The European Fund and Asset Management Association (EFAMA), in cooperation with SWIFT, published a new report about the evolution of automation and standardisation rates of fund orders received by transfer agents (TAs) in the cross-border fund distribution centres of Luxembourg and Ireland during the first half of 2017.
Twenty-eight TAs from Ireland and Luxembourg participated in the survey.
The Mid-year report combines the Luxembourg and Ireland data into one single cross-border fund processing report, providing statistical evidence on the advancement of automation and standardisation rates of cross-border fund orders. This report also provides data on standardisation levels of fund orders in Italy.
Report highlights include:
• The total order volume of cross-border funds increased by 13.3% to 19.5 million orders in the first half of 2017, from 17.2 million orders in the second half of 2016.
• The total automation rate of processed orders of cross-border funds reached 86.6% in the second quarter of 2017. The use of ISO messaging standards increased from 53.4% in Q4 2016 to 54.2% in Q2 2017, while the use of manual processes remains stable at 13.4% in Q2 2017.
• The total automation rate of orders processed by Luxembourg TAs reached 84% in the second quarter of 2017 compared to 84.4% in the last quarter of 2016. The ISO automation rate increased from 68.3% in Q4 2016 to 69.4% in Q2 2017, while the use of proprietary ftp decreased to 14.7% in Q2 2017 compared to 16.1% in Q4 2016.
• The total automation rate of orders processed by Irish TAs reached 90.6% in the second quarter of 2017. The use of ISO messaging went up to 30.3% in Q2 2017 compared to 27.8% in Q4 2016.
Peter De Proft, EFAMA Director General, notes: “The report confirms that 2017 will be a record year in terms of net sales of investment funds. The success of both UCITS and AIFs reflects the investors’ interest in these products and the ability of fund managers to improve their competitiveness, notably by eliminating manual processes, which are costly and subject to operational risks. Looking forward, the European Commission’s ambition to tackling remaining barriers to the cross-border distribution of funds will contribute to further support investor demand and make fund processing standardization even more important.”
Tanja Van Sterthem, Funds Market Manager, SWIFT, adds: “The first EFAMA-SWIFT Standardization report was published in 2009. Back then, the funds industry jointly decided to go for an objective to reach 80% automation of cross-border fund orders. Today, with nearly 87% of cross-border funds orders automated, the ongoing progress of Luxembourg and Irish transfer agents proves that these markets are committed and want to become more efficient for the benefit of its customers. Along with the continuous increase of funds order volumes (which increased by 13.3% compared to the second half of 2016), it is also encouraging to note that ISO adoption is the first choice for TAs when setting up new links with new counterparts. This mid-year report confirms the funds community is moving in the right direction and that, more than ever, now is the moment to start focussing on the potential next buckets of automation, such as transfers, account openings and cash forecast messages.”