IN THIS ISSUE

• Stay safe in current circumstances
• Superannuation – further regulatory change
• Quoted managed funds – potential fund data challenges
• Proxy voting process – additional focus on positive change
• Member executive survey – the results are in
• Working Groups – a round-up of key issues
• Member events – Sydney and Melbourne coming up
• In Focus – new ACSA Chair Sally Surgeon shares her thoughts

STAY SAFE

With further COVID flare-ups at the time of publication in Melbourne and Sydney, we encourage all members to stay safe and follow public health guidelines.

The asset servicing industry proved its value at the height of lockdowns last year and no doubt will again during this and further pandemic disruption.

SUPERANNUATION

ACSA members servicing the superannuation sector will be acutely aware of the regulatory agenda facing funds at present, including the recent passing of the Your Super Your Future legislation. This is in addition to APRA’s Superannuation Data Transformation (SDT) project.

The implementation challenge flowing from these legislative changes is significant for members, individual funds and the system as a whole. Although custodians are not the subject of the regulation, ACSA is reviewing practicalities of implementation, with a focus on the systemic challenges of asset reporting.

A sub-group comprising members of the ACSA Regulatory Working Group and Data Taskforce has reviewed SRS 550.0 - Asset Allocation and SRS 101.0 - Definitions, with focus on the asset class characteristics required for 30 June 2021 reporting. 

The sub-group is refining a process to notify APRA of issues, and to track them through to resolution.

LISTED (AND QUOTED) MANAGED FUNDS

Managed fund issuers continue to innovate, including using modified listing rules to support market quoted and traded funds. For issuers, this can offer efficiency as multiple distribution channels can be utilised without the need to duplicate fund structures for what is the same strategy (and asset pool).  The most common example are Exchange Traded Products (ETPs) that trade and settle on regulated markets (like the ASX and NSX in Australia) or directly with the issuer’s registry via bilateral orders for applications and redemptions.

For asset servicing firms, while the trading/settlement pathway will be determined by client instruction, there can be potential challenges in managing asset identification, fund data, corporate actions and downstream servicing for securities with this double life.

The Transactions sub-group would like to hear from practitioners on this topic. Contact rob@acsa.com.au if you are interested in contributing.

Source : Data sourced from ASX Investment Product Report 31 May 2021 (ASX Fund Segment) see ASX Investment Product Report

PROXY VOTING PROCESS

Through May and June, Treasury consulted with the market on potential reforms to proxy advice with reference to a consultation paper (see Consultation).

Although ACSA did not seek to provide a view on proxy advice reform or the key elements of the consultation paper, we did utilise the consultation to raise current proxy voting procedural issues that reduce certainty, add risk and reduce efficiency.  These procedural issues merit policy review both in their own right and in light of any potential changes in the broader proxy voting landscape.

ACSA provided specific input on:

• Voting Entitlement Record Date
• Proxy Lodgement
  

The introduction of a regulated record date and a clear distinction between subsequent proxy submission date would allow custodians to ensure that the risk of over/under voting is effectively eliminated and will therefore significantly improve the integrity of the proxy voting process. We provided detailed examples and process flows to illustrate current issues.

The certainty created through regulated dates and distinction between them is particularly important when considering the scale of holdings for which custodians facilitate voting, and therefore the possibility of a voting outcome to turn on the basis of this current procedural weakness in our market.

MEMBER EXECUTIVE SURVEY

Engagement with ACSA member C-suite representatives to discuss the Association’s strategy for 2021 was undertaken during April to June. A sincere thanks to the senior member representatives who provided feedback.

ACSA is an industry association and our members are companies (9 Full and 21 Associate).  The survey and interviews were targeted at the senior representative of our member firms, and a selection of potential member firms (including some who have been involved in recent ACSA cross-industry initiatives including Funds 2.0 and the Registries Forum).

Highlights from the on-line survey and one-on-one interviews.

For Associate members, why are you a member of ACSA, what is the value proposition …

“ACSA is the only industry body providing a forum for operational discussion.”

“Custodians are a key target market, and ACSA provides insight on key topics,Challenges.”

“Content from working groups is very useful.”

“Peer networking is valuable.”

Affirmation of the industry’s strategic landscape …

Email (with links for more detail), remains the preferred business method of communication, with direct discussion via working groups and the Board/CEO a close second …

The voluntary nature of working group contribution has its own set of challenges …

An appetite to expand the dialogue through the value chain, balanced against staying true to core mission and focus on what is achievable …

“Might be better to split the settlement and corporate actions within ops WG to get better skills and focus.” 

“We are better off to have a laundry list of items to fix in each area, and have the WG’s or taskforces vote on importance, and chip away systematically.”

"Continued communication via various mediums including Newsletter and LinkedIn.”

“Encourage participation with non-traditional players in the market that could add to the discussion."

"Maintain a narrow focus that provides the best opportunity to providing meaningful results/outcome to industry and members."

"Working groups to have an even representation/stakeholders from all sides."

"Targeting FinTechs of all sizes - start up, mid-sized and more established vendors and giving them a forum to engage at ACSA with members and other market participants to help promote efficiency, innovation and driving down cost for the industry."

“How can we get decision makers to the table to commit to resources to make things happen?”

“Need engagement and commitment from participants. When commit time to workshops, want to see outcomes and results.”

“At times it would be useful for ACSA and other industry bodies such as the FSC to share agendas.”

“Possible cross over industry topics could be interesting.”

WORKING GROUP ROUNDUP

As always, thank you to industry practitioners who provide their time and expertise in support of ACSA’s mission to promote systemic efficiency and best practice for the benefit of members and their clients.

Tax

• Tax controls over third party data
• 2021/22 Federal Budget detailed implementation
• Fund data standards (via dedicated sub-group)
• Burton’s case – treatment of foreign CGT
  

Regulatory

• APRA Superannuation Data Tranformation Project (sub-group comprising representatives from the Regulatory Working Group and Data Taskforce)
• Portfolio Holdings Disclosure
• RG97 Disclosure of fees and costs in PDSs and periodic statements

Operations

• Systemic process improvement - COVID inventory
• CHESS Replacement Project
• Proxy voting proceedural improvements

Members & Services

• Topics and speakers for upcoming member and external events
• Website refresh

MEMBER EVENTS

Updates, guest speaker and networking drinks.  Save the date now!

Full program and registration details will issue shortly. Physical attendance will, of course, be subject to COVID-related public health guidelines and venue host policy.  ACSA is planning for webinar streaming as a contingency.

When: 4:30PM - 7:30pm, 16th September

Where: HSBC, Barangaroo

When: 4:30PM - 7:30pm, 21st October

Where: Northern Trust, Melbourne

IN FOCUS

Sally Surgeon, Head of Client Services, Northern Trust was recently appointed Chair of Australian Custodial Services Association.  She has a long association with ACSA through various working groups and a Director since 2018.

Sally takes the role of Chair at a busy time for our industry.  For this In Focus feature we speak to her priorities for the weeks and months ahead. Our Members and Services Working Group Chair Nichole Alexander recently caught up with Sally. 

Congratulations on your appointment Sally, tell us about your first few weeks as Chair of ACSA

My first 60 days or so as Chair has been very productive. I’ve been lucky to enjoy a seamless handover from previous Chair, David Knights who leaves ACSA in great shape and well positioned for the future. David also remains closely involved as a Board Director, so we can continue to benefit his experience and insights.

Myself, Deputy Chair Jennifer Saunders and the full Board continue to focus on key initiatives, drive work streams forward and continue our advocacy program. This Newsletter highlights much of this good work by the CEO, the working groups and the Board.

The key priorities over the coming weeks include:

• Proxy Voting Consultation
• New data standards
• Refresh of the website to better communicate with members and stakeholders
  

So, a great start to the role and looking forward to making progress over the coming weeks and months.

How does the ACSA Board work?

The Board is a collegiate group of professionals who meet 10-11 times a year to discuss pre-competitive issues and opportunities facing the industry. Representatives of our full members comprise the Board and we work closely with the CEO to drive forward key work streams, set the priorities of Working Groups and facilitate interactions with regulators.

You’ve had a long career in custody, tell us about your experience?

I’ve been fortunate to enjoy a 25-year career in the custody industry, covering all types of roles from custody and operations, project management and client servicing.

I joined Northern Trust in 2005 in London and relocated to Melbourne in 2007 to support our expansion into Australasia. Prior to Northern Trust, I worked at State Street where held a number of positions in operations, project management and consulting services in both their Sydney and London offices.I’m also involved with Women in Super and are engaged in several Northern Trust sponsored internal Business Resource Councils that promote diversity, equity and inclusion.  

Why should people get involved in ACSA?

ACSA is a great place to engage with industry peers and learn about issues impacting our industry. My experience is that I’ve always got more back than what I put in and benefited from the networking, experience and insights from others.

I’d encourage all interested parties to get involved for the following reasons:

• Make a tangible contribution to our industry via a working group.
• Meet new people via networking and events.
• Learn from new perspectives and people.

Get in contact with us if you’d like to learn more!