IN THIS ISSUE

• Member events – mark your calendar!
• The significant impact of new APRA reporting requirements for super funds (and spill over to investment managers).
• A new standard aimed at fund tax data efficiency.
• Why the sharing of thought leadership matters to our industry.
• ISSA Future of Securities Services symposium.
• A new regular feature In Focus to showcase ACSA members and strategy.

MEMBER EVENTS

ACSA is planning for the return of physical member events in the second half of 2021 – of course COVID permitting.

It has never been more important to foster industry dialogue on systemic challenges.  Physical formats offer the added benefits of informal networking.Mark your calendars for:

• Sydney : 4pm, 16 September 2021
• Melbourne : 4pm, 21 October 2021

Meeting logistics will be confirmed shortly. The agenda will reflect the feedback of industry priorities recently validated in the ACSA Executive Member Survey.

A NEW STANDARD - FUND TAX DATA

After significant work and collaboration across our member base, ACSA is pleased to announce the finalisation of a new standard that defines common market conventions and data schema definitions for the exchange of fund tax data.

All members are encouraged to review and adopt the standard data schema which has been mapped to key tax outputs including individual tax returns and AIIR reporting.

The benefits include more efficient exchange of data through the service chain, reduced risk of errors, the removal of ambiguity and lower query level for both producers and receivers of tax information.

The standard and key documents will shortly be published to members.  Engagement is also underway with other key stakeholders including fellow industry associations and the ATO.

ACSA understands that a number of information vendors are building to the new standard to further promote efficiency options to the market.

APRA SUPERANNUATION DATA TRANSFORMATION

APRA’s Superannuation Data Transformation (SDT) dramatically extends the data that superannuation funds need to report to the regulator and has knock-on impacts for fund managers. 

Although custodians are not the subject of the regulation, as an industry we are concerned that implementation of the new requirements poses significant systemic challenges. These impacts place policy intent in jeopardy as well as adding significant cost and risk to industry.

Key concerns include:

• Specific data challenges (a lack of definition, availability and cost in accessing the asset class, sector and security characteristics required);
• A lack of guidance on standard interpretations for reported data.  This creates a genuine risk that reporting across funds will be incomparable;
• Timeframe pressure. Implementation will be compromised where systems and process change is deployed without sufficient time to specify and test.  The complexity of data and current regulatory timeline heightens risk in deploying change for funds directly and each of their service chain partners. 

Industry worked together and with APRA over an extended period in the roll out of the reporting elements of the Stronger Super reforms.  SDT dramatically extends the existing data set and includes characteristics that cannot be readily accessed in the market (and in some cases do not exit). The compressed timeframe has also hindered the ability of stakeholders to consult on the details of implementation.

A sub-group comprising members of the ACSA Regulatory Working Group and Data Taskforce has reviewed SRS 550.0 - Asset Allocation, with focus on the asset class characteristics required for 30 June 2021 reporting. ACSA is seeking urgent consultation with APRA to highlight these concerns and offer alternatives.

INNOVATION AND THOUGHT LEADERSHIP

A question for every industry is the extent that it leads innovation and engages in dialogue on future state:

• Individually – the investment made by individual member firms in creating competitive advantage and value for their clients;
• Collectively – pre-competitive systemic opportunities to drive out risk, improve efficiency and foster innovation.  A rising tide that lifts all boats.

In practice, both forces drive change – the commercial incentive to provide a differentiated offer in a competitive market, and the collective identification of ways for the industry as a whole to work smarter and align to emerging client needs.

ACSA exists to encourage dialogue on systemic inefficiency and advocate positive change through standards, common market practice and the removal of regulatory barriers. We also have an eye on emerging issues – for example, increased institutional demand for private assets, the rise of interest in crypto currencies, global trends in ETF growth, and transformative nature of distributed ledger technology.

ACSA plans to foster more forums for innovation and thought leadership – including guest articles in this Newsletter, our website and industry events.

ISSA FUTURE OF SECURITIES SERVICES

ISSA conducted a Virtual Symposium 5th May 2021 to gain additional input and refine focus.

Informed by presentations from Oliver Wyman on macro settings, and input from member polls on initial priorities, a focus set of six opportunity areas were discussed at the symposium.Groups discussed each area of opportunity framed by criteria including the extent ISSA could influence outcomes, the clarity and strength of views held, the degree that other organisations already covered the topic, and likelihood that output would lead to action.The groups then presented back their thoughts and recommendations.  A final poll on the proposal to take to the ISSA Board resulted in:

ISSA is currently refining next steps including how best to cover the topics - a combination of new WGs and/or existing ones, and the appropriate timelines.

Additional details can be found at ISSA Symposium

WORKING GROUP CHAIR FORUM

On 18 May, ACSA hosted a round table discussion for all working group chairs and sponsors, and with the full Board in attendance.

The forum allowed sharing of best practices as well allowing cross-fertilisation of ideas across the groups.  Some of the key take-aways included:

• Submission writing essentials – a guide for better submission writing (including the key points of know your audience and clarity of key ask).
• The importance of a pragmatic focus in driving systemic efficiency and implementable outcomes.
• The link between Sponsors and Chairs as a way of staying true to strategy and focus.
• Further practical tips and networking opportunities via future regular forums.

IN FOCUS

The re-boot of the Operations Working Group will take place on 31 May 2021.  The shadow of Pandemic disruption has fallen heavily on operating team around the globe, this coupled with local industry change meant that the normal rhythm of this important working group was interrupted during the past 18 months. 

For this In Focus feature we highlight the thoughts of new Working Group chair Sam Meares.  Our Members and Services Working Group Chair Nichole Alexander recently caught up with Sam.

Welcome back to ACSA Sam, the Operations WG is in solid hands with you taking the reins at such an important time. 

Can you tell us a little about the work of Operations WG?

ACSA has had an operations focus since inception as the key to improved efficiency for the mutual benefit of its member organisations, the broader industry as a whole and most importantly our underlying clients being domestic and international institutional investors. 

The current working group was formed in 2018 through the amalgamation of the then long standing Custody Operations and the Corporate Actions working groups, in part due to convergent focus on numerous issues. Most relevant at the time, and still today, being the ASX CHESS replacement project. The Working Group is concerned with operations, market initiatives and technology changes that impact custodians and their clients. Its’ collective voice provides access to, and weight in engagement with, market infrastructure providers, regulators and government authorities.  The group has been responsible for consultation outcomes and submissions that have shaped our market.

What are the priorities for the Operations WG in the near term, and how do you see these evolving over the next 12-24 months? 

The multiple components of the ASX CHESS replacement project remain an integral part of the agenda in the foreseeable future as the custodian and broader financial markets industry in Australia seeks to navigate a generational change and appropriately leverage the opportunities that will present themselves in the new market infrastructure, both for day one and beyond. Given the universal challenges all participants have faced through the COVID period and the deferred implementation timeline announced by the ASX, member organisations have been challenged to progress their own and the collective agenda in recent times so this will require refocus and renewed energy and drive.

Outside of CHESS replacement the group will continue to focus on matters of inefficiency in the market that member organisations raise through best practice in other global markets, other participant groups domestically and maximizing the value of external change factors. We will also look to explore the transformation of industry operating models deployed in our COVID response and challenge legacy thinking around how industry participants may interact in the future.

Tell us a little about your career in custody? 

My career has been inherently linked to the domestic Australian Custody market for over 20 years, initially with Westpac Custodian Nominees but more recently with the sub-custodian businesses of international firms in HSBC and BNP Paribas. Through that time I have been involved in client facing and product roles but have always had a bias for the technical demands of the operational components of these businesses. More recently I have had opportunities in applying these skills in the running of offshore service centre locations and being the operational lead for strategic investment in global custody infrastructure, allowing me to accumulate international perspective on buy and sell side custody businesses.

I was fortunate early in my career to become involved in both the Custody Operations and the Corporate Actions working groups. They both provided me with an opportunity to expand my knowledge beyond the sometimes repetitive nature of a structured processing environment and understand the opportunities that were available to my business and the broader industry if the environment was changed for mutual benefit. My early engagements ranged from lobbying and engaging with global Securities Market Practise Group (SMPG) to deploy unique SWIFT identifiers in the Australia market to support primary and secondary ETF markets, to the automation of Unlisted Unit Trust / Mutual fund orders through the adoption of ISO20022 standards and the creation of standards for Corporate Actions announcements in the Australian market.

I have only recently returned to the Australian market after having more exposure to other global locations. My motivation to return to the ACSA fold was driven by my desire to be in a position to be at the forefront of the local market changes and apply some of my overseas learnings in what is a truly unique time in the evolution of the local market. 

Why should people get involved with an ACSA working group? 

As I have reflected on my own experience above, being actively involved in an ACSA working group provides a real opportunity to expose yourself directly to changes that are relevant to the industry, your firm and your own career progression. The forums are designed to allow you to have your say in a collaborative environment and contribute in a number of different capacities to meaningful industry outcomes.

It also provides an instant exposure to a broad and strong network of industry participants, I am pleased to see on my return a mixture of some old faces that I worked with in my previous engagement with the Association and some newer faces who provide fresh perspective and challenges. We are always looking for more of these so welcome anyone thinking of being involved!