Schroder Investment Management has outsourced its registration business (also known as transfer agency, or TA) in Singapore to Dexia Fund Services for 42 local unit trusts with 40,000 investor accounts and 27 offshore funds. A local registrar, Barbinder, lost the business.

Last year Singapore's authorities allowed global fund managers to register offshore funds to access Central Provident Fund account monies, prompting Schroders and other firms to begin consolidating their existing onshore product line into a single range.

"We're seeing some local products disappear," says Scott McLaren, deputy managing director at Dexia in Singapore. "We support Schroders in Luxembourg so this was a natural move for them. They can use the same transfer agency platform, so they can consolidate their distribution platform globally."

Schroders handles TA work in Hong Kong itself, using systems from vendor DST. McLaren says he is unaware if Schroders will one day outsource the Hong Kong work as well, and Schroders officials declined to comment.

TA is the gritty side of a suite of back-office functions alongside custody, trust and fund administration, all of which Dexia offers. It claims 35% market share of Singapore domestic funds assets under trust against its main rival HSBC/Bank of Bermuda, which has a fund administration joint venture in Singapore with UOB called Asia Funds Services. Ironically Dexia is now HSBC Asset Management's trustee in Singapore, which it was forced to outsource to avoid conflicts of interest when HSBC acquired Bank of Bermuda.

Dexia now claims to be the transfer agent for the two largest onshore fund managers, DBS Asset Management and Schroders. It also counts Allianz Dresdner Asset Management, Deutsche Asset Management and ING Investment Management as clients in the Lion City. Dexia parent Dexia-BIL has over 50% of the Luxembourg market for TA and it leverages that dominance to win customers in Asia, says McLaren, as the funds are all domiciled in Europe but require local processing.

He believes that gradually there will be more demand from global players as they evolve from expense master-feeder structures in Singapore and directly register their European-based fund lines. "But not all global players will collapse everything into one product line," he says. "For example, they offer guaranteed funds that can last seven, 10 years." But the feeder structure is expensive and doubles managers' costs for things like legal fees and NAV calculations.

While the TA business may grow, the fund administration pie will remain limited, because that work for global funds is already done out of Europe. As for the big domestic fund managers, the other two giants, OCBC Asset Management and UOB Asset Management, do TA in-house. This could change as industry standards become more complex and demanding, which would force manual processing to become automated. But as long as back offices can be outsourced to cheap labour in places like Chennai, increased demands on back offices for Asia-based fund managers may still be handled manually.