Invesco outsources Taiwan fund admin and TA
Deregulation has made it possible for fund managers to outsource non-core activities to third parties.
InvescoÆs Taiwan business is in the final stages of outsourcing fund administration and transfer agency, says Dean Chisholm, Hong Kong-based COO for Asia.
It is handing the work to HSBC, following changes to TaiwanÆs securities law last year that made it possible for fund managers to shed non-core activities.
HSBC has been the first to set up a Chinese-language fund administration platform in Taiwan. Invesco will be its second client, after Prudential Asset Management û but the first for transfer agency (TA).
TA û running the registrar of fund subscribers and redeemers û is hard, nitty-gritty work that fund managers often have to do themselves, if they lack confidence in a third partyÆs ability to get it right. Any error will anger clients or distributors, who will complain to the fund manager; they may not even be aware that the function is handled by another party.
Outsourcing TA is brand new in Taiwan where regulation and market practice have kept it in-house û and where no custodian had the wherewithal to provide the service. HSBC invested in a Chinese-language platform specific for this market, sensing an opportunity to gain enough scale to make the service work for it and for its clients. Signing Invesco appears to have justified the effort.
Outsourcing of fund administration and related functions is becoming more prevalent in several regional markets, including Korea and India, thanks to new regulations that explicitly allow it. For many global fund houses entering these markets, it is a relief to outsource if they can avoid building a local infrastructure. Locally based fund groups, meanwhile, may look to outsource backoffice work as they offer international products to their clients.
ôWiring Asiaö, a payments and securities services supplement to the September edition of AsianInvestor magazine, looks at back- and middle-office outsourcing in detail.
It is handing the work to HSBC, following changes to TaiwanÆs securities law last year that made it possible for fund managers to shed non-core activities.
HSBC has been the first to set up a Chinese-language fund administration platform in Taiwan. Invesco will be its second client, after Prudential Asset Management û but the first for transfer agency (TA).
TA û running the registrar of fund subscribers and redeemers û is hard, nitty-gritty work that fund managers often have to do themselves, if they lack confidence in a third partyÆs ability to get it right. Any error will anger clients or distributors, who will complain to the fund manager; they may not even be aware that the function is handled by another party.
Outsourcing TA is brand new in Taiwan where regulation and market practice have kept it in-house û and where no custodian had the wherewithal to provide the service. HSBC invested in a Chinese-language platform specific for this market, sensing an opportunity to gain enough scale to make the service work for it and for its clients. Signing Invesco appears to have justified the effort.
Outsourcing of fund administration and related functions is becoming more prevalent in several regional markets, including Korea and India, thanks to new regulations that explicitly allow it. For many global fund houses entering these markets, it is a relief to outsource if they can avoid building a local infrastructure. Locally based fund groups, meanwhile, may look to outsource backoffice work as they offer international products to their clients.
ôWiring Asiaö, a payments and securities services supplement to the September edition of AsianInvestor magazine, looks at back- and middle-office outsourcing in detail.
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