INVESTMENT OPERATIONS CONFERENCE 2021 – ACSA HIGHLIGHTS

The annual Investment Magazine Investment Operations Conference was held on 23 March 2021 as a virtual event.

Highlights of the ACSA Update presentation by Chair David Knights and CEO Robert Brown:

Full members currently hold over $4 trillion assets under custody for Australian institutions.

Industry dialogue, engagement and advocacy deliver benefits through standard market practice and enable automation.

Through our 4 standing working groups and further 5 special purpose taskforces, ACSA made 23 formal submissions last year, and initiated hundreds of informal discussions

Much of ACSA’s advocacy is focussed on topics that are by their nature behind the scenes, and therefore not particularly visible.  None the less, they contribute directly to systemic savings, end investor outcomes, efficiency and risk reduction.

The refreshed ACSA industry strategy has been developed through collaboration with industry consultants, our membership base and insight derived globally.

The process identifies key themes grouped as enablers, landscape and focus.

Focus themes include investment shifts into direct assets and ESG investing.

Efficiency, risk and best practice remain at the heart of the ACSA mission. 

All of the industry’s services are underpinned by data. ACSA continues to work to encourage consistent data schemas and definitions across stakeholders (especially regulatory data), common approaches for data transportability through the value chain, and standards with respect to storage and access innovations (including APIs, distributed ledger and other technologies).

David Knights ended with the following challenges to the audience:

• How to plan your business in terms of people, processes and technology to adapt to opportunities of new ways of working?

• What role can you play in helping to streamline and standardise increasing regulatory reporting requirements across the value chain?

ACSA PEOPLE

The Investment Operations Conference also provided the platform to announce ACSA Award winners for 2021 (and remotely present their physical awards).

ACSA Chair, David Knights, said: “After a unique and challenging year, it is a great pleasure to recognise the individuals who go above and beyond for the asset servicing industry. These individuals have given their time, knowledge and experience to further the cause of the Association’s work. These Awards are a small token of our gratitude and thanks for their invaluable efforts in promoting positive change.”

From top left, congratulations to 2021 ACSA Award winners Adam Taxakis, NAB Asset Servicing, James Crane, Northern Trust and Jodie Bosler, HSBC and the 2021 ACSA Service to the Industry Award went to Scott Oakland, J.P. Morgan.

See the full story and award citations at Awards 2021 Media Release.

A special vote of thanks to Bryan Gray who retired from J.P. Morgan in January.  Bryan was awarded a Lifetime Achievement Award by Conexus founder Colin Tate at the IOC last week.

An industry veteran, Bryan has worked in financial services for over thirty years.  He has been actively involved in the custody industry and acted as chair of the Australian Custodial Services Association on three separate occasions.

In accepting the Award, Bryan said “I’d like to thank Colin and the team at Conexus Financial and Investment Magazine. You have been great supporters of the Custody and Investment Operations Industry for many years and that support has been greatly appreciated by those of us who work in the industry.   I’d also like to thank ACSA for this recognition and for its sponsorship of this conference, and for all the Association does behind the scenes to ensure our Investment Industry in Australia runs smoothly and efficiently.

ACSA is run by individuals who have extremely busy day jobs but they get together on a voluntary basis to resolve industry issues and ensure the industry continues to function effectively.  They’ve certainly had their work cut out for them during this pandemic and I got to see first-hand this past year how hard they worked to adapt and educate government and regulators on the challenges of cheques, wet ink signatures and delivery of physical documents in an environment where almost 100% of your staff are working remotely and electronically.

It was incredible to see how well our industry pivoted to having all of our staff working remotely all over the world, processing billions of dollars of transactions from their homes, coping with asset price volatility and increased transaction volumes and never skipping a beat.   It was a credit to everyone who works in the industry and recognition of significant technology investment that has been made by the industry over the long term”.

OPERATIONS WORKING GROUP

Congratulations to Sam Meares, BNP Securities Services, on his appointment as Chair of the Operations Working Group.  

Sam’s background includes significant securities services experience with Westpac, HSBC and most recently BNP Paribas Securities Services where he took on the role of Head of Banking Service Operations for Australian and New Zealand in mid 2020.   The full Operations Working Group has not met for some time, although a number of important operational matters have been addressed at sub-group level in the interim.  A re-boot meeting will be held for all participants in April. 

ACSA Director Sean Gardiner (J.P. Morgan) has joined Andrew Gibson (Citi) as joint sponsors. 

PANDEMIC DISRUPTION – LESSONS LEARNED AND STILL LEARNING

ACSA has recognised the opportunity of extending automation and better practice for manual and inefficient processes that were amplified by office lock-downs and workforce disruption.

Our affiliate member – the International Securities Services Association – has an initiative in place on this very topic.

ISSA recently published the second in a series of articles written by its New Norm Working Group (WG). In this article, the WG focuses on the challenges faced, as well as opportunities created, with the adoption of electronic signatures.

Although electronic execution was already becoming more common in a number of jurisdictions before the global pandemic, in most markets (and especially in Asia) it was not. Even where it was accepted, there was still the requirement to retain the original copies with a wet ink signature. There is therefore a concern that - post pandemic - there will still be a need for this wet ink signature or that the entire wet ink process will be completely reinstated.

The ISSA WG looks at:

• The adoption and specific challenges around electronic signatures in Securities Services during Covid-19 and suggestions for a way forward post-pandemic
• The legal aspects surrounding electronic signatures, which may differ by jurisdiction (albeit that common cross-jurisdictional elements can be identified)
• The different technological solutions that are available for executing documents electronically.

The article is available here.

ACSA is reviewing this topic and other areas of inefficiency for Australian parallels.  Our advocacy across stakeholders is to permanently embrace more automated processes, especially where robust market practice and corresponding risk controls are also in place.

MEMBERSHIP FOCUS

The ACSA Board will be reaching out in April to all ACSA member C-suite representatives to discuss the Association’s strategy for 2021 and to gain feedback on focus and engagement.

One of the themes for discussion is the “what” and “how” of ACSA working groups, and the opportunity for the subject matter experts from member firms to contribute – including whether additional skills can be brought to support the Association mission (for example, fintech’s and specific industry problem statements).

Separately, ACSA is in an advanced stage of reviewing the website with a new look, enhanced navigation and content update planned for release in July 2021.  The website is a key channel for information sharing that is currently under-utilised.

ACSA EVENTS

Potential upcoming forums – let us know which ones you would like to help make happen:

• ACSA Tax Data Standard – a business overview of the new standard, scope and benefits
• Funds 2.0 – reflection and re-boot (by focus stream)
• APRA Superannuation Data Transformation – scope, timing and implementation challenges
• Private assets – systemic challenges and opportunities
• Pandemic Disruption – lessons learned score card and advocacy pathway
• Resilience and cyber threats – asset servicing value chain perspective
• New look ACSA Website – how to gain the most from this resource
• Custody 101 – an opportunity for new entrants to the industry to gain an understanding of asset servicing
• ATO third party data reliance – key issues, status of review

COMPETITION IN FUNDS MANAGEMENT

Australian Securities and Investments Commission (ASIC) engaged Deloitte Access Economics in 2020 to produce an objective assessment of competition in the managed funds industry in Australia.

Deloitte Access Economics has prepared an Interim Report that highlights some areas for further exploration that were identified in our research, and questions for feedback. The report was published on 5 March here.

While the purpose of the review is focussed on retail managed investment products and outcomes for investors, it does provide detailed analysis of the supply chain, including key outsourcing arrangements for fund managers.

Custody and investment administration are mentioned extensively in the Interim Report as key outsource services.  Comments are also made about the structure of the custody industry, and reference ACSA statistics.  Overall, these custody and investment administration services are seen as an enabler to competition for fund managers (including lowering barriers to entry).  

ACSA is reviewing the report.