UK asset manager Barclays Global Investors (BGI) has become the fourth firm to go live on Swift's automated managed funds processing solution in Australia, with the financial messaging network provider anticipating more new clients in the coming months.
The solution automates and standardises fund processes previously conducted by fax, including applications, redemption, confirmation and reporting. It can process standard managed funds, including all BGI's managed, venture capital and private equity funds, but providers have yet to use it for the latter two. Hedge funds are handled by another Swift service, due to their complexity.
BGI joins HSBC's sub-custody and clearing arm, RBC Dexia Investor Services and Vanguard Investments Australia, which went live on the Swift service in April and are already seeing tangible results. HSBC reports that it has been able to replace around 100 faxes a day, and Tim Worner, a consultant at Australia's Morse Consulting, estimates the savings could be as much as A$40 ($37) per transaction.
"We are now seeing the significant benefits of automation, with further reduction in processing risks, allowing us to enhance services to our clients," says Peter Snodgrass, HSBC's head of securities services in Australia.
Tim Hamer, Swift's securities commercial manager for funds in Australia and New Zealand, says he hopes to have one more provider live on the solution by the end of the year and another four in 2010. "The more people that adopt [this solution], the more efficiencies and cost savings it will produce for the industry," he says. "Now that we have four firms over the fence, adoption will move faster."
Reconciliation, corporate actions and distribution are the next likely fund processes Swift plans to automate in Australia, says Hamer, adding: "Right now we're trying to eliminate the high-volume processes before addressing other areas."
"It is not a matter of if, it is more about when standard funds transaction processing will be introduced," he adds.
Swift's fund processing solution went live in Australia's wholesale fund community in April, the result of a two-year collaborative project among 14 fund managers, registry and service providers, aimed at reducing costs and risk and improving distribution practices and efficiency in the industry. Australia is the first market to use the system for domestic transactions, although it is used elsewhere for cross-border trades.
Participants in the project include ANZ Custodian Services, Ausmaq, BGI, BNP Paribas Securities Services, BT Financial Group, Colonial First State, Fortis Investment Management, HSBC Securities Services, JP Morgan Worldwide Securities Services, Macquarie Bank, National Custodian Services, RBC Dexia Investor Services, State Street Investor Services and Vanguard Investments Australia.
The development of Swift's funds-automation solution was driven originally by the desire of global fund managers selling Ucits and Sicavs into Asia to automate their transaction processes. Since it first became available in 2005, the fund automation solution has grown to include 68 message types and market participants in Asia, Europe and North America.
Other collaborative initiatives at Swift (the Society for Worldwide Interbank Financial Telecommunication) include the development of its Accord for Securities solution with the prime broking community and its Innotribe stream at Sibos.