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Cross border settlement costs coming down

After my recent blog and article commenting on the excellent progress at EMXCo in the drive to STP in the unitised funds space, the latest news that Euroclear's FundSettle has built an automated link to the EMXCo message system has to be a whopping leap forward for cross border STP.

Of course this is an in-house Euroclear initiative but the result has terrific benefits for the unitised funds space. The cost savings for the industry are reported to be lowered from EUR 25 to Euro 7 and at the same time eliminating the costs of fax.

Some vendors and consultants have been critical concerning EMXCo's use of their own proprietary FIX based messages; causing disappointment by the buy side of the market with too much benefit is going to the sell side. However, this development shows that the Euroclear strategy through EMXCo and FundSettle are moving fast in the right direction.     

It has been reported that this link between FundSettle and the EMXCo message system will benefit 2,500 UK funds but an impressive 37,000 worldwide. This is going to elevate EMXCo messages further and push them as the prime message standard for investment funds.

With improved confirmations and faster turn rounds emanating from this development the benefits should be felt through the order/execution and settlement chain and hopefully percolate to the retailers.

Critics of the EMXCo messaging solution will say that there is an imbalance of costs and benefits between the distributers and those retailing the product. However, this link moves the day closer when the retailers can gain equal returns.

I anticipate further good news to come out of EMXCo in the near future as they tackle further the inefficiencies and costs in the funds space. In the meantime we can all rejoice that at least one of the market structure organisations is proving so effective and leading the way.          


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Gary Wright

Gary Wright


BISS Research

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19 Sep 2007



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