Navigator, a Singapore-based fund distribution platform for financial advisers (FAs) that is owned by UK insurer Aviva, has reached a point that it feels automation is needed to ease operational and cost pressures.
Peter Gibson, chief operating officer at Navigator, says Singapore's funds industry is gradually reaching a stage whereby fund managers are looking to automate fund orders to remain competitive.
Last week the firm signed a deal to link up with electronic fund order routing network provider Calastone, and it will go live later this year, connecting with its global network of transfer agencies across 17 countries. Some 460 investment schemes from 40 fund managers are sold via the platform in Singapore, including firms such as Aberdeen, Franklin Templeton, Invesco and Schroders.
Rival Singapore FA platforms iFast and Phillip Capital have been using Calastone since November and June 2012, respectively, to automate fund subscription and redemption orders.
Based on data from Calastone, the combined transaction volume from the three platforms is expected to account for over 50% of all fund orders originated from distributors in Singapore, which also include commercial and private banks. Calastone and Navigator both declined to provide figures.
“When we are onboarding new funds or fund managers, we are also prepared to tell them that we would give preference to fund houses that have already automated their orders, over those that are keeping the process manual," says Gibson. "We want to help drive the industry’s move towards electronic platforms."
Through automation, Navigator will be capable of onboarding more funds without adding extra staff to process the expected rise in trading volume, he adds. It currently processes orders by fax, which means major pressure in terms of manpower if there is growth in order traffic, particularly if there are unanticipated spikes in volume.
Aside from making cash investments, Gibson says advisers can also trade unit trusts via Navigator using monies in Singapore's supplementary retirement scheme and Central Provident Fund. Aviva will also use Calastone's messaging system for routing orders related to its investment-linked products.
Navigator says its 40 FA clients will as a result have more time to process their orders to meet fund houses’ cut-off time.
While nearly all the main global fund managers distributing in Singapore already automate their orders, some of the regional and local fund managers still do not see fund automation as their utmost priority, says Sebastien Chaker, head of Asia at Calastone.
“Equally, some of the local bank distributors are taking a wait-and-see approach with fund automation," he adds. "Fund automation usually does not command a high internal priority compared to the automation of [trading] other asset classes such as equities, or changes that must be made for regulatory compliance."
But fund automation brings operational benefits for fund managers, custodians acting as transfer agents, and distributors. The traditional method of faxing these orders for subscription, redemption, confirmation or settlement can cause manual errors.
Other Asian markets, including Korea and Taiwan, have a central fund order routing platform operated by the local central securities depository, but Singapore does not have such infrastructure as yet.