Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
The group is planning to open an office in Seoul this year as well, having expanded bricks-and-mortar to other regional centres such as Mumbai and Shanghai last year. Since Lazaro Compos became SwiftÆs global CEO last year, the organisation has sought to decentralise operations from its headquarters and open doors closer to its users around the world.
It hired Hwang Heetaek from Bloomberg in 2006 in Hong Kong to handle relations with Korean clients. This month it has also hired Brown Lee in Seoul and is now finalising the legal requirements to open the rep office there. Once the office is activated, Hwang will move from Hong Kong to head it up.
He says the new office will serve to both drum up new members among Korean asset managers and securities companies, which are underrepresented compared to Korean banks, as well as to promote infrastructural efficiency.
Swift wanted to open the office now to take advantage of the Capital Markets Consolidation Act, which becomes effective February 2009, and will allow asset managers and broker/dealers to engage in investment banking-type activities. ôMany domestic players will need the Swift infrastructure to deal in cross-border transactions and payments,ö Hwang notes.
Swift is also in discussions with the KSD to clear and settle fundsÆ underlying securities for international investments. The KSDÆs FundNet platform is fully automated for domestic mutual funds, but lack such a capability or network for overseas. In particularly, Swift is keen to help connect Korean investment managers to global custodians and trustees for post-trade settlement communications.
Thirdly, Swift has identified funds distribution as a major growth area in the Asia-Pacific.
For example, in 2003, CitibankÆs Singapore office began to automate orders for mutual funds sold across its regional platform by using Swift message protocols, in order to handle the growing volume of business and to give it a competitive edge and cost savings.
In Australia, Swift messages are used for domestic fund transactions. In other parts of the region, such as in Hong Kong, Singapore and Taiwan, they are used for cross-border sales, particularly for Luxembourg-domiciled funds.
Ian Johnston, Asia-Pacific CEO, says the talks in Korea would also apply just to cross-border fund sales. The KSD already has a highly efficient, centralised electronic platform for processing domestic fund sales and settlements.
ôWeÆre talking with countries in the region that have a centralised domestic infrastructure for fund distributions about how to connect overseas,ö he says. ôKorea is a good example.ö At present, when local banks or securities firms sell a cross-border investment product, it is usually ordered and settled by fax or some other laborious method.
HSBC Fund ServicesÆ Korea business has just signed on to automate fund sales using Swift messaging. Swift has also inaugurated a working group including the likes of HSBC and other global and local banksÆ trustee departments to examine ways to move local asset managers from faxes to electronic settlements and payments for mutual funds.
Korea is the fifth-largest Asia-Pacific market in terms of number of transactions for Swift, following Japan, Australia, Hong Kong and Singapore, of which fund sales constitute one line of business. Nearly 1,500 financial institutions from the region are now using Swift messages. It is also actively building volumes in trade payments, cash management after-payments and corporate treasury trade matching.
Regulators keep their eyes open on tightening insurance industry by introducing more detailed risk management requirements, which could bring pressure on smaller players.
China and India are more obvious choices for AustralianSuper to consider in Asia Pacific, but the super fund currently lacks the expertise and prefers to stick to the US and Europe.
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Investors are increasingly turning to private companies and private debt in their hunt for ESG alpha, but the age-old problem of transparency and due diligence remains