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November 19, 2009

Euroclear, EMXCo Unveil Automated Routing, Settlement Service For UK Funds

Eliminates manual intervention and offers protection from counterparty and settlement risks

By CBR Staff Writer

EMXCo and Euroclear have launched a fully electronic and integrated order routing and settlement solution for UK fund transactions. According to the HM Treasury, the UK funds industry could save GBP70- 290m per year by embracing processing automation in place of paper-based fund unit settlement.

The firms claimed that in addition to cost savings, the new service delivers other important benefits such as decreased settlement risk and fewer errors in processing and transaction reporting, as manual intervention is eliminated. Up-to-date fund balances based on processed transactions at Euroclear UK & Ireland which are reconciled with the fund register on a daily basis, in full compliance with FSA rules.

Settlement within four business days, as compared with up to ten days today. Electronic exchange of key transaction information among all relevant fund market participants, including fund managers, promoters, distributors, third party administrators.

Back-office efficiency gains by settling UK fund transactions with a proven provider of primary and secondary trade services, where market participants already settle their UK equity and bond transactions. Use of highly resilient infrastructure, with strong user/owner governance and a solid track record of operational stability.

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Yannic Weber, CEO of EMXCo and Euroclear UK & Ireland, said: Having worked closely with the 26 members of the UK Fund Liaison Group, representing all segments of the fund industry, we are confident that the end-to-end fund-processing service we are providing fully meets market requirements.

We are eager to share with them the advantages of substantial operational cost savings and protection from counterparty and settlement risks, in accordance with the IMA recommendations for greater use of electronic funds processing.

Peter Fleming, head of UK investment administration at Skandia said: This fully automated processing solution is great news for the industry and Skandia supports it. EMXCo and Euroclear UK and Ireland are in an ideal position to offer this service which we expect will remove operational risk and improve efficiency.

Initially, funds domiciled in the UK, Channel Islands and Isle of Man are eligible for this service. The coverage of funds is intended to be expanded in the future.

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