Calastone Limited, the independent cross-border transaction network for the mutual fund industry, today announced its application to become a Crest central sponsor, paving the way for automated settlement for mutual fund transactions.
Calastone provides an electronic communication and message translation service for all participants including fund providers, distributors and transfer agents. Calastone presents, for the first time, the opportunity for the whole of the mutual fund market to become fully electronic, without the need for membership fees or technical investment.
Calastone Transaction Network (CTN) participants are able to send or receive instructions using their preferred means of communication in any format, such as flat files, FIX, SWIFT, ISO15022, ISO2022, XML or proprietary formats. This enables all participants to enjoy straight through processing irrespective of size or technology capabilities. Through Calastone's execution management system, participants can now track their trades and manage exceptions on a real-time basis throughout the transaction lifecycle. This helps firms reduce not only their costs, but also operating risks.
Commenting on the application, Kevin Lee, Managing Director of Calastone said, "Our service marks a milestone for the mutual fund industry. For the first time, the entire mutual fund industry has equal and low cost access to the benefits of straight through processing. By applying to become a CREST central sponsor, we will be able to add the automation of transaction settlement via our SWIFT capabilities. We believe that the mutual fund industry will benefit from an independent, open access, low cost alternative in the cash and cash plus arena."
Alain Raes, Chief Executive of SWIFT EMEA, stated, "Automation in funds order processing and settlement is key to enhancing value for the UK fund industry. We look forward to helping Calastone, Euroclear and our joint communities drive efficiencies and standardisation across their businesses over SWIFT."
Campbell Fleming, Managing Director of JPMorgan Asset Management UK said, "We are delighted to see, and work with, another entrant to the UK marketplace. The UK lags continental markets and practices, so we especially welcome anyone that is facilitating more efficient, quicker and cheaper ways to invest in UK mutual funds and make business simpler and safer for all concerned. As an early adopter of the IMA proposals, and its efforts in this area, we are keen to engage with quality providers to improve our services and standards. This is doubly important at a time when our industry is facing huge competitive pressures in difficult market conditions so it is good to see more competition and choice, which in the long run will improve what is being provided to our clients and the investing public."
Stephen Mohan, Managing Director of Cofunds added, "As an early adopter of the Calastone Transaction Network service, we have already realized significant cost savings and operational efficiencies. We fully support Calastone's efforts to help the mutual fund industry move to open standards in settlement as these will reduce costs and improve efficiencies for small and large players. We expect Calastone to be an element of our very successful asset servicing business for wealth managers."
Jonathan Willis, Operations Director of IFDS added, "Calastone is, with the addition of the Crest settlement element, able to provide a fully end-to-end STP service to the whole of the mutual fund market. This is in line with the industry goals for automation of trading and settlement, as published by the IMA, and should lower cost and increase operational efficiency. The Calastone model of being able to take a range of message standards is also in line with the industry goals of interoperability and should encourage the use of STP from areas of the market where the present costs of entry have been historically deemed too high. We look forward to seeing positive adoption from distributors and fund managers alike."