Euroclear has responded to the relaunch of the Vestima mutual fund order-routing platform owned by rival ICSD Clearstream by unveiling an order-routing service for French mutual fund transactions. It uses the existing FundSettle order-routing platform owned by Euroclear and the RGV/Relit+ settlement platform owned by Euroclear France.
Euroclear says the new initiative in the French market is only the first of a broader strategy that will be implemented at all of the central securities depositories (CSDs) controlled by the Euroclear group.
The new service in France will start in the first quarter of 2006. Euroclear says it will enable the French CSD to process mutual fund transactions from order to settlement on a fully automated basis. The Brussels-based ICSD says the new service was developed in consultation with Euroclear France’s users and with two trade organisations, AFTI (the Association of Financial Intermediaries) and AFG (the French Asset Managers Association).
Commenting on today’s announcement at Fund Forum 2005 in Monaco said:
“This novel solution for the French funds market could not have been developed without the full support of our users, with whom we have been working very closely”, says Brigitte Daurelle, Director of Product Management, Euroclear SA/NV Paris. “It will enable us to offer a full STP service for French investment funds, from order routing through to custody and settlement, thereby reducing considerably the risks and costs currently associated with the manual processing of fund transactions.”
Bruno Prigent, the Societe Generale custody chief who also moderates the CSD working group at AFTI, says “an automated order-routing system linked to Euroclear France’s own custody and settlement infrastructure will greatly help to improve the competitiveness of France’s fund sector and to promote more widely the CSD model for fund processing in Europe.”
With an estimated 5,000 orders transmitted per day, third-party fund distribution in France grew by 20% in 2004. Over the next three years, annual growth rates are expected to be in excess of 10%.
Euroclear says these rising volumes have made automation of the order-routing process a priority for French mutual fund managers and distributors. The benefits, say Euroclear, include significant reductions in the costs and risks associated with existing manual processes (primarily via fax and phone), and improved service levels for investors and fund promoters alike.