Efficiency requires common european standards in fund processing

Single registration could save time and money for fund managers wanting to distribute funds across borders. In the same way, achieving common European standards in fund processing will bring further efficiency to the industry.

With this in mind, Fefsi last year established the Fund Processing Standarisation Group (FPGS) to develop recommendations for improving efficiency in the cross-border processing of fund units and shares. In February, two reports were released from the group.

The first focuses on order and settlement procedures and calls for the improvement of electronic communication between firms using messages constructed under international open market standards – ISO 20022 – referring to universally recognised unique identifiers for funds and those involved in back-office tasks.

“Back-office procedures are very complicated and inefficient and we feel it is necessary to change the operating model of the industry to keep its competitiveness in the future,” says Bernard Delbecque, senior economic adviser at Efama, formerly Fefsi, who argues something must be done now “taking into account industry figures for 2004 and the opinion of consultants who believe that transaction volumes will double in two to three years”.

He adds: “If we want to support the move towards open architecture there is a need to facilitate the purchase of funds from different countries across Europe.” Mr Delbecque believes in the cooperation of all industry players. “Not just fund providers but also distributors, banks, custodian and institutions such as Euroclear and Clearstream.”

The second report by the FPGS calls for the adoption of a pan-European fund processing passport. “This would be a document that each fund promoter would have to prepare summarising the main characteristics of each fund that are needed in order to ensure proper fund processing and to help all players working in the back office. There is already a single prospectus for investors and this would be the single prospectus or passport for those involved in fund processing.”

The next step for the group is the endorsement and implementation of these recommendations. “The view taken by our members is that Efama should focus on standarisation. We are market neutral and are not taking positions in favour or this or that infrastructure. The goal of this group is common standards.”

Delbecque: ‘if we want to support the move towards open architecture there is a need to facilitate the purchase of funds from different countries across Europe’