Growing demand from Asian asset managers to invest across borders has prompted BNP Paribas Securities Services to launch a dealing outsourcing service.
The bank, seeking to act as the centralised dealing agent offering managers access to offshore brokers and trading venues, has just implemented outsourcing for its first client – BNP Investment Partners, the group's asset management arm – after launching the service in Asia last year.
Outside Asia, it has been offering dealing outsourcing in Europe for over a decade as European asset managers have been investing in multiple markets across the continent for a long time.
Now in Asia, fund managers are increasingly investing outside their home turf. Bruno Campenon, head of BNPP Securities Services in Hong Kong, cites increasing interest from Hong Kong-based Chinese fund managers looking for investment opportunities overseas.
In offering dealing outsourcing, BNPP Securities Services is also attempting to bundle other mid- and back-office outsourcing services such as trade matching, settlement, reconciliation, fund accounting, global custody and transfer agency as a package.
Francis So, head of dealing for Asia at BNPP Securities Services, notes that dealing outsourcing is relatively new to Asian asset managers, who have traditionally linked outsourcing with mid- and back-office functions.
In fact, several managers told AsianInvestor that dealing and execution is an important function they need to have control over and keep in-house to ensure investment performance, or preserve confidentiality with regards to their trading strategies.
“[But while] many investment managers have their own dealing set up in-house already, for these fund managers the question that would prompt them to consider outsourcing is whether they are willing to move away from a fixed-cost model for their trading desk to a variable cost model, where they only pay for the dealing service when they trade,” says So.
BNPP Securities Services are not the only custodians offering such bundled outsourcing services. Citi has also been active in this area, branding such service as “E2C”, or execution-to-custody.
The US bank, which operates as sub-custodian across 61 countries, has been the first-mover in offering such bundled outsourcing to Asian managers. Citi claims that it has currently implemented, or is in the process of implementing, “E2C’ outsourcing for four Asian managers.
A feature story about outsourcing trading functions to custody will be published in the June issue of AsianInvestor.