Transfer agency services provider International Financial Data Services (IFDS) and BNP Paribas are piloting Euroclear UK & Ireland’s new electronic ‘order-through- to-settlement’ service, which includes cash and custody processing, for investment funds.
IFDS client M&G Investments and BNP Paribas Securities Services as distributor are the first to use the service. IFDS is responsible for supporting 40 financial organizations manage their assets worth in excess of £477 billion (€560 billion).
The service is intended to help organizations reduce the costs and risks of fund processing. HM Treasury in the UK estimates that the UK fund industry could save between £70 and £290 million (€80 – €315 million) per year by automating fund transaction processing and promoting real-time reconciliation.
Euroclear’s investment fund processing service offers post trade services for investment funds, including: electronic route orders for UK investment funds; automated fund unit settlement for subscriptions and redemptions and distribution and receipt of corporate action proceeds.
John Trundle, CEO of Euroclear UK & Ireland, commented: “Fund transactions settle with us on a delivery-versus-payment basis, meaning that cash and fund units are exchanged electronically and simultaneously. Full processing automation avoids major human processing errors. Moreover, we are pleased to offer a comprehensive and evolving range of related services to clients. For example, we recently introduced a centralized way to transfer funds, which will help to ease substantially the laborious and risky re-registration process.”
Laurence Mumford, Retail COO, at M&G said: “EUI’s new fund settlement service is a pivotal step towards increased efficiency in the post-trade services for investment funds and we are delighted to provide this increased ability to our UK clients.”
James McAleenan, head of the UK for BNP Paribas Securities Services, said: “We are delighted to be the pilot custodian on such an innovative project, which will no doubt enhance the post-trade services industry. We firmly believe that this initiative will improve efficiency, in particular regarding better use of liquidity and optimizing payment processes, which are two of the biggest challenges today.”