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Managed Funds
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Managed Funds

MANAGED FUNDS

Managed Funds tackles inefficiencies in the managed funds sector.

Focus issues evolve as new market challenges emerge, or opportunities are triggered by new opportunities for industry co-operation, new technology and/or utility solutions.

Progress has been made in many key areas, including automation of transaction flows and new fund tax data standards. The product market place continues to innovate and new fund types and channels can pose new challenges.

Operationally, unlisted managed funds remain a relatively inefficient investment type when compared to traded markets. Traded markets offer regulated and consistent listing rules, golden source data and standardised settlement conventions – compared to the fragmented (issuer specific) nature of the unlisted managed funds.

 

Current taskforce focus includes:

Background

ACSA hosted forums on unlisted managed funds efficiency in Sydney and Melbourne in late November 2018.

The industry forums provided a range of views on systemic inefficiency, risks and opportunities to do things better. The content largely mirrored the problem statement identified in the pre-circulated Industry Discussion Paper, but with some interesting additional insight.

Co-operation at an industry level is independent of competitive market forces, the role of solution providers and individual house innovation, but helpful in accelerating change and lowering implementation costs.

A number of key themes emerge from these forums – including on-boarding, fund data, corporate actions and reporting, orders and transfer and additional standards to drive common practice.

Work streams were formed in 2019 to progress these streams, including specific use cases and potential pilots.

 

Executive Sponsor

Ben Sung - Clearstream

Chair

Manoj Deshpande - Clearstream

 

“ACSA is pivotal in contributing with Regulatory bodies in effecting changes for the benefit of investors. I have had the opportunity to contribute to working groups such as Funds 2.0 and the Data Task Force and together with other industry participants strongly support ACSA in its undertakings.”
Shirley Bowles
HSBC
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On-boarding

AML/KYC process efficiency, potential to harmonise risk interpretation while also balancing fraud prevention and cyber security risks. Improved investor experience across fund issuers.

ACSA hosted industry workshops bringing together key service chain actors to refine problem statements and better understand constraints. Ideas for a centralised utility and multi-party reliance were canvassed, but ultimately limited by regulation.

A significant benefit of the work stream was that it created a forum for digital on-boarding solution providers to better understand the problem space, and to be introduced to issuers and registries.

Fund Data

Regulatory, Tax, Reporting, Fund Static Data – opportunities to streamline publication and collection for all stakeholders, improve the integrity and consistency of data, encourage efficiency through a “golden source” approach. Opportunities for standard formats and interpretations to improve the investor experience.

A specific use case on the complex field of fund tax data was adopted. A new standard was developed and endorsed by ACSA in June 2021.

Transactions

Orders and Transfers. One key historic improvement in managed fund order processing was the elimination of the fax. An estimated 2 million fax instructions were used across the Australian market in 2008. Virtually all business to business application/redemption order flows are now done electronically.

Focus for this stream extended to eliminating residual manual processes, including streamlined cash processing, automation of in-specie transfers and improvements to the reconciliation process between unit registries and custodians.

Current Approach

The formal sub-group streams were replaced with a rolling taskforce approach in early 2020. This allows interested parties (both ACSA Members and broader industry stakeholders) to focus on specific current issues.

As outlined above, current taskforce focus includes:

  • Dual access funds
  • Reconciliations
  • Fund Tax Data Standard

ACSA will continue to keep members informed of emerging trends, new initiatives and utility solutions.

 

 

DUAL ACCESS FUNDS

Dual access funds are managed funds that trade on regulated markets (ASX, Chi-X) and settle on CHESS, but that are also available via bilateral orders for applications and redemptions to the issuer’s registry (like a traditional unlisted managed fund).

Although the same underlying fund, each access method entails different custody and settlement market practice. Rising market interest has driven the need for discussion in the interests of efficiency and common practice.

The industry group that first met in Q2 of 2021 to discuss. This group has subsequently expanded with participation from additional registries, market participants, custodians and administrators.

This cross-industry group met on 2 September 2021 to further understand the opportunities for positive change. Key points from this meeting are summarised in the table below.