global custody.

14 15

14-21 ISJ41.indd 14 17/07/2009 18:02

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16

Panel Debate ISJ | Investor Services Journal

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ISJ Investor Services Journal

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EQ9041_203x267mm+3.indd 1 07-07-2009 17:17:47

and experience in delivering complex, multi-jurisdictional solutions and our focus on a globally integrated approach across all in-scope sites. The recent flu pandemic has further highlighted the importance of contingency planning — another priority for customers. At State Street, we have a comprehensive business continuity programme in place throughout our global operations.

CHAKAR: Certainly, more robust risk management is a clear priority for regulators worldwide. But capital preservation and risk mitigation have always been the foundations of what we do, so in that respect it is business as usual from our perspective in recent months – if admittedly a little more intense than usual. We continue to look to educate clients about the various risks – be they operational, counterparty or systemic – and provide them with the tools and expertise they need in order to address them. I’d add that it works both ways: firms will be expected to carry our intensive due diligence on their service providers, custodian banks included, and that will lead to greater scrutiny of providers’ financials and on the back of that an acceleration in the flight to strength that has been gathering pace for some time now.

DANLOY: Operation risk is one thing, but counterparty risk is also important. When you’re a customer of a provider I think the first thing that’s important to know is: ‘what is the provider ready to accept in terms of responsibility and liabilities when it comes to these things?’ By counterparty risk I refer to the fact that the custodian safe-keeps your assets but that custodian may be using third party agents across quite a number of countries to safe-keep these assets in the local markets. The question is: what is a global custodian ready to accept in case of failure or insolvency of one of its agents or sub-custodians? It’s not a crystal clear answer and institutions are not always

administration now outsourcing. That’s valid for hedge funds managers but also traditional asset managers – they realise now the activity is non-core and there is more scrutiny from the regulators on this service and therefore are already questioning the long term future of the company and we can see a lot o outsourcing deals happening. The second thing is the expectations from your third party administrator. Until recently, it was not unusual for the third party administrator when it had to value an instrument that was illiquid – an OTC for example – to ask the fund manager for a price, or at best ask the fund manager for a market maker who might give a price. Sometimes the market maker would give one valuation – but is it accurate? I think a lot of administrators didn’t really know. Today, there’s no doubt in my mind that the clients we have are expecting us to independently value all these instruments and be capable of valuation. It’s one area of business where we can see a lot of clients coming in, in the area of OTC and structured product pricing.

4. In a recent market survey by Investor Services Journal, custodian respondents said their clients’ highest priority was to understand and gain assurance about the operational risk. How can this best be communicated?

SMIT: Generally, customers are placing a renewed focus on due diligence — and that extends to their dealings with their investment service providers. They are interested in visiting our offices in person and gaining a better understanding of the infrastructure behind the servicing of their funds. And, at the bid stage, customers are asking more questions about risk. They want to understand in greater detail our approach to risk throughout the lifetime of our relationship with them. We emphasise our expertise

our analytical and reporting solutions, and indeed we have enhanced our offerings around core performance measurement, historic risk reporting and asset liability matching information – specifically, FAS 157 reporting and our Trustee Board Reporting solution for UK and European pension plans. Independent valuation for OTC derivatives is another key area. We’ve revamped Workbench, our information delivery platform so that clients now have access to enhanced online reporting, analytical and monitoring services via a single portal. The focus on fuller disclosure and exposures will also be felt in areas like collateral management and hedge fund administration, where we would expect to see an upsurge in outsourcing. Likewise around transfer agency, where we are seeing a lot of activity as asset managers recognise the harsh realities and are finally throwing in the towel – there are fewer and fewer people who are continuing with in-house administration in this space. On a final note, there has unquestionably been a persistent downward pressure on fees in recent years. That has only been exacerbated as asset values have fallen, but at the same time we are starting to see a new realism on the part of some clients that you get what you pay for. Certainly, from our point of view, we cannot allow our margins to be eroded indefinitely, because that will only damage our ability to make the very significant reinvestment, literally hundreds of millions of dollars, that is required if we are to ensure we are at the top of our game in respect of technology and intellectual capital.

DANLOY: There’s been a shift in terms of the expectations from our client base and from their clients. Independent valuation is important, and if you’re a hedge fund manager and do your own in-house administration, there may be a lack of transparency that your investors might not necessarily like. We see people who had provided their own

countries we’ve excluded from this approach - that will come as a second step. We wanted to focus on the countries with the largest potential and in which we had sufficient expertise in custody services and where we had a client base domestically.

3. Many people have cited the increase in what institutional investors are asking of their asset managers, such as independent administration, and enhanced client reporting. Have you experienced such changes and how are your conversations with custodial clients different to a year ago?

SMIT: For our customers and their clients, risk is firmly top of the agenda. They want greater assurances about the security and integrity of their assets, and enhanced, independent reporting — hence the trend for asset managers to transfer responsibility for a wide range of investment operations to independent third-party providers. The separation of investment management and pricing can lead to greater comfort for investors. In addition, the value proposition can be significant — asset managers can benefit from the economies of scale achieved by their investment service providers. Throughout the investment lifecycle, asset managers are considering the outsourcing option more seriously then ever. In the middle office in particular — one area where we are seeing particular interest — they stand to realise significant advantages. Over the past year, our conversations with customers have focused on how we can support them through the new pressures that a new financial landscape creates, whether those pressures are coming from their investors or increasingly demanding regulation.

CHAKAR: Perhaps unsurprisingly given the crisis, transparency and risk now well and truly cemented at the top of their list of priorities. We fully expect to see ever stronger demand for

14-21 ISJ41.indd 16 17/07/2009 18:02

Are you in search of the road to timely SEPA Direct

Debit compliance? Equens is ready to lead you

there with an economical, state-of-the-art and

user-friendly internet solution. With our Debtor

Bank Module any bank will be able to receive

SDDs and fully comply with the SDD regulations and

implementation guidelines drawn up by the

European Payments Council (EPC). Equens’ Debtor

Bank Module can be implemented quickly and easily

by means of a pre-programmed, step-by-step pro-

cess that makes it fully operational within six weeks

– another way to offer you maximum benefi t at

minimum cost. View the video on the operation of

the Debtor Bank Module at www.equens.com/sdd

nothing

equals

In search of the best road to SDD?

We’re ready to lead you there.

EQ9041_203x267mm+3.indd 1 07-07-2009 17:17:4714-21 ISJ41.indd 17 17/07/2009 18:02

18

Panel Debate ISJ | Investor Services Journal

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through which vast amounts of global data flow day in and day out, we are uniquely positioned to transform that raw information into the market intelligence that allows our clients to sidestep potential pitfalls and seize the opportunities when they arise to continue to grow their businesses. More specifically, we are focusing our energies on derivatives, in particular on risk mitigation and risk reduction products in both the exchange traded derivatives and OTC derivative spaces

DANLOY: For me the area where all the custodian community needs to improve is risk mitigation. There are two angles: the customers’ assets - risk monitoring the overall exposure - and the counterparty risk, ie, how you effectively mitigate the risk you have with various counterparts. I mentioned the sub custodians, but also if you look at securities lending, what is the risk you have with the borrowers? Lehman Brothers was a very active borrower in the securities lending market. This includes counterparties to trades that have been executed by clients but that you need to settle afterwards. If there’s one area that we need to improve is monitoring the risk of the counterparties your clients are using across the various products and services you deliver. Further, we’ve been very good at assessing end-of-day positions, but I think intra-day monitoring is an area in which custodians need to improve our systems need to evolve.

7. The hedge funds sector is stabilising - more money is flowing into this industry and there is now a blurring line between ‘alternative’ and ‘mainstream’ funds and their services. Is this a significant area of growth for you as a custodian?

SMIT: We see enormous opportunities in the hedge fund sector. Despite the battering that many funds have taken as

would have to manage various relationships.

6. 2009 has seen significant activity in the development of technology in almost all aspects of the capital markets and asset management. What is the number one area of technology that a custodian this year will have to invest in or enhance?

SMIT: Keeping pace with the increasingly complex servicing demands of customers is essential. One area where the need is particularly urgent is OTC derivatives, which have become an increasingly important component of any investment strategy. They enable investment managers to avoid certain risks while enjoying more consistent returns, providing a measure of capital protection. While the industry foresees enormous growth in the overall volume of derivatives transactions, the financial crisis has focused people’s attention on the pricing and administration of these transactions. The technology platforms in use today were mostly designed for traditional investment products, such as equities and bonds. As the use of OTC derivatives expands, the need to confirm transactions with great accuracy and speed will grow. In addition, derivatives trades now involve collateral arrangements that supporting platforms must be equipped to manage. These challenges underline the need for third-party administrators to make the strategic investment that will enable them to offer expert capability and capacity. This has certainly been an area of focus for State Street.

CHAKAR: Broadly speaking, analytical and monitoring tools. As already noted, in 2009 all roads lead to greater transparency. More than ever clients need real-time access to portfolio exposures across multiple asset classes, investment structures and regions. As the people who oversee the industry’s plumbing,

element if you are to offer a credible, bundled solution.

CHAKAR: It’s a classic ‘horses for courses’ scenario. For some larger clients, especially the multinationals there are very appreciable benefits to consolidating down to one provider that offers a bundled solution spanning multiple markets and regulatory environments. In particular, a bundled approach provides them with a consistent and harmonised level of service and information delivery via one standard interface. That has a real upside for them in terms of transparency, efficiency and risk mitigation. On the other hand, some institutional investors still prefer to cherry-pick the ‘best of breed’ in different areas. That may better fit their own risk profile, in that they may be required to use multiple providers to spread any risk across a number or providers. The trick is to be able to be flexible enough to service both constituencies, and to so that your offering needs to be at once scaleable and modular.

DANLOY: There are various trends in the market, and these two trends are conflicting, and it’s hard to say: ‘this is the way people operate’. You have large players that tend to unbundle, and have the scale and size to justify doing so. They do this because they can then appoint whoever they believe is the best provider for every single part of the services they require. So, one will be custodian, one transfer agent, one the securities lending agent, one collateral manager. They can do it with sufficient size and internal resources. For small and medium sized players, I think they still go for the bundled approach because it’s easier for them, to manage one relationship and the value they take from one relationship is more than enough for them, and the benefits they might derive from using various providers will not be enough to upset the fact that they

taking the same level of risk. Also, the institutions that have their own in-house agents might be at an advantage to those who only use third parties. If I use Societe Generale as my agent in 30 markets around the world, I have reduced my risk in these 30 markets. So you have some global custodians who also operate locally, but the ones that don’t do sub custody have to bear their own level of risk.

5. The same survey found that there has been an increase in the number of institutional investors who seek to ‘unbundle’ the custody service they receive. How do you assess the opposite attractions of being a ‘one-stop-shop’ with the perceived greater clarity for investors who seek different specialisms from different service providers?

SMIT: Where custodians once focused solely on their traditional role of safekeeping, they increasingly offer a wide range of sophisticated, add-on services, such as risk analysis, transfer agency and securities lending — to name but a few. In recognition of our growing remit, we label ourselves ‘investment services providers’ or ‘global services providers’. This trend has been driven by our customers’ needs — they want to treat us as a one-stop shop where they can buy integrated solutions that incorporate services across the investment lifecycle. The potential benefits of integrated solutions are significant, not least in terms of data integrity. Data requires inputting only once and can be deployed across multiple systems, facilitating greater straight-through processing and reducing operational risk. This approach also enables consistent reporting as you have a consolidated view of activity. In today’s environment , where the focus is on risk and cost, integrated solutions represent a compelling proposition. But as an investment service provider, you need to be good at every

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Streamlining buy-side operations and technology from front, middle to back offi ce

15thæ Septemberæ 2009,æ Hyattæ Regencyæ Jerseyæ Cityæ æ æ æ æ æ æ æ æ æ æ æ æ æ æ æ æ æ www.tsam.us

æ Derekæ Stein,ææ Chief Information Offi cer, æ ææ Barclaysæ Globalæ Investors

Seanæ Kelley,æ Managingæ Director,æ æ æGlobalæ Head,æ Technologyæ Andæ æ æ æOperations,æ Deutscheæ Assetæ æ æ æManagement

æ Peteræ Noll,æ Chiefæ Technologyæ æ æ Offi cer,æ Pioneeræ Investments

æ æ Jamesæ Mazarakis,æ Formeræ Chief Technology Offi cer, ææ æ T.æ Roweæ Priceæ Associates

æ Michaelæ Cloherty,æ Deputy Chief Operating Offi cer,æ æ ææ Generalæ Motorsæ Assetæ æ ææ Management

Martinæ Korn,æ Senioræ VicePresident,æ Chiefæ Informationæ æ æ æOffi cer, OppenheimerFunds

æ Georgeæ Batejan,æ Senioræ Viceææ President,æ Chiefæ Information Offi cer, Evergreenæ Investments

Toddæ Juillerat,æ ManagingæDirector,æ Head,æ PerformanceæMeasurement,æ Stateæ StreetæGlobalæ Advisors

Alanæ Goldstein,æ Chief Information Offi cer,æBNYæ Mellonæ Assetæ Management

Rickæ Eng,æ Chief Operating Offi cer,æLeggæ Masonæ Capitalæ Management

TSAMæ willæ bringæ togetheræ theæ mostæ senioræ innovatorsæ toæaddressæ theæ industryÍ sæ fundamentalæ issuesæ throughæ front,æmiddle and back offi ce. During the annual convention, due to takeæ placeæ thisæ Septemberæ inæ Newæ York,æ attendeesæ willæ haveætheæ choiceæ ofæ overæ 40æ presentationsæ takingæ placeæ duringæ 4æ nicheæstreams. All in one day!

Theæ programmeæ isæ dividedæ intoæ 4æ streams,æ offeringæyouæ theæ choiceæ of:

Tacticalæ ITæ GovernanceæThisæ streamæ presentsæ anæ exclusiveæ opportunityæ designedæ toæ addressæ theæ

buy-side operational challenges that technology presents. The program drawsæ togetheræ theæ sometimesæ opposingæ needsæ ofæ operationsæ andæ IT,æ andæusesæ caseæ studies,æ presentationsæ andæ interactiveæ sessionsæ toæ allowæ youæ toæbenchmarkæ youræ ownæ ITæ operatingæ modelæ toæ identifyæ whereæ investmentæ addsævalue to your bottom line and enhances business processes. Attendees will beæ CXO,æ VPæ andæ director-levelæ andæ areæ responsibleæ foræ settingæ theæ technologyæstrategy for their company. Key to discussions on the day will be SOA-based

architectures,æ highæ performanceæ architectures,æ capacityæ enhancementæ andæfutureæ scalability,æ ITæ andæ businessæ processæ outsourcing,æ riskæ managementæand talent attraction and retention.

Dataæ Stewardshipæ Modelsæ &æ TechniquesæFundamental across the entire investment process, effective Data

Managementæ willæ beæ aæ keyæ componentæ ofæ triumphæ foræ investmentæmanagementæ companiesæ whoæ areæ ableæ toæ design,æ implementæ andæ leverageætheir data. This stream is, therefore, business critical for practitioners

whoæ wantæ toæ establishæ oræ maintainæ theiræ positionæ ofæ excellenceæ inæ dataæmanagement.

Performanceæ Measurementæ &æ AttributionWithæ theæ recessionæ havingæ hitæ theæ entireæ economyæ atæ aæ globalæ scale,æ moreæ

thanæ everæ beforeæ institutionalæ investorsæ needæ toæ understandæ whereæ theiræinvestment strategies have succeeded and where they have fallen short. Performanceæ measurementæ andæ attributionæ departmentsæ areæ confrontedæ withæunprecedentedæ pressureæ toæ provideæ consistentæ andæ accurateæ performanceæand attribution information in less time at an increasingly global scale. Furthermore,æ whileæ tryingæ toæ retainæ clientsæ onæ theæ oneæ side,æ performanceædepartments,æ onæ theæ otheræ side,æ areæ seeingæ themselvesæ increasinglyæchallenged by recruitment and retention of talent in their departments.

Clientæ ReportingæCaseæ studiesæ fromæ buy-sideæ practitionersæ whoæ areæ strikingæ aæ balanceæbetween superiority of reports and effi ciency and are re-evaluating andæ redesigningæ approachesæ toæ clientæ reportingæ andæ theæ technologyæinvolved. You will hear about strategic reporting initiatives utilizing

scarce resources by enhancing operational effi ciencies, data accuracy andæ quality;æ howæ toæ meetæ clientsÍ æ increasinglyæ complexæ andæ moreæ adæhoc demands with a reduced headcount; how to organize and motivate employees during diffi cult times to meet increased client demands for more complexæ customæ reportingæ asæ wellæ asæ innovativeæ reportæ delivery:æ fromæ face-to-faceæ withæ aæ hardæ copyæ toæ webæ andæ videoæ messagingæ toæ nameæ butæ aæ fewæspecialist case study topics.

Offi cer,

æ æ Jamesæ Mazarakis

DeputyMichaelæ Cloherty Chief Operating Offi ceræ Generalæ Motorsæ Assetæ æ ææ Management

President,æ Chiefæ Informationæ æ æ æ

æ President,æ Chiefæ Information Offi cer,

Managingæ Director,æ æ æGlobalæ Head,æ Technologyæ Andæ æ æ æ

Deutscheæ Assetæ æ æ æ

æ Derekæ SteinChief Information Offi cer, Barclaysæ Globalæ Investors

Advisoryæ Panel

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Streamlining buy-side operations and technology from front, middle to back offi ce

15thæS eptemberæ2009,æHya ttæR egencyæJe rseyæCit yæææææææææææ æ ææææææwww .tsam.us

æ Derekæ Stein,ææ Chief Information Offi cer, æ ææ Barclaysæ Globalæ Investors

Seanæ Kelley,æ Managingæ Director,æ æ æGlobalæ Head,æ Technologyæ Andæ æ æ æOperations,æ Deutscheæ Assetæ æ æ æManagement

æ Peteræ Noll,æ Chiefæ Technologyæ æ æ Offi cer,æ Pioneeræ Investments

æ æ Jamesæ Mazarakis,æ Formeræ Chief Technology Offi cer,ææ æ T.æ Roweæ Priceæ Associates

æ Michaelæ Cloherty,æ Deputy Chief Operating Offi cer,æ æ ææ Generalæ Motorsæ Assetæ æ ææ Management

Martinæ Korn,æ Senioræ VicePresident,æ Chiefæ Informationæ æ æ æOffi cer, OppenheimerFunds

æ Georgeæ Batejan,æ Senioræ Viceææ President,æ Chiefæ Information Offi cer, Evergreenæ Investments

Toddæ Juillerat,æ ManagingæDirector,æ Head,æ PerformanceæMeasurement,æ Stateæ StreetæGlobalæ Advisors

Alanæ Goldstein,æ Chief Information Offi cer,æBNYæ Mellonæ Assetæ Management

Rickæ Eng,æ Chief Operating Offi cer,æLeggæ Masonæ Capitalæ Management

TSAMæ willæ bringæ togetheræ theæ mostæ senioræ innovatorsæ toæaddressæ theæ industryÍ sæ fundamentalæ issuesæ throughæ front,æmiddle and back offi ce. During the annual convention, due to takeæ placeæ thisæ Septemberæ inæ Newæ York,æ attendeesæ willæ haveætheæ choiceæ ofæ overæ 40æ presentationsæ takingæ placeæ duringæ 4æ nicheæstreams. All in one day!

Theæ programmeæ isæ dividedæ intoæ 4æ streams,æ offeringæyouæ theæ choiceæ of:

Tacticalæ ITæ GovernanceæThisæ streamæ presentsæ anæ exclusiveæ opportunityæ designedæ toæ addressæ theæ

buy-side operational challenges that technology presents. The program drawsæ togetheræ theæ sometimesæ opposingæ needsæ ofæ operationsæ andæ IT,æ andæusesæ caseæ studies,æ presentationsæ andæ interactiveæ sessionsæ toæ allowæ youæ toæbenchmarkæ youræ ownæ ITæ operatingæ modelæ toæ identifyæ whereæ investmentæ addsævalue to your bottom line and enhances business processes. Attendees will beæ CXO,æ VPæ andæ director-levelæ andæ areæ responsibleæ foræ settingæ theæ technologyæstrategy for their company. Key to discussions on the day will be SOA-based

architectures,æ highæ performanceæ architectures,æ capacityæ enhancementæ andæfutureæ scalability,æ ITæ andæ businessæ processæ outsourcing,æ riskæ managementæand talent attraction and retention.

Dataæ Stewardshipæ Modelsæ &æ TechniquesæFundamental across the entire investment process, effective Data

Managementæ willæ beæ aæ keyæ componentæ ofæ triumphæ foræ investmentæmanagementæ companiesæ whoæ areæ ableæ toæ design,æ implementæ andæ leverageætheir data. This stream is, therefore, business critical for practitioners

whoæ wantæ toæ establishæ oræ maintainæ theiræ positionæ ofæ excellenceæ inæ dataæmanagement.

Performanceæ Measurementæ &æ AttributionWithæ theæ recessionæ havingæ hitæ theæ entireæ economyæ atæ aæ globalæ scale,æ moreæ

thanæ everæ beforeæ institutionalæ investorsæ needæ toæ understandæ whereæ theiræinvestment strategies have succeeded and where they have fallen short. Performanceæ measurementæ andæ attributionæ departmentsæ areæ confrontedæ withæunprecedentedæ pressureæ toæ provideæ consistentæ andæ accurateæ performanceæand attribution information in less time at an increasingly global scale. Furthermore,æ whileæ tryingæ toæ retainæ clientsæ onæ theæ oneæ side,æ performanceædepartments,æ onæ theæ otheræ side,æ areæ seeingæ themselvesæ increasinglyæchallenged by recruitment and retention of talent in their departments.

Clientæ ReportingæCaseæ studiesæ fromæ buy-sideæ practitionersæ whoæ areæ strikingæ aæ balanceæbetween superiority of reports and effi ciency and are re-evaluating andæ redesigningæ approachesæ toæ clientæ reportingæ andæ theæ technologyæinvolved. You will hear about strategic reporting initiatives utilizing

scarce resources by enhancing operational effi ciencies, data accuracy andæ quality;æ howæ toæ meetæ clientsÍ æ increasinglyæ complexæ andæ moreæ adæhoc demands with a reduced headcount; how to organize and motivate employees during diffi cult times to meet increased client demands for more complexæ customæ reportingæ asæ wellæ asæ innovativeæ reportæ delivery:æ fromæ face-to-faceæ withæ aæ hardæ copyæ toæ webæ andæ videoæ messagingæ toæ nameæ butæ aæ fewæspecialist case study topics.

Offi cer,

æ æ Jamesæ Mazarakis

DeputyMichaelæ Cloherty Chief Operating Offi ceræ Generalæ Motorsæ Assetæ æ ææ Management

President,æ Chiefæ Informationæ æ æ æ

æ President,æ Chiefæ Information Offi cer,

Managingæ Director,æ æ æGlobalæ Head,æ Technologyæ Andæ æ æ æ

Deutscheæ Assetæ æ æ æ

æ Derekæ SteinChief Information Offi cer, Barclaysæ Globalæ Investors

Advisoryæ Panel

TSAM NA Ad 203x267 .indd 1 13/7/09 14:07:2014-21 ISJ41.indd 19 17/07/2009 18:02

20

Technology ISJ | Investor Services Journal

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24

Jean-Baptiste Le Dantec at SmartCo, a leading software company for the middle and back office, says the concerns of current and prospective clients regarding the tools for data management is two-fold. “Firstly, how to generate savings – [this is] due to the contraints and the uncertainty in the market. The second thing is how to be ready to increase the size of activity. They anticipate concentrations - that means anticipating the ability to acquire some other company or to be merged with other company.” The company’s flagship product, Smart Financial Data Hub is an overall solution bought by asset managers, custodians and other investor services firms, and covers repositories for securities, third-parties, indices and benchmarks, funds and mandates, as well as operational data. One significant challenge is the disparate nature of data in financial institutions. There is often a mosaic of different systems and data feeds that have accumulated over time, have different uses and present information in their own way. These innumerable variables can hinder efficiency, as well as the ability to merge systems. The answer, says Le Dantec, is to find a way to centralise the data. “They need to centralise the information as it will be easier for them to merge with an information system of another activity. That will also handle a strong increase in terms of the value of data they manage. It needs to be managed in one central department across geographical locations.” He adds that there are differences between asset managers and custodians

as to their capacity for centralisation. “The less advanced in the subject of data centralisation are the investments banks. Traditionally, they are more used to have vertical organisations. The front office and middle and back offices are specialised: one part of the company deals with the equity, one fixed income and another dealing with derivatives, for example. “For the asset managers, given that in one portfolio the manager may have very different instrument types, they have been used to centralising data. So they are more advanced. “For the custodian and the investor services providers, they have different activities, such as fund administration. What some custodians are working on now is to set the grounds for establishing a kind of business support line on which they will put all the data management tasks - that will be an internal service that will deliver the data to the business lines. Some of our French customers are moving in that direction, and offering data management as a service externally.” Le Dantec says clients want to be able to evaluate which data feeds and sources have been worth the financial investment. “Clients are getting data from different providers so they have a lot of data providers that don’t have the same quality. Then this data is used in different parts of the organisation. From centralising data, he says, SmartCo’s system is able to calculate and extract reports on the systems and then tell them who’s used the data and where it’s come from. n

Data profile: SmartCo

ourselves as custodian, we value the trade independently and also provide performance, all off the same platform. We are also helping them ‘slice and dice’ data to ensure they have the information and market intelligence they need from a reporting and risk management perspective. It is a fully integrated solution, and as such much more efficient solution in respect of cash and collateral management. But to address the other part of your question, we certainly do continue to see – and service – demand from increasingly sophisticated long side investors, our traditional client base, for short exposure through long/short strategies, 130/30 and 120/20 funds and the like. I have no doubt that will only become a bigger part of what we do going forward.

DANLOY: The hedge fund industry had a tough time and has recovered well, even if you look at the performance of the industry as a whole it might be one of the best years ever. But with the AIFM (EU) Directive still be discussed, and with some of the constraints that might be placed on these fund managers, I can’t tell you today whether the way forward for the hedge fund industry is rosy of not. It will depend on the discussions at EU level. The UK doesn’t necessarily think they same way as alternative funds as the French. So I will be keen to see the consensus. Clearly some of the directions taken in the initial draft might have a major impact on the hedge find industry. If the AIFM proposals confirm that a hedge fund needs to have a provider based in Europe, even if domiciled elsewhere, I think a lot of these institutions in offshore centres will find it difficult to provide going forward. I would say the hedge fund world has never been one in which SGSS has wanted to develop its business. We service hedge funds but it’s not the main focus in terms of business development for us. n

a result of the market turmoil, there are signs that the industry has started to regain confidence. Hedge funds are adjusting to what will undoubtedly be a fundamentally different environment. Firstly, their investors are likely to demand independent custody and administration of their investments. Although many large hedge funds will be understandably reluctant to walk away from their substantial investment in internal administration, they will find it increasingly difficult to say ‘no’ to clients’ demands for the increased assurance that comes of independent pricing and administration. To meet investors’ need for information, support and clarity, hedge funds are already asking administrators with experience in all asset types and investment strategies to provide a complex and expanding list of services. Further, the financial crisis has driven hedge funds to start using traditional custody banks and increase their use of third-party custody arrangements that allow collateral to be held away from counterparties — a reaction to the collapse of critical financial institutions in autumn 2008.

CHAKAR: I’d suggest it is overly simplistic to suggest that custodians should or could simply disintermediate the prime brokers. There have capabilities – notably around capital introduction, electronic trading platforms that provide front-end trading and order-routing, and cross-margining across multiple asset classes and products – we do not possess as a custodian.My view is that continued co-existence will be the way forward. What we have done is to extend our capabilities to ensure we can work much more efficiently and effectively with the prime brokers to the benefit of the end client. For instance, post-execution we provide a truly end-to-end service for alternatives, which means the client only need touch the trade once. We deliver back office services, we instruct

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Ireland01 11 12 3203 13 3304 14 24 3405 15 25 3516 3607 17 27 3708 18 3809 19 3910 4002 06 20 21


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Ireland’s fund evolution Regulatory regime views investor protection and transparency as priority in Ireland, writes John Hamrock, Kinetic Partners

Thanks to Ireland’s dedication to providing cost-effective, efficient and highly skilled fund administration, its global reputation as a leader in international investment management continues to expand. Clearly, recent events have required hedge funds to question existing business models and investors to increasingly seek greater transparency. This increased scrutiny has furthered Ireland’s strong industry position. With EUR1.4 trillion in total assets under administration, half of which is comprised of hedge fund administration, Ireland continues to demonstrate its strength and future potential.IntroductionThe recently announced joint venture between Morgan Stanley, Goldman Sachs and Bank of America Merrill Lynch, which are launching 13 exchange-traded funds and 22 exchange-traded commodity funds domiciled in Ireland is evidence of the country’s growth. For US traditional and alternative fund managers, Ireland represents a gateway for exporting advisory services. US mutual funds have tax disadvantages when sold to non-US investors whereas European registered mutual funds, also known as Undertakings for Collective Investments in Transferable Securities (UCITS), offer greater tax efficiencies when sold worldwide. Ireland enables US fund managers to establish themselves in the EU. Investors, in turn, benefit from access to more tax competitive products and added transparency. Ireland is one of the leaders in Europe for UCITS funds. “2009 will be the year of the regulated investment product,” states Gary Palmer, CEO of the Irish Funds Industry Association. “In particular, new fund start ups are feeling increasing pressure from investors seeking more risk-averse products and regulated jurisdictions.” Ireland todayIreland’s regulatory regime has always viewed investor protection as a priority while recognising the importance that hedge funds place on quick market access. To reassure investors and ensure that there are no delays in hedge fund

products reaching the market, Ireland introduced the Qualifying Investor Fund (QIF) to balance meaningful oversight with flexibility. QIFs are authorised and regulated by the Irish Financial Regulator, and all parties to the fund must also be similarly authorised and regulated, including custodians, trustees and prime brokers. Ireland is home to many large global banks, asset management and service providers. The Irish Stock Exchange is a global leader in the listing of funds. Ireland recently signed a memorandum of understanding with China, thus opening the Chinese market to the distribution of Irish funds. There is no tax on income or capital gains within Ireland-registered funds. A range of double taxation treaties with countries around the globe exist with no ‘taxe d’abonnement’. “These products will allow us to continue to serve our clients’ ever expanding needs across all spectrums of their businesses as well as open new distribution opportunities for Delaware,” said Christopher McCarthy, co-head of Global Sub-Advisory Sales and Services for Delaware Investments. In spite of a difficult 2008, the UCITS brand is widely recognised and distributed in over 140 countries. UCITS are transparent, and governed by tried and tested regulation with a focus on risk management and investor protection. UCITS III has brought flexibility to accommodate alternative strategies utilising leverage and short exposure. UCITS has evolved to meet changing market demands through the implementation of UCITS III and the introduction of UCITS IV (estimated implementation by 2011). UCITS alternative strategies can utilise total return swaps, futures and options, hedge fund indices and financial indices, repurchase agreements and other derivatives used in efficient portfolio management, and over-the-counter (OTC) derivatives subject to certain criteria. Within the UCITS product framework, fund sponsors may opt for traditional long-only investment packaged as a non-sophisticated investment such as equities and bonds. A non-sophisticated UCITS may

measure its global exposure (ie, leverage) using the commitment approach, which essentially aggregates the underlying notionals to determine the fund’s degree of leverage. Alternatively, the fund sponsor can use derivatives with leverage to seek enhanced absolute returns. The sophisticated UCITS must measure its global exposure utilising the value at risk or another regulator-approved methodology. Increased product offerings can be available under UCITS, such as fund of funds, index funds, exchange traded funds (ETFs) and derivative funds. However, physical shorting of UCITS alternatives is not permitted; instead, shorting must be through a synthetic means such as use of derivatives. A number of ‘130/30’ funds have been launched under UCITS III. This type of investment strategy augments an existing 100% long-only strategy with an added 30% synthetic short sell, also known as “short extension”. The extra 30% long exposure is a leveraged exposure offset by a 30% short exposure in assets which the investment manager believes are overvalued. Other configurations such as 150/50 or 120/20 are also possible. UCITS Guidance Note 3/03 provides guidelines on how cash settled derivative instruments must be covered at all times by liquid assets, ie, money market instruments and transferable securities that can be repurchased, redeemed or sold at limited cost, in terms of law fees and narrow bid/offer spreads and very short settlement delay. Under UCITS III, FDSs (financial derivative instruments) may be used subject to certain limits. A fund is permitted to invest up to 100% in other UCITS funds and up to 30% in aggregate non-UCITS funds provided that these funds meet certain criteria (ie, must be regulated to a standard equivalent to a UCITS) and in the case of both UCITS and non-UCITS are subject to certain diversification rules (eg, maximum 20% in a single investment). The aggregate credit risk exposure to each derivatives counterparty cannot exceed 10% of the net asset value. A UCITS fund cannot use a prime broker, but similar type arrangements may be

2622 23 29

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ISJ Investor Services Journal Ireland

8,000

6,000

4,000

2,000

0

possible through the use of International Swaps and Derivatives Association/Credit Support Annex arrangements.UCITS IV implementationUCITS IV was granted informal acceptance by the European Parliament in January 2009 and awaits final ratification by the European Council of Ministers. Once adopted, UCITS IV will permit the passporting of management companies across borders. It will introduce a streamlined administration of cross-border fund distribution and allow for cross-border fund mergers that will facilitate cost efficiencies resulting in lower fund expenses and better returns for investors. Master-feeder structures will be allowed which will lead to greater pools of assets and economies of scale. The Key Investor Information Document will be a succinct document describing the fund’s characteristics. UCITS IV will also lead to enhanced cooperation mechanisms between national regulators in Europe. Non-UCITSIn addition to UCITS funds, Ireland also allows for non-UCITS funds to compete with alternative funds domiciled in traditional offshore centers. Essentially, there are three categories of non-UCITS funds: 1. Retail FundA retail non-UCITS fund is not required to have a minimum initial subscription limit. Generally, the investment diversification limits are similar to the UCITS regulations. It is harder to register a retail non-UCITS fund for cross-border distribution. 2. Professional Investor Fund (PIF)With a PIF the minimum initial subscription requirement per investor is EUR125,000. Derogations from investment restrictions imposed on retail non-UCITS funds may be granted by the Irish Financial Regulator on a case by case basis. 3. Qualifying Investor Fund (QIF)QIFs are designed for high net worth individuals or institutional investors. The investment restrictions and borrowing limits are not applied. The minimum initial subscription per investor is EUR250,000. The QIF is confined to

individuals with a minimum net worth in excess of EUR1,250,000 or to institutions which invest on a discretionary basis and having a net worth of at least EUR25 million. Ireland - tomorrowOn 30th April, 2009 the European Commission issued a new draft Directive on Alternative Investment Fund Managers. In this directive, alternative investment funds are defined as any collective investment undertaking, which is not a UCITS, and so could include hedge funds, funds of hedge funds, private equity funds, real estate funds, infrastructure funds, and non-UCITS retail funds. This directive will impose added costs on managers in terms of requiring them to hold additional capital, implement complex new fund reporting and risk management systems. The Irish fund administration industry will analyse the new directive in great detail and work closely with hedge fund manager clients to help adapt to the new directive as efficiently and seamlessly as possible. This directive, coupled with the harsher UK tax regime, may lead alternative investment managers to consider establishing in Ireland. Clearly, Ireland is well-positioned to grow from fund administration to security analysis, trading, and portfolio management. Government agencies such as the Industrial Development Agency (IDA Ireland) and Enterprise Ireland are devoting significant resources to attract asset management companies to establish a presence in Ireland. The Government and industry are working together to build a world class third level academic institution dedicated to offering advanced degrees in security analysis and portfolio management. There are also a growing number of professionals in Ireland who have attained chartered financial analyst (CFA) qualifications. Additionally, Ireland has a strong global reputation in technology with companies like Intel and Hewlett Packard long established on its shores that may be leveraged for the asset management

industry. Quant shops, for example, utilise significant technology in managing index and enhanced index portfolios. And beyond...The benefits of domiciling funds in Ireland is

attracting more attention on the global investment playing field. Indeed, the country has accomplished a good deal this past year, particularly as Ireland has secured itself as a gateway for global funds distribution. Clearly, 2008 and the opening months of 2009 have been difficult for the global financial services industry. The speed and the tone of regulatory change will be challenging for the asset management and servicing industry, both in Europe and in the United States. The asset management industry has proven its resiliency and its ability to adapt in difficult market and regulatory environments. In spite of all the bad news, the significant fund redemption levels and the more stringent industry regulations, we are encouraged by the initiatives underway with asset management firms to increase cross-border marketing and distribution, to recruit sales and business development professionals, and to execute corporate mergers and acquisitions. With the increased scrutiny that less-regulated offshore centers and tax havens are facing, Ireland’s future as a regulated fund centre looks bright. n

Application to the Irish Financial Regulator; Business plan prospectus; Simplified prospectus; Memorandum and Articles of Association/Trust Deed/Common Contractual Fund Deed; Custody/administration agreements; Investment management/advisory agreement; Distribution agreement Derivative (or risk) management process; Directors questionnaire; Annual Financial Derivative Instruments (FDI) report

UCITS documents required

2000 2001 2002 2003 2004

Net Assets of European UCITS (EUR bln)

UCITS Non UCITS

Promoter - entity which the Financial Regulator requires to stand behind the fund; Management company - eight core management functions; self-managed UCITS funds efficient and cost effective option; Investment manager - no need to be domiciled in Ireland, but must be approved by the Irish Financial Regulator; Directors; Custodian/Trustee - the Trustee is responsible for duties relating to the safekeeping of the fund’s assets and carrying out oversight functions on behalf of shareholders; Administrator; Auditor; Irish Stock Exchange listing sponsor.

UCITS service providers

UCITS growthThe graph shows the growth of assets in European domiciled UCITS from EUR3 trillion in 1998 to EUR7.9 trillion through 2007. The drop in assets in 2008 to EUR6.1 trillion was due to the combination of market depreciation coupled with net redemptions.

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DnB NOR is the leading provider of Custody, Clearing and Remote Member Service in Norway. DnB NOR offers a full range of securities settlement, Corporate Action and cash management services for both foreign and domestic institutional clients. The bank has a strong commitment to the Custody business in Norway and the staff is highly knowledgeable and experienced. In addition, DnB NOR provides a wide range of value-added services for foreign clients such as Securities Lending, Income Collection, Proxy Voting, Tax Reclaim, and MIS reporting. As the largest commercial bank in Norway, DnB NOR offers clients full services in securities trading, registration, foreign exchange and Money Market.

ISJ Investor Services Journal ISJ Directory of Services

T: +47 22 94 92 95F: +47 22 48 28 46Contact: Bente I. Hoem, Head of Global Relations & NetworkE: [email protected]:www.dnbnor.com

Intesa Sanpaolo’s Transaction Services include :• Sub Custody, Derivatives and Remote Membership Clearing• Global Custody and Depository Bank for mutual funds, pension funds, real

estate funds, private equity funds and hedge funds• Fund Administration for mutual funds, pension funds, real estate funds,

private equity funds and hedge funds• Paying Agent for foreign funds and sicavs• Cash and Payment services like swift to checks, mass payments, checks and

cash letters

Banking Securities Services provides award winning local and regional custody services for investment professionals. We are proud to be the largest custodian provider in terms of assets and number of foreign clients in Central & Eastern Europe. ING has been providing Securities Services in CEE since 1994 and we will continue our ongoing pursuit of excellence through new technology. Innovation and client focus are the key drivers to service our clients the best way.Other activities of ING Wholesale Banking Securities Services are Paying Agency Services and web-based management of employee stock option & share plans.ING is your local partner in: Belgium, Bulgaria, Czech Republic, Hungary, Poland, Romania, Russia, Slovak Republic and Ukraine.


Piazza della Scala 620121 Milan, ItalyT: +39 02 8794 2466F: +39 02 8794 1519W: intesasanpaolo.comC: Riccardo LamannaE: [email protected]

For further information please contact Lilla Juranyi, Global Head Custody at + 31 20 7979 435 or contact her by email: [email protected]

Asset Servicing

Custody & Clearing

Consultancy

Goal is widely-acknowledged in the fi nancial services sector for its innovative and creative solutions to highly-specialized niche processes.Goal’s research has shown that in excess of USD8 billion of withholding tax remains unclaimed each year by the rightful owners and benefi ciaries and that over USD12 billion is lost because rightful benefi ciaries are not participating in class actions, bankruptcies and disgorgements.

SMA Financial is the UK’s premier provider of SWIFT services and a long standing business partner of SWIFT. SMA’s vast experience in the banking and securities industry has provided high quality provision of SWIFT related consultancy, training, system care and bureau services which is second to none. SMA prides itself on their in-depth and highly experienced team of consultants chosen from the banking and securities industry. The introduction of the SWIFT bureau service has witnessed much success by providing cost effective and quality hosted connectivity services to many satisfi ed clients.

BHF Asset Servicing GmbH comprises the custody, depotbanking and securities services of BHF-BANK Aktiengesellschaft. With around 250 members of staff, approx. EUR 270 billion in assets under administration and a depotbanking volume of EUR 85 billion, BHF Asset Servicing GmbH is one of Germany’s leading specialists in depotbanking and custody business. It develops innovative and high-class services for investment companies, institutional investors and foreign banks, and excels at tailoring solutions to the individual needs of its clientele.

Assets under Administration: EUR 270 bnNo of funds: 478

T: +44 (0) 208 760 7130C: Stephen Everard or Saghar BigwoodA: 7th Floor, 69 Park Lane,Croydon, Surrey, CR9 1BGE: [email protected] or [email protected] or [email protected]: www.goalgroup.com

Simon MurbyManaging DirectorSMA Financial LimitedTelephone : +44 (0)20 7940 4200Bramah House,65-71 Bermondsey Street,London. SE1 3XFWebsite: www.sma.co.uk

Strahlenbergerstraße 45; 63067 Offenbach a.M. Germany•Contact: Moritz Ostwald •Phone:+49 69 667744 838•Email: [email protected]

ISJ Directory of Services

Directory ISJ41.indd 24 16/07/2009 18:15

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Nordea is the leading fi nancial services group in the Nordic and Baltic region and operates through three business areas: Nordic Banking, Private Banking and Institutional & International Banking. Nordea is the leading custody services provider in the region. Nordea provides high quality, tailor-made custody services for local and foreign investors dealing with Nordic and Baltic securities. Due to the unique history of being formed from four established banks, Nordea is the only Nordic custody provider with strong local presence and expertise in all four markets. Nordea combines Nordic competence with local expertise, and has proven ability to deliver high quality services that meet both clients’ and each local market’s requirements. Leading Nordic custodian: Critical mass and resources available; deep local experience and active involvement in each Nordic market; Complete operational capabilities and best-fi t systems developed in each Nordic market; Proven ability to deliver high-quality service in all Nordic markets; Excellent connection with key players in all Nordic Markets; Extensive product and service offering; Your single point of entry to the whole Nordic region.

RBC Dexia Investor Services offers a complete range of investor services to institutions worldwide. Our unique offshore and onshore solutions, combined with the expertise of our 5,500 professionals in 16 markets, help clients grow their business and sustain enhanced performance through effi ciency improvements and robust risk management processes. Equally-own by RBC and Dexia, the company ranks among the world’s top 10 global custodians with USD 1.9 trillion in client assets under administration.

Contact:Nina GrothHead of Sub-custody and ClearingTel: +45 3333 6124E-mail: [email protected]

www.rbcdexia.com

T: +44 (0) 20 7653 4096F: +44 (0) 20 7248 3946Contact: Antony JohnsonGlobal Head Sales and DistributionE: [email protected]: 71 Queen Victoria Street, London, EC4V 4DE, UK

25

Financial Asset Services is the custody and investments-servicing division of Standard Bank, providing a unique suite of services to sophisticated investors in South Africa and eight sub-Saharan markets.

Standard Bank has assets under custody to the value of ZAR1.56 trillion and an overall market share of approximately 40%.

Standard Bank’s unique selling point lies in its consultative approach to relationships combined with the bank’s commitment to custody and investment administration services.

SEB is the leading provider of securities services in the Nordic and Baltic area. We are committed to custody and clearing processes for the wholesale market. We hold securities worth over 560 bn EUR and provide services in more that 75 markets, 10 of them under the SEB name (Sweden, Norway, Finland, Denmark, Luxembourg, Germany, Estonia, Latvia, Lithuania and Ukraine). We offer a full range of securities services including corporate action and information services, securities lending and services to remote members of the Nordic and Baltic stock exchanges. We continuously develop new products in connection with clients and partners to ensure we deliver the high-quality products our clients demand. We always strive to make the processes more effi cient. With a history of over 150 years in the securities industry; we know the market and our clients well.

ISJ Directory of ServicesISJ Investor Services Journal

Santander is Spain’s leading fi nancial institution and the largest bank in the euro zone by market capitalization. Our commitment and contribution to the securities industry is well established after more than a century of providing services in this fi eld.Santander’s cutting edge technology enables it to offer a comprehensive array of innovative services in a broad range of markets. Santander currently has full local capabilities in Iberian and Latin American markets along with a franchised presence in many others. Santander`s experience and product range ensures that every aspect of the securities business is fully contemplated.

T: Europe: (34) 91 2893932 / 28T: USA: (1212) 350 39 02 W: santanderglobal.comE: globalsecurities@ gruposantander.com

A:Standard Bank Investor ServicesSecurities Lending Department25 Sauer Street 2nd Floor, Entrance 3Johannesburg 2001South Africa T: +2711 636 6615E: [email protected]: www.standardbank.co.za

T: +46 8 763 53 04F: +46 8 763 69 30C: Goran Fors, Global Head of Custody ServicesE: [email protected]: www.seb.se


Société Générale Securities Services offers institutional investors, asset managers and fi nancial intermediaries a comprehensive range of fi nancial securities services: custody, clearing & trustee services, fund administration, asset servicing and transfer agency. SGSS currently ranks 3rd European custodian and 9th worldwide custodian (Source: Globalcustody.net) with EUR 2,580* billion in assets held and valuates 4,354* funds representing assets of EUR 405* billion (as of June 2007).

Sébastien DanloyGlobal Head of Sales,Investor ServicesSociété Générale Securities ServicesT: +33 (0)1 41 42 98 65E: [email protected]: www.sg-securities-services.com


26


Interactive Data Corporation (NYSE: IDC) is a leading global provider of fi nancial market data, analytics and related services to fi nancial institutions, active traders and individual investors. The Company’s businesses supply real-time market data, time-sensitive pricing, evaluations and reference data for millions of securities traded around the world, including hard-to-value instruments. Many of the world’s best-known fi nancial service and software companies subscribe to the Company’s services in support of their trading, analysis, portfolio management and valuation activities. Through its businesses, Interactive Data Pricing and Reference Data, Interactive Data Real-Time Services, Interactive Data Fixed Income Analytics, and eSignal, the Company has approximately 2,300 employees in offi ces located throughout North America, Europe, Asia and Australia.

SmartCo is a leading provider of data management solutions for the fi nancial industry.SmartCo’s software, Smart Financial Data Hub, covers all the data area, including fi nancial instruments, market data, third parties, funds, transactions, and provides full connectivity, a powerful and user friendly front-end, traceability, quality control, data enrichment and customisable workfl ow. Our solutions are based on SmartPlanet, an innovative technology focused on data management, and able to meet evolving business requirements.SmartCo offers to its customers the ability to respond in the fastest way to regulatory and business changes.

ISJ Directory of Services ISJ Investor Services Journal

www.interactivedata.comT: 020 7825 7800F: 020 7608 3514Brendan BeithEuropean Sales [email protected] House 13-17 Epworth Street London EC2A 4DL UK

For further information: www.smartco.fr or [email protected]

SmartCo37 rue de Liège75008 ParisFranceT: + 33 1 58 22 29 60E: [email protected]: www.smartco.fr

Established in 2002, IMFC Fund Services B.V. is a boutique hedge fund administrator and a trustee with its offi ces in Amsterdam and Sydney. IMFC offers third parties administration and related services to all type of onshore and offshore funds combining high quality, independency, technology, timely calculation with fl exibility, experience, custom-made solutions and competitive rates. Our services include: fund set-up and corporate services, NAV calculation and other accounting services, R&T agent and other investors and compliance services.


For more information visit our website: www.imfcfundservices.com

www.imfcfundservices.comt +31.20.644.4558f +31.20.644.2735 Mrs. Consuelo Nardone: [email protected] Rivierstaete Building, Amsteldijk 166, 1079 LH Amsterdam, Netherlands

Fund Administration

With an extensive network that spans over 70 countries, well-positioned in the emerging trade and investment corridors across Asia, Africa and the Middle East, Standard Chartered’s Wholesale Banking business combines global capabilities with local expertise to develop innovative products and services to meet the diverse needs of our corporate and institutional clients in some of the world’s most dynamic markets. Building on a rich banking heritage, Standard Chartered is noted for a client-focused approach to business, unmatched on-the-ground expertise and a solid track record of innovative, award-winning financial services solutions, reflecting our continued commitment to power our clients’ ambitions. As one of Asia’s leading custodians, Standard Chartered serves global, regional and local custodians and broker-dealers, as well as local and regional fund managers. The Bank plays a key role in promoting the development of these markets and keeping the international investor community informed of industry developments across the region.

Swedbank provides client-focused custody services to domestic and international securities lending (including auto-borrow facilities), derivative clearing services, proxy voting, full corporate actions and income service. Flexibility is an important aspect of Swedbanks products and services. Our dedicated Client Relations Managers and Account Managers are focused on personalized processing and reporting solutions. Other Features:• ISO9001:2000 quality certifi cation.• Swedbank Markets Online (SMO) internet information and reporting tool for

Custody and Securities Lending.• Nordic Custody alliance with DnB NOR (Norway), OKO Bank (Finland) and

Amagerbanken (Denmark) to offer regional custody product. Institutional Assets under Custody: USD 70 billion

T: +46 8 5859 1800F: +46 8 7237 147C: Neal Meacham, Head of CustodyE: [email protected]: Stockholm SE 105 34 Sweden

Data Services

Market Data & Analytics provides high-value real-time market data, indices and back offi ce services. Information from diverse sources are provided to its customers, tailored to their specifi c information needs. Accuracy and reliability are ensured by collecting the data from the Group’s own trading platforms, such as Xetra® and Eurex® and cooperation partners like STOXX Ltd. and the Irish Stock Exchange. Avox®, a majority-owned subsidiary, validates, corrects, enriches and maintains business entity data. With an operational model, unique in the industry, Avox® enables clients to comply with regulatory requirements and to achieve a holistic view of the risk exposure towards a client.

Avox Redwither Tower Redwither Business Park Wrexham, LL13 9XT United Kingdom T: +44 (1978) 661 813 F: +44 (1978) 661 668W: www.avox.info

C: Giles Elliott, Global Head, Securities ServicesP: +65 6517 0134E: [email protected]: www.standardchartered.com


ISJ Investor Services Journal ISJ Investor Services Journal

27

ISJ Investor Services Journal ISJ Directory of ServicesISJ Investor Services Journal

Drawing upon an extensive track record of profi ciency, dependability and responsiveness, Swiss Financial Services acts as administrator as well as registrar and transfer agent of funds investing in a broad range of fi nancial instruments. These include futures, foreign exchange, equities, options, bonds and other funds.

We perform accounting and administration services for diverse fund types domiciled in, but not limited to, the United States, Bahamas, Cayman Islands, B.V.I. and Ireland.

Société Générale Securities Services offers institutional investors, asset managers and fi nancial intermediaries a comprehensive range of fi nancial securities services: Clearing, Liquidity Management, Custody and Trustee, Fund Administration, Asset Servicing, Fund Distribution Services and Issuer Services. SGSS currently ranks 3rd European custodian and 7th worldwide custodian (Source: Globalcustody.net) with EUR 2,731* billion in assets held and valuates 5,158* funds representing assets of EUR 499* billion (at end March 2008).


Fund Services is a dedicated fund administrator providing customized and flexible services for traditional and alternative investments. Our comprehensive range of services for investment funds includes fund set-up, registration and support around the world, fund accounting, NAV calculation, risk control and reporting. We have practical experience with registering funds in 28 jurisdictions.We provide a flexible offering from the full range of services, including Private Labelling, to selected functions. Through our leading fund administration architecture, multi-source pricing and powerful compliance tools, we offer a tailored, cost effective service. www.ubs.com/fundservices


Luxembourg: Jean-Paul Gennari, tel. +352-44-1010 1Switzerland: Markus Steiner, tel. +41-61-288 4910 W: www.ubs.com/fundservices C: Andre ValenteT: + 41 61 288 6269 E: [email protected]:UBS Global Asset Management - Fund Services, Brunngässlein 12, PO Box CH-4002 Basel, Switzerland

Swiss Financial Services (Ireland) Ltd. Block 4B,Cleaboy Business Park, Old Kilmeaden Road, Waterford, Ireland T: +353 51 351180F: +353 51 871595

Adrian Maher E: amaher@swiss-fi nancial.ie

Sébastien DanloyGlobal Head of SalesSociété Générale Securities ServicesT: +33 (0)1 41 42 98 65E: [email protected]: www.sg-securities-services.com

Hedge Fund Administration

Apex Fund Services Ltd is a global hedge fund administration solution for hedge funds and private equity clients located in 12 separate jurisdictions across the globe. The company uses the software solution, PFS PAXUS, which is a fully integrated hedge fund accounting system combined with web-based reporting to allow clients and investors to access their information 24/7 securely online. We will tailor all solutions to meet your needs and our continuing focus on the quality of service and the relationship with each and individual client ensures that we retain our ethos of providing a personalized service rather than a generic solution. Highly qualifi ed and experienced staff, mirrored with top tier technology and competitive fee structures make Apex Fund Services Ltd the clear choice for your fund administration needs.

C: Peter HughesGroup Managing DirectorT: +1 441-292-2739F:+1 441-292-1884E: [email protected] BohanGroup Manager of OperationsT: +353 21 4633366F: +353 21 4633377E: [email protected]

Custom House, which is one of the world’s largest independent alternative investment and hedge fund administrators, was awarded a SAS 70 Type I in May 2007 and a SAS 70 Type II in December 2007.Custom House offers a round-the-world, round-the-clock service from its offi ce in Dublin and representative offi ces in Chicago and Singapore, enabling it to provide, not only complete global administration services, but also the ability to produce daily dealing NAVs.Custom House is authorised by the Irish Financial Regulator under Section 10 of the Investment Intermediaries Act, 1995, which authorisation does not extend to the Chicago and Singapore representative offi ces.

Custom House Administration & Corporate Services LimitedA: 25 Eden Quay, Dublin 1, IrelandT: +(353) 1 878 0807F: +(353) 1 878 0827C: dermot.butler@ customhousegroup.comC: david.blair@ customhousegroup.comwww.customhousegroup.com

Intesa Sanpaolo’s Transaction Services include :• Sub Custody, Derivatives and Remote Membership Clearing• Global Custody and Depository Bank for mutual funds, pension funds, real

estate funds, private equity funds and hedge funds• Fund Administration for mutual funds, pension funds, real estate funds,

private equity funds and hedge funds• Paying Agent for foreign funds and sicavs• Cash and Payment services like swift to checks, mass payments, checks and

cash letters

Piazza della Scala 620121 Milan, ItalyT: +39 02 8794 2466F: +39 02 8794 1519W: intesasanpaolo.comC: Riccardo LamannaE: [email protected]


28


Newedge Global Prime Brokerage Group is a global, multi-disciplinary, solution-providing team dedicated to delivering superior services to alternative investment industry participants including hedge funds, commodity trading advisors (CTAs), fund of hedge funds, family offi ces, and institutional investors (insurance companies, banks and pension funds). The Newedge prime brokerage team offers a global range of brokerage services covering a wide range of asset classes including equities, bonds, currencies, commodities, and their related listed and OTC derivative products. We also offer an innovative portfolio-based cross-margining solution, a dedicated account management desk, hedge fund start up services, quantitative information on the hedge fund industry, capital introductions services, and recently prime brokerage services to Sharia compliant hedge funds. Newedge is wholly owned by Calyon and Société Générale, with both companies having 50% ownership.

Prime Brokerage


Data Explorers (www.dataexplorers.com), based in New York and London, is the world’s most complete resource for data, analysis and insight into securities lending and short selling. The company’s proprietary data gives an unrivalled, comprehensive view on share lending and short-selling activity. With data sourced directly from securities lending desks of over 100 of the top lending fi rms and representing most of the global securities lending market, Data Explorers has built a reputation with leading fi nancial institutions as the source for short intelligence that informs their decision-making and their coverage of market sectors and companies. Please visit our Blog: dataexplorers.com/news, Twitter, twitter.com/dataexplorers, Video dataexplorers.com/daily-briefi ng and LinkedIn linkedin.com/companies/data-explorers sites.


Securities Lending

EquiLend is a leading provider of trading services for the securities fi nance industry. EquiLend facilitates straight-through processing by using a common standards-based protocol and infrastructure, which automates formerly manual trading processes. Used by borrowers and lenders throughout the world, the EquiLend platform allows for greater effi ciency and enables fi rms to scale their business globally. Using EquiLend’s complete end-to-end services, including pre- and post-trade, reduces the risk of potential errors. The platform eliminates the need to maintain costly point-to-point connections while allowing fi rms to drive down unit costs, allowing fi rms to expand business, move into different markets, increase trading volumes, all without additional spend. This makes the EquiLend platform a cost-effi cient choice for all institutions, regardless of size.


Philippe Teilhard de Chardin, Global Head of Prime BrokerageT +44 20 7676 8536Vincent Tournant, Head of Business Development T +44 20 7676 8171Duncan Crawford, Head of Capital Introductions T +44 20 7676 8504E: [email protected]/primebrokerage

UK: 2 Seething Lane, London, EC3N 4AT T +44 (0) 20 7264 7600, F +44 (0)20 7392 4004 US: 75 Rockefeller Plaza, 19th Floor New York, 10019, USAT +1 212 710 2210 F + 1 212 710 2212 Julian Pittam T +44 (0) 207 264 7616 E:[email protected] New York: Ken Read T +212 710 2210 E: [email protected] www.dataexplorers.com

www.equilend.comEquiLend Europe Ltd.14 Devonshire SquareLondon, EC2M 4TE+44 (0) 207 426 4426T: UK- +44 (0)20 7743 9510C: Michelle LindenbergerE: [email protected]: 17 State Street, 9th Floor New York, NY, 10004T: US- +1 212 901 2224C: Michelle LindenbergerE: [email protected] W: www.equilend.com

Fund Services holds a leading position in the area of hedge fund administration with specialized teams around the world. We offer a complete range of services including accounting, NAV calculation, shareholder services, banking and credit facilities. With specialist expertise in both single manager and fund of hedge fund administration, services can be provided for both onshore and offshore funds. Through our comprehensive range of services and products, leading edge technology platforms and superior client service, we work in partnership to offer the solutions you need.

Cayman Islands: Darren Stainrod, tel. +1-345-914 1076Eire: Don McClean, T: +353-1-436 3636US: Concetta Mastrangelo, tel. +1-212-882 5523 W: www.ubs.com/fundservices C: Darren Stainrod, T: ++1-345-914 1076E: [email protected]: UBS Fund Services (Cayman) Ltd, PO Box 852 GT, Grand Cayman, Cayman Is

International Finance Centres

The British Virgin Islands has created a progressive and transparent environment for the establishment and regulation of mutual/hedge funds and their functionaries. By the end of Q3 2006 the BVI had recognised or registered more than 4,000 funds, and licensed some 700 managers and administrators, making the BVI a leading domicile of choice for investment business. Benefi ts of conducting investment business in the BVI include:• Fast-track registration and licensing system - funds can be registered in a few days.• Presence of qualifi ed, experienced legal, accounting & administration practitioners.• A well-developed corporate professional infrastructure.• Modern, robust and cost-effective regulatory and corporate regimes.• BVI private and professional funds fall outside the scope of EU Savings taxation Directive.• Segregated Portfolio Companies - also known as Protected Cell Companies - can now be

formed as mutual funds under the BVI Business Companies Act 2004.

British Virgin Islands International Finance CentreHaycraft Building1 Pasea EstateRoad TownTortolaBritish Virgin IslandsT: +1 284 494 1509F: +1 284 494 1260W: www.bviifc.gov.vg

Payments & Settlements

VocaLink is the payment transaction specialist. Trusted by the world’s top banks our automated payment system processes over 90 million transactions per day. The VocaLink switching platform powers the world’s busiest ATM network and provides end-to-end management of Europe’s largest ATM estate, while the Real-Time Payments platform provides the central infrastructure for the UK Faster Payments service. The VocaLink EuroCSM delivers reach for our clients throughout the SEPA and beyond with a range of value-added services that leverage our know-how and technical capabilities. VocaLink is the partner of choice internationally, working with BGC to process Sweden’s automated payments. Find out how we can help your business at www.vocalink.com

VocaLinkDrake HouseHomestead RoadRickmansworthHertfordshireWD3 1FX

T: +44(0)870 1650019F: [email protected]: www.vocalink.com



29


FINACE® is the only fully integrated solution today which supports the future business model within the area of Securities Finance and Collateral Management. The architecture of FINACE® is based on a stable, leading edge technology platform, which was developed with performance and robustness as the focus of design. With fl exibility at its core, customer-driven extensions and modifi cations can be quickly and easily applied to the standard component set.

eSecLending is a full service securities lending agent and administrator of customized securities lending programs. Their program has been adopted by many of the world’s largest and most sophisticated asset gatherers including pension funds, mutual funds, investment managers and insurance companies. They are a third party industry specialist providing lenders with customized programs, high touch client service, comprehensive risk management, and superior risk adjusted returns. The fi rm takes a highly consultative approach with their clients by structuring separate, non-pooled programs and utilizing a competitive auction to determine the optimal route to market for their clients’ lendable assets. Having built their business to incorporate investment practices such as the use of specialists, multiple-managers, unbundling, price transparency, and competition, their approach ensures best execution and also provides clients with greater control over their programs, allowing them to more effectively monitor and mitigate risks and counterparty relationships.

Santander is the only Spanish fi nancial institution with a team exclusively dedicated to securities fi nance & with the purchase of Abbey in 2004 has expanded its capacity on a Global basis with trading teams in London (UK) & Connecticut (USA).Santander’s leading local capabilities in Spain, Portugal, UK, USA & Latin America, along with its solid balance sheet & combined with the state-of-the-art technology, provides its clients with the broadest range of solutions in securities lending & fi nancing, including availability across all assets classes, as well as access to uncommon emerging markets.

Eurex is one of the largest derivatives exchanges and the leading clearing house in Europe. Wherever you are located, we provide you with access to the benchmark futures and options market for European derivatives. Eurex also offers short term funding products, such as Eurex Repo. Eurex Repo is among the forerunners in providing integrated trading and clearing for repo transactions. Eurex’s latest innovative marketplace is called Eurex SecLend. Eurex SecLend. Europe’s leading investment banks participate as borrowers in the Eurex SecLend marketplace, acting as principal brokers, dealers and intermediaries. They all benefi t from Eurex’s leading state-of-the-art trading and processing services. For Eurex, service and technology innovation is not just a buzzword. New trends are being transformed into inventions through the adoption of advanced trading practices. Find out more on www.eurexseclend.com.

JPMorgan’s Securities Lending program is unparalleled due in no small part to the Firm’s breadth of capability, fi nancial strength, professional expertise and seamless operations. Our program enables investors to access a broad spectrum of lending markets, with a diverse borrower base, offering a broad indemnifi cation against borrower default, while achieving very competitive bids for their securities - all of this in an environment designed not to compromise the activities of their fund managers. As one of the founding members of EquiLend, a global automated platform for borrowers and lenders, JPMorgan is at the forefront of technology and is ideally placed given its integrated lending, custody and accounting platforms.


T: US- +1 617 204 4500T: UK- +44 (0)20 7469 6000C: Christopher JaynesE: [email protected]: www.eseclending.comA: 175 Federal Street, 11th FL, Boston, MA 02110, US

A: 1st Floor, 10 King William Street, London EC4N 7TW, UK

W: www.eurexseclend.comT: +41 58 854 2066F: +41 58 854 2455E: [email protected] Zurich Ltd., Selnaustrasse 30, 8021 Zurich, Switzerland

T: +41 (0)44 298 92 00F: +41 (0)44 298 93 00A: COMIT AG, Pfl anzschulstrasse 7,CH-8004 Zürich, SwitzerlandW: www.fi nacesolution.comwww.comit.ch

New York: William Smith T: 212-623-5664 E: [email protected]: Michael Fox T: 44 207 742 0256E: [email protected]: David Brown T: (61-2)92504606 E: [email protected] W: www.jpmorgan.com/wss

W: www.gruposantander.comT: (3491) 289 39 42/54E: securitieslending@ gruposantander.com

Around the world, securities fi nancing is managed on SunGard’sproven solutions for international and U.S. domestic securities lending and repo for over 250 clients. Through our Loanet, Global One, Martini and Astec Analytics products and services, we provide comprehensive business solutions and information with worldwide reach for equities or fi xed income securities fi nancing. These solutions – all in an integrated, exception-based processing architecture – includes order routing, pre-trade analytics, trading, position management, operations, accounting, settlement and reconciliation.

Email: securities.fi nance@ sungard.comContact:EMEA: +44 (0) 20 8081 2779America’s: +1 (646) 445-1179Asia Pacifi c: + 62276400Visit: www.sungard.com/securitiesfi nance



30

Financial Tradeware provides integrated solutions for medium to small sized Investment Management fi rms, Fund Managers and Hedge Funds, covering the full trade life cycle. It is part of the Dharma Group of companies and benefi ts from the joint contributions and experiences within the group of market traders, business analysts, fi nancial services professionals and skilled Microsoft Certifi ed programmers. The company has developed a suite of applications that integrate and Straight Through Process (STP) real-time trading, back offi ce administration, accounting and compliance. Ultra.net®, S-Messenger® and H-Fund® arwe the company’s fl agship products all based on Microsoft.NET infrastructure. The company also offers a Member Concentrator for hosted SWIFT connectivity and Member Administered Closed User Group (MA-CUG) services for Corporates and Hedge funds.

ISJ Directory of Services ISJ Investor Services Journal

SunGard is one of the world’s leading software and IT services companies. SunGard serves more than 25,000 customers in more than 70 countries, including the world’s 25 largest fi nancial services companies.

Dedicated to post trade securities operations, GL RIMS is your comprehensive real time securities post execution processing solution, covering middle offi ce, settlement and accounting requirements. Its wide use of automation enables global capital markets organisation to achieve maximum STP. It is a fl exible, highly scalable and easy to install platform with a new Service Oriented Architecture feature that allows smooth and effi cient connections with other third parties within a company.


Isis Financial Systems provides mission critical investment management software and services to many large and small companies. Our customers perform a broad range of functions including fund accounting, derivative and hedge funds, wealth management, and pension and endowments, etc…. Our integrated solution services the front, middle, and back offi ces of these companies with software that accommodates most any security type. Built on a contemporary three tiered architecture our application helps fi nancial companies improve operating effi ciencies, increase accuracy and reliability and improve customer service.IsisFS has the experience and IMS has the tools to improve your operations and save you money.

W: www.f-tradeware.comT: +44 (0)20 7493 2773F: +44 (0)20 7495 4858C: Graham BrightE: [email protected]: 31 Dover Street London W1S 4ND UK

Contact:Isis Financial Systems14 Felton StreetWaltham, MA [email protected] (00-1) 781-209-0262

SunGard Global Trading25 Canada Square, London E14 5LQ

Tel +44 (0)20 8081 2000

Fax +44 (0)20 8081 3399

www.sungard.com/globaltrading

Email: [email protected]

DST International is the world’s premier vendor of technology solutions to the global investment management community with over 700 clients in 55 countries, and 1500 employees in 19 of the world’s leading financial centres. Our wide range of asset management solutions meet the needs of fund managers, dealers, settlement staff, custodians and record keepers operating as international asset managers; from front office simulation, opinion management and modelling functions, through data management, dealing and settlement to custody and corporate actions. The suite of products can be used either as stand-alone applications or brought together in flexible combinations according to specific needs.

T: UK +44 (0)20 8390 5000Boston +1 617 482 8800Hong Kong +85 225 812 880F: +44 (0)20 8390 7000E: [email protected]: DST House, St Mark’s Hill, Surbiton, Surrey, KT6 4QDW: www.dstinternational.com

Eagle Investment Systems LLC is a global provider of fi nancial services technology, serving the world’s leading fi nancial institutions. Eagle’s Web-based systems support the complex requirements of fi rms of any size including institutional investment managers, mutual funds, hedge funds, brokers, public funds, plan sponsors, and insurance companies. Eagle is committed to providing enterprise-wide, leading-edge technology and professional services for investment accounting, data management, and performance measurement. Eagle’s product suite is offered as an installed application or can be hosted via Eagle ACCESS, Eagle’s application service provider. Eagle Investment Systems LLC is a division of The Bank of New York Mellon Corporation. To learn more about Eagle’s solutions, contact [email protected] or visit www.eagleinvsys.com.

W: www.eagleinvsys.comT: +44 (0) 20 7163 5700F: +44 (0) 20 7163 5701A: The Bank of New York Mellon Financial Centre160 Queen Victoria StreetLondon EC4V 4LA

Technology

BI-SAM is a leading provider of analytics software, client reporting and data management solutions to the investment management community. Our integrated and innovative solutions have already been adopted by many renowned asset managers in France, Belgium, Luxembourg, UK, Hong Kong and Singapore who have assets under management ranging from 10 to 450 billion Euros. The B-One suite of products covers: performance measurement, performance attribution (equities, balanced and fi xed income), risk attribution (ex-post and ex-ante), as well as multi-lingual client reporting and factsheets. This suite of products can be used either as stand-alone applications or ASP hosted solutions. The Company has approximately 45 employees in offi ces located in Europe (Paris, London, Luxembourg). Offi ces in Asia and North America are under consideration. The Company is headquartered in Paris.

A: BI-SAM Ltd1 CornhillLondon EC3V 3NDT: +44 (0)20 3008 5834F: + 44 (0)20 3008 5831E: [email protected]: www.bi-sam.com



31


Information Mosaic is a global provider of advanced custody, corporate actions and wealth management solutions to the global securities industry. Information Mosaic’s business professionals leverage decades of fi nancial industry expertise and technical knowledge to deliver complex projects on time and within budget. Since inception, the company has utilized the most modern technology to develop solutions to run on a scalable, single platform. Today, Information Mosaic supports clients from offi ces in Boston, Dublin, London, Luxembourg, New York and Singapore. Currently, six of the top 10 global custodians deploy Information Mosaic solutions worldwide.

IGEFI is the foremost provider of software solutions for international fund promoters, third-party service providers and fund managers. Its prestigious client-base is testimony to our commitment, service and quality with more than 200 expert staff supporting clients from seven offi ces worldwide including Bangalore, Boston, Frankfurt, Geneva, London, Luxembourg and Paris. MultiFonds is operational in more than 20 countries worldwide and support investment funds assets in excess of US$ 2 trillion. MultiFonds Fund Accounting and MultiFonds Transfer Agency are developed on a “one system-one database” philosophy and provide signifi cant advantages including reduced overhead and IT support costs and single look and feel reporting for global clients.


For more information on Information Mosaic, please visit our website at www.informationmosaic.com Global:[email protected], US: [email protected]: [email protected]: [email protected] Enquires:jfl [email protected]

A:IGEFI Group Sàrl - 7, Rue des Primeurs,L-2361 StrassenT: +352 26 44 211 F: +352 26 44 21 44E: marketing@igefi .comW: www.igefi .comC: Mr. Jesper Steiness - Head of Business DevelopmentEurope & AsiaE: jesper.steiness@igefi .com

For more than a decade, administrators, managers, and advisors have reliedon KOGER for dependable software tools backed by extensive industryexperience and expertise. Now, for those who want to reduce costs and streamline business processes, Koger offers Fully Integrated FundAdministrator, a vertically integrated suite serving the back-offi ce software needs of the fund industry.Fully Integrated Fund Administrator consists of three core programs:~ NTAS, the New Transfer-agency System~ E*TAS, Electronic Transfer Agency System~ GRID, Global Reach Interface DaemonOther programs, such as PTAS, KIT, and KORS available separately, complement the core competency of Fully Integrated Fund Administrator.

T: 001-201-291-7747 F: 001-201-291-7808C: Mr Ras SipkoE: [email protected] USA12 Route 17 NorthSuite 111ParamusNew Jersey, NJ 07652, USAW: www.kogerusa.com

Misys provides integrated, comprehensive solutions that deliver signifi cant results to over 1,200 fi nancial institutions globally. Our buyside solutions help asset servicers, asset managers and hedge funds handle the latest complex products, streamline processes, reduce costs and improve STP. Misys Summit is our award winning, multi-asset class solution that boasts 18 years OTC derivatives market expertise. With extensive OTC buyside coverage and the market leading structured products module, Misys Summit delivers the solution you need for handling the end to end process for OTC. We also provide a customisable ASP service for fast implementation and lower costs.

[email protected]

Odyssey Financial Technologies is an industry leader in the global provision of wealth and asset management solutions and services to the Private Banking, Mass Affl uent and Retail Banks as well as Institutional and Fund Managers. Over 200 fi nancial institutions in more than 30 countries have chosen Odyssey solutions. Odyssey focuses on providing a comprehensive range of components for portfolio management (PMS), advisory process, customer relationship (CRM), compliance, risk, analytics and Enterprise Data Management (EDM). The components are deployed on a single scalable wealth and asset management platform, facilitating the enterprise-wide implementation of solutions and data management. Founded in Luxembourg in 1995, Odyssey today has offi ces in the key fi nancial centers, including London, New York, Singapore, Zurich, Frankfurt, Brussels, Geneva, Madrid, Toronto and Tokyo. Odyssey’s operational head offi ce and main development centre is located in Lausanne, Switzerland. Throughout this knowledgeable network Odyssey employs over 600 professionals.

Building on over twenty years of experience in capital markets and cross-asset software solutions, Murex introduces Mx Asset Manager - a unique cross currency, cross asset fund management solution capable of handling the full range of products, from plain vanilla to the most complex derivative products. Coupled with a high degree of fl exibility and customization, Mx Asset Manager features a multifaceted design catering to the needs of both service providers (prime brokers, administrators, asset servicing providers) and direct clients (portfolio managers for mutual, pension or hedge funds, insurance companies). With so many new challenges presented to buy-side managers when integrating increasingly-complex derivatives into their portfolios and funds, Mx Asset Manager represents a strong and reliable ally for dynamic position keeping and multi-dimensional risk management in a thriving market.

C: Hélène Desbiez Business Development ManagerT: +33 1 44 05 32 00E: [email protected]: www.murex.com

London Offi ce:Martin House5 Martin LaneLondon EC4R 0DP U.K.

T: +44 (0)20 7621 5800F: +44 (0)20 7621 5899

E: [email protected]: www.odyssey-group.com

Technology


32

ISJ Investor Services Journal ISJ Investor Services Journal ISJ Directory of Services

SimCorp Dimension is a powerful, comprehensive and truly seamless investment management system. It can handle NAV and other calculations, with complete related accounting, for a huge variety of fund structures and product types, including regional specialities. SimCorp Dimension has been designed from scratch as an enterprise-wide system, handling all aspects of the investment management process and related administration functions, consistently. Data is recorded once into a core database so that reporting is made easy, there is no reconciliation of data and no duplication of procedures.-By cutting latency in securities processing, our clients are recognising new effi ciencies, reducing costs and increasing throughput-By streamlining their customer on-boarding processes, our clients are gaining faster access to fees, increasing customer satisfaction, gaining greater cross-sell opportunities.

Founded in 2002, Redi2 Technologies is a leading provider of fee billing solutions to the global fi nancial services industry. Redi2 offers fl exible, feature-rich solutions that help fi rms streamline operations, improve cash fl ow, reduce costs, enhance client service and meet compliance obligations. Redi2’s fl agship fee billing and revenue management solution Redi2 Revenue Manager helps fi nancial professionals more easily manage the fee billing process, including client setup, multi-currency fee and accrual calculations, invoice and advice generation, accrual reconciliation, adjustments and reversals. Our open APIs and support for industry-standard relational databases ease integration with third-party solutions, including accounting, performance measurement and CRM systems.


Netik’s team have spent the past 25 years perfecting the art of bringing together market, reference, portfolio accounting, performance and risk data from disparate sources into a single version of the truth (SVOTTTM). The result is a highly scalable and sophisticated business data model that has been designed to process all securities and offers a complete model for traditional and alternative markets.


Redi2 Technologies, Inc.1771 Broadway St.Oakland, CA 94612T: +1 (510) 834-7334E: [email protected]: www.redi2.com

For more information please visit: www.netik.comor email: [email protected]

T: +44 (0)20 7260 1900 F: +44 (0)20 7260 1911 C: Elizabeth Gee, sales director of SimCorp DimensionE: [email protected]: www.simcorpdimension.comA: SimCorp, 100 Wood Street, London EC2V 7AN

peterevans is a leading provider of front to back offi ce solutions for the fi nancial services sector. With 23 years experience peterevans takes a sophisticated and dynamic approach to assist customers in reducing costs and witnessing an increase in margins by seamlessly replacing costly and restricting legacy platforms. peterevans works in a collaborative manner and sees clients as partners to help meet all the demands in today’s marketplace. The xanite product suite offers a highly confi gurable, fl exible and fully integrated, browser based, comprehensive front to back solution that complies with message standardization and settlement harmonization. Deployed as a single application or integrated as components into your existing platform. Each of the xanite modules can be delivered via an ASP or self-hosted. Covering: wealth management, custody corporate actions clearing and settlement private client and on-line stock broking.

peterevansNew Broad Street House35 New Broad StreetLondon EC2M 1NHT: +44 (0) 29 20 402200E: [email protected]: www.peterevans.com

Princeton Financial Systems (PFS), a 100% subsidiary of State Street Corporation, is a leading provider of portfolio management and accounting systems, investment compliance, data management, and reporting solutions to the global investment industry. Our solutions are used worldwide by over 430 leading investment managers, custodians, insurance companies, pension funds, hedge funds, and banks, which manage combined total assets of over $5 trillion in more than 40 countries.These include ABP, AEGON, AIG, Allianz Global Investors, BNP Paribas, CaIPERS, CACEIS Investor Services, Citi, Commerzbank, Credit Suisse, HSBC Insurance, Metropolitan Life Insurance, Nationwide, Northwestern Mutual, Prudential, RBS, Société Générale Securities Services, and State Street. MIG21, PFS’s award-winning investment compliance and risk monitoring solution, optimizes pre-trade and post-trade compliance checking, the administration of regulatory, prospectus, and internal investment guidelines along with the consequent resolution workfl ows. PFS, headquartered in Princeton (NJ), has offi ces located throughout the United States, Canada, Australia, Singapore, and China as well as in United Kingdom, the Netherlands, Luxembourg, France, Germany, and Switzerland.

Pirum provides a full suite of automated reconciliation and straight through processing (STP) services supporting Operations within the global securities fi nance industry. The company’s on-line SBLREX service encompasses daily contract compare, monthly billing comparison, mark-to-market & exposure processing, pending trade comparison, income claims processing and custody reconciliation. Subscribers to Pirum’s services signifi cantly increase their operational effi ciency and reduce their risk by using Pirum’s solutions, as staff are able to focus on fi xing the exceptions instead of using their time to check and process routine business. These automated processes are more scalable and risk controlled too, allowing signifi cantly higher volumes to be managed without corresponding increases in operations headcount.

T: +44 20 7220 0961F: +44 20 7220 0977C: Rupert PerryE: [email protected]: Pirum Systems Limited37-39 Lime StreetLondon, EC3M 7AYW: www.pirum.com

For more information, visit Princeton Financial’s website at www.pfs.com or www.pfs.aquin.com.T: +1 609-987-2400F: +1 609-987-9320C: Lorne Whitmore, Vice President, Global Sales & Product ManagementE: [email protected] A: 600 College Road East, Princeton, NJ 08540, USAW: www.pfs.com, www.pfs.aquin.com


ISJ041

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