Korea Securities Depository (KSD) announced today that it will launch in June 2012 offshore fund-transaction processing services for Korean distributors and trustees. This will be achieved by linking its domestic FundNet platform, an automated mutual fund platform offering end-to-end coverage from distribution to clearing and settlement, with Euroclear Bank's FundSettle platform.
By linking with FundSettle, Euroclear's automated, multi-currency fund-transaction processing platform, FundNet can become the de facto single platform for all Korean fund market participants to process both their domestic and offshore fund transactions. From June 2012, Korean distributors and trustees will be able to use KSD as the centralised access point to invest in not only numerous domestic funds, but also around 60,000 offshore funds via FundSettle.
Transactions will be processed on a straight-through basis using ISO 20022 messages over the SWIFT network, which means minimal manual intervention and very low risk. Processing and asset servicing costs will also be low due to the economies of scale that KSD, as the central agent, will be able to offer its clients. As a result of this initiative, Korean distributors and trustees can expect a substantial increase in STP rates, from close to zero to more than 90% for offshore fund transactions.
SWIFT contributed to the overall process with its business and standards expertise to coordinate the selection and mapping of ISO 20022 messages amongst relevant stakeholders, namely KSD, Euroclear, fund promoters and transfer agents.
Mr. Hyung-Wook Moon, Managing Director and Head of the Deposit & Settlement Services Division of Korea Securities Depository, said: "KSD is a transfer agent for all Korean-domiciled investment funds, connecting to local fund distributors and trustees. The link with FundSettle will enable Korean distributors and trustees to use KSD as the centralised access point to invest in domestic and offshore funds."
Olivier Grimonpont, General Manager and Regional Head of Euroclear Bank's operations in the Asia-Pacific region, said: "Our growing relationship with Korea Securities Depository reinforces our commitment to the Korean market and to the Asia-Pacific region in general. Euroclear is happy to support KSD and the fund community in Asia with our FundSettle platform, and in adopting and nd implementing ISO 20022."
Ian Johnston, Chief Executive, Asia Pacific, SWIFT said: "SWIFT's aim is to help our community to communicate with each other seamlessly in a standardised and automated way, reducing both cost and risk. We're very pleased that KSD and Euroclear adopted ISO 20022 messages using SWIFT network for this important initiative for the funds market."