Euroclear says money-market funds are now eligible for processing on its FundSettle cross-border mutual fund processing platform. Funds managed by Federated Investors, the US fund manager, recently became the first money-market funds to be processed on FundSettle.
Money market funds presents different challenge from other mutual funds, because most settle on trade date, while mutual funds generally settle between two and five days after trade date (depending on the fund in question). “FundSettle is the only platform in Europe capable of processing trades in money-market funds in a genuinely straight-through manner, on trade date,” says Christopher Renwick, Executive Director of Federated Investors (UK) Ltd. “We are delighted that Euroclear has been able to place our funds on FundSettle so quickly and easily. This will help us to ensure our clients can settle their orders with maximum efficiency and at low cost.”
Money market funds also differ from ordinary mutual funds in terms of order size and transactional activity. Euroclear says a typical money market fund order would have an average value of Euros 50 million, with frequent rollover of subscriptions and redemptions, compared to an average value of Euros 100,000 for a buy-and-hold mutual fund order on FundSettle. At the end of June 2003, the total estimated assets under management of money market funds in Europe was Euros 674 billion.
With other money market funds joining the platform, FundSettle now handles over 110 money-market funds, denominated in US dollars and sterling as well as euros. In all, there are more than 18,000 mutual funds, unit trusts, OEICs (open-ended investment companies), FCPs (fonds communs de placement) and hedge funds, registered in 18 jurisdictions around the world, available on FundSettle.
“The acceptance of money market funds on FundSettle broadens the range of operational efficiencies that we can offer the fund industry, specifically to facilitate liquidity management,” says Barbara Vuylsteke, Director, Investment Fund Product Management at Euroclear Bank. “FundSettle’s automated and highly flexible infrastructure is well suited to tackling the operational challenges of money-market fund-order processing.”