Managed Funds to be Electronically Traded in Australia – Calastone
Calastone, the independent transaction network for the managed funds industry, announced January 18 the company had begun processing electronic trades of managed funds for Australian clients in January 2012.
Calastone, the established service provider in the UK and Europe, provides a unique messaging hub for the managed funds industry enabling organisations to electronically connect to each other irrespective of the chosen technology or messaging protocol in use.
Joint founder of Calastone, Kevin Lee, said the firm’s offering was revolutionising the way managed funds are traded in Australia.
Calastone’s service enables all fund participants, platforms, custodians and fund managers to significantly reduce costs and risk, while preserving their freedom to engage with their retail clients and each other as they choose.
Mr Lee, who relocated to Sydney from London in July last year, said Calastone had been received with enthusiasm by local firms.
“The industry’s appetite for the use of Calastone’s service has grown rapidly due to a number of beneficial factors, including time-to-market and outstanding levels of production service. Almost every provider in the UK and Europe uses Calastone, and we expect the Australian market will embrace this new technology together with the savings and transparency it brings.”
Early Australian adopter, RBC Dexia, has been utilising Calastone technology around the globe for many years.
“We have been at the forefront of the drive for automation in the Australian fund market in recent years and what Calastone provides is a substantial initiative, leading the industry towards that goal. It is an easy way to increase efficiency and dramatically reduce risk – benefits which will be passed on to our clients and ultimately the end investor” said Shannon Sweeney, Product Manager for Fund Administration.
Brett Jollie, Managing Director of Aberdeen Asset Management, said “We use Calastone in many parts of the world, it’s a specialist service designed for the primary managed fund market and it works. We are pleased our Australian business and our clients now have the opportunity to experience its benefits.”
Another of Australia’s top three wrap platform providers is also participating on Calastone under a pilot arrangement.
“Participants have enjoyed a reduction in cycle time by around a third as a direct result of this mechanism,” Mr Lee said. “Trades are confirmed between counterparties within 5-10 minutes, as opposed to 1-3 days using the current fax-based system.”
Calastone offers a full funds service from account opening through to settlement. The firm is independent and provides it services via a fee-for-service model that is inherently free of conflict.
“Our service is a business to business service designed for the funds market, which is a primary market, meaning units can only be bought and sold through the issuer,” Mr Lee said. “This is very different from a secondary market, like equities. With Calastone, there is no need for fund providers to maintain a register of holdings on our system. Our experience internationally shows that replicating the register – in the way another proposed managed fund trading system is requiring for the Australian market – is inefficient, and adds layers of extra costs and risks that don’t need to be there.”