Deep divisons between the asset management community and broker/dealers and custodians on expectations for straight-through processing have emerged at the Swift international banking and operations seminar in Geneva.
At a session dedicated to the securities industry at the interbank payments show, Donald Brydon, chairman, AXA Investment Managers, told a packed house of bankers and brokers: “At the risk of being unpopular, I would argue that asset managers are not part of your industry. As asset managers, we are part of our own industry and we are the customers of your industry.”
In the absence of a clearly-articulated business case, asset managers have little incentive to participate in industry initiatives to improve straight-through processing said Brydon. “If you want us as your clients to pay for something, make us a business proposal and we’ll consider it,” he added.
He continued by questioning Swift’s commitment to the asset management community: “The first visit I had from Swift was a few months ago and I’ve been in the industry for 30 years...Ten years ago you didn’t even want to talk to us.”
Later in the day, at a global custodian roundtable hosted by the Omgeo virtual matching utility, John Kinnamon, sales director at Citibank global securities services intermediaries backed up Brydon’s complaints. Referring to the difficulties of convincing investment managers of the benefits of automation, he noted: “The problem is that they weren’t invited to participate in the early stages of the STP effort. We left them out of the dialogue for years.”
Other custodians on the platform poured cold water on the introduction of the much-feted ISO 15022 securities message standard and prospects for improving straight-through processing rates. Paul Stillabower of RBC global services talked of the problems caused by the lack of a global standard for settlement. “Even things like ISO allow different interpretations to come into the process,” he said.
Frederic Perard head of product development and operations at BNP Paribas agreed, at the same time reinforcing the splits in the community: “There are still to many interpretations on how to use ISO 15022, especially from asset managers.”