AsianInvestor’s asset service award winners, explained
Every year, AsianInvestor's editorial team conduct an intensive analysis of the region's leading asset management service providers, fund products, and asset managers, to ascertain the top organisations of the previous 12 months.
The winners of these categories must combine a mixture of business performance, growth and progress, on both quantitative and qualitative criteria. Below, we detail why we chose this year's winners of our asset services category.
ASSET SERVICE AWARDS
BEST LAW FIRM, ASSET MANAGEMENT
Relatively rarely for law firms in the asset management services space, Sidley Austin has a notable presence in both Hong Kong and Singapore, in addition to lawyers in Japan and Australia.
The organisation has been adding clients fast over the past year, including a mixture of Chinese asset owners, international private equity businesses and a sovereign wealth fund; all-told it now represents over 500 fund-related entities in the region.
While other law firms have a stronger presence in products like exchange-traded funds (ETFs), Sidley Austin has a strong business for alternatives funds such as private equity and hedge funds. It has also gained some sizeable business advisory work, including being appointed with consultancy EY to work with a regional central bank on changing local rules to promote new forms of local fund structures.
Meanwhile in Singapore Sidley Austin helped a number of associations draft responses to queries to the Monetary Authority of Singapore on the introduction of the new S-VACC fund vehicle in the city state.
Other key successes included advising China Orient Asset Management on China’s first dual-currency real estate fund focused on the US, which utilises a Cayman Island’s master fund, and advising Asia Investment Capital on establishing Hong Kong’s first locally domiciled private equity fund under its new rules. At a time when the number of players and investors into alternative funds is growing, Sidley Austin is enjoying a strong spate of business flow.
BEST COMPLIANCE SERVICES PROVIDER
Now 15 years old, ComplianceAsia has built its business during a time of enormous change in Asia. Myriad global and regional regulatory changes over transparency have presented challenges for many investors, and offered a steady stream of business for the company.
Two-thirds of ComplianceAsia’s business is for fund organisations or vehicles, particularly for Chinese asset managers seeking to either set up or remain compliant with Hong Kong’s financial and regulatory demands. They employ the organisation to help internationalise and offer enough due diligence to appeal to international investors.
In addition ComplianceAsia works with dozens of clients on corporate licence applications, as well as working with well over 100 clients that conduct regular and ongoing compliance programmes. Its Singapore business is smaller, but there it has licencing clients in the low double digits and over 50 clients engaging it in compliance updates.
A big focus for ComplianceAsia has been building in China. The firm spent a long time educating the Shanghai municipal financial services department on what its role is, and that allowed it to establish an office there and then offer services to international asset managers.
ComplianceAsia has also built a cloud-based online information system, to help answer the questions of its clients, while it partnered up with technology firms to improve its client onboarding system and create a shareholder disclosure tracking system. It has also deepened its research capabilities to offer a bespoke service for clients.
BEST AUDITOR (FUNDS AND TAX)
As one of the world’s principle consultancies and accounting firms, EY has long boasted a strong regional presence.
It has over 3,200 professionals in its wealth and asset management business in Asia Pacific, which together have helped it enjoy a substantial market share and seen its regional revenues rise by over 20% during 2017, including a rise of over 50% for its advisory work. It has won an array of business from new clients, including a broad variety of hedge funds and private equity funds.
EY now audits around a third of the top asset managers by size in the region, and a big chunk of Australia’s retail and wholesale funds. It’s also built its profile among China’s mutual fund managers; EY audits over half of the top 20 mutual fund managers by AUM.
The firm participates in a broad variety of industry groups and regularly publishes research. One of the key advisory roles it played in 2017 was being appointed by an Asian central bank to help expand its appeal for new types of fund vehicles.
It was also engaged by the Hong Kong Monetary Authority to input tax details for marketing material promoting Hong Kong ETFs across the region, won IFRS 9 implementation and valuation modelling at two Chinese asset managers, and worked with a large Asian asset manager over modernising its operating model, including picking and implementing new technology solutions.
BEST INDEX PROVIDER, GLOBAL
As one of the big three global index providers, FTSE Russell has increasingly sought to build its presence in Asia Pacific, in particular to take advantage of the region’s pool of assets and China market potential.
The index provider has been adding to its capabilities to do this. This included its takeover of the Yield Book and Citi’s Fixed Income Indices, to bolster its fixed income data and analytics, which also gave it new multi-asset index options.
That helped it get some notable new mandates, including being picked as index provider for BlackRock’s iShares Core 7-10 Year US Treasury bond ETF, which listed on the Tokyo Stock Exchange in September. FTSE Russell has had other notable success in the environmental, social and governance (ESG) space too; Japan’s Government Pension Investment Fund picked the UK-headquartered company to provide its FTSE Blossom Japan index as a core ESG benchmark in July 2017. This was followed by Daiwa Asset Management and Asset Management One, which listed ETFs based on the index.
FTSE Russell also made strides for ESG coverage in Taiwan, partnering with Taiwan Index Plus Corp. to develop the FTSE4Good TIP Taiwan ESG index. Taiwan’s Bureau of Labor Funds picked the index for its new $1.4 billion five-year passive domestic investing mandate.
Other new index successes in the region include a FTSE Bursa Malaysia MidS Cap Index and a FTSE ST Consumer Goods & Services Index in Singapore.
BEST GLOBAL CUSTODIAN FOR MUTUAL FUNDS
HSBC Securities Services
As one of Asia’s leading commercial, retail and custodian banks, HSBC has long had a deep level of penetration in 17 regional markets. This level of penetration has increasingly helped it act as a custodian for the region’s growing mutual fund industry.
During 2017 the custodian arm of the bank enjoyed a good year, particularly when it came to supporting the expanding business of foreign investment flows into China’s capital markets. HSBC Securities Services (HSS) built a market share of over one-third the quota of Shanghai and Shenzhen Stock Connect programmes, while raising its market share in both qualified foreign institutional investor (QFII) and renminbi-QFII programmes, the key entrance gateways into China for foreign investors. In the latter it acts as a custodian for over half the market. It was also one of the first custodians to support Bond Connect when it began operating last year; in effect HSS could support transactions from day one.
Added to this, HSS’s Custody plus platform can offer investors and integrated broker and custody platform for China’s onshore A-shares, which is likely to prove increasingly important in the future. And it has built a proxy voting platform based upon distributed ledger technology, and has several other projects in mind using the new tech as well.
Regional funds say HSS offers breadth and depth of service, particularly from Hong Kong, making it a reliable custodian partner.
BEST GLOBAL CUSTODIAN FOR ASSET OWNERS
BNP Paribas Securities Services
While BNP Paribas Securities Services is not the very largest custodian in the world, it has been among the most aggressive in terms of rolling out new products and technology. That has particularly caught the eye of some of Asia’s asset owners.
The France-based custodian can boast of having been picked to support the expansion of most of China’s largest commercial banks as they have internationalised their operations. It was also chosen by the Asia Infrastructure Investment Bank to be its sole custodian after a fiercely competitive bidding process, and was picked by a leading regional life insurer to evaluate its credit risk coverage and liquidity ratios.
The custodian has also been developing risk analytics software to help Chinese clients monitor their exposure to ESG risks, a fast-growing area of interest among asset owners and fund houses alike in the region.
In addition, BNP Paribas Securities Services received two large institutional client mandates from Malaysian asset owners during 2017, and it received a multi-asset servicing mandate from the now-embattled Australian fund manager and asset owner AMP.
BEST BANK FOR CROSS BORDER CUSTODY
BNP Paribas Securities Services
Being part of a bank without a presence in a huge variety of global countries, BNP Paribas Securities Services has focused on building a strong cross-border custody business. While it operates in 27 markets directly, it has a global custody network that covers over 90 markets across the world.
That, combined with its energetic efforts to roll out new technological solutions, have impressed many fund houses. Its assets under custody have risen by well over 20% per annum over the past two years.
The French operator enjoyed several successes in Asia during 2017. It was the first and thus far only custodian to be appointed by Harvest and BEA Union Investment Management when they issued funds via the Hong Kong-Switzerland mutual recognition scheme. They are the only fund houses to have used the system so far.
It also launched triparty collateral service to connect collateral takers and givers, making it the first new entrant into that space in over 15 years.
Plus BNP Paribas Securities Services partnered with Axa Investment Managers to create a next-generation fund distribution platform called Funk Link, which operates using blockchain distributed-ledger technology.
Notably, BNP Paribas Securities Services also created Smart Chaser, a new predictive tool that analyses fund trades and assesses the probability of some trades failing, before taking preventative measures. The system, which began being rolled across its operations last year, could greatly help fund house trading operations reduce their risk when it comes to conducting investments in other markets.
Look out for the asset class award winners soon.
This content originally featured in AsianInvestor's April/May 2018 magazine edition.