Johannesburg
09 September 2013
Reporter: Georgina Lavers
Fragmented South African fund processing to be fixed
Strate and Euroclear have signed a letter of intent to fix the currently fragmented processing of mutual fund transactions in South Africa.

The initiative aims to establish a fully electronic environment for the industry and investors in local funds.

The current administrative processes associated with the South African mutual fund industry are disjointed, with no automated way to link cash payments with fund unit orders in a low-risk environment.

Through the collaborative initiative with Euroclear, Strate are looking to work with the local industry to explore the implementation of an electronic and centrally hosted mutual fund settlement and custody platform for the South African market.

Strate and Euroclear will also investigate options to centralise record-keeping as well as create added benefit by improving settlement and payment efficiencies.

The core element of the intended initiative is the provision of a platform where mutual fund transactions are processed on an automated basis from order routing to settlement and asset servicing.

This end-to-end solution aims to be sufficiently robust and resilient to serve as an infrastructure for both domestic and international market participants, with settlement conducted in central bank money for South African investors.

According to Monica Singer, Strate’s CEO, there are inefficiencies and risks at present in the mutual fund industry. “The fund unit and cash components of mutual fund subscriptions and redemptions in the South African market are credited or debited several days after cash has been received for settlement. We will investigate how Strate can improve this process, potentially centralising fund ownership registration and delivering a safer and more efficient means to enable our local fund industry to grow.”

She added that the next steps to be taken include engaging with local stakeholders to define the required functionalities as well as the timing for implementation.

Lieve Mostrey, chief technology and services officer of Euroclear, said: “Sharing our decades of experience in fund processing for domestic and cross-border transactions with Strate and its clients is an efficient and cost-effective way to add value to an important emerging fund market.”

“As we begin a new partnership with Strate, the South African market can be sure that the primary objective of our collaboration is to deliver greater operational efficiencies while reducing risk. We also envisage that this initiative will attract other markets to share the same technology in order to achieve economies of scale for their fund markets.”

More news
The latest news from Asset Servicing Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
MiFID II unbundling compliance will be last-minute scramble for 85 percent
23 June 2017 | London | Reporter: Stephanie Palmer
Asset managers are cutting it fine in compliance with research unbundling rules under MiFID II, with 85 percent saying they expect to be compliant in Q4 2017 or later, ahead of the January 2018 deadline
ICMA: NSFR will make EU repo less attractive
23 June 2017 | London | Reporter: Drew Nicol
The association also point to increased automation of highly manual and labour-intensive processes of the market as a way to mitigate rising costs and create efficiencies
Caceis welcomes two new clients to TEEPI
23 June 2017 | Luxembourg | Reporter: Stephanie Palmer
Swiss Life Global Solutions, a Luxembourg-based insurance and wealth management provider, and European asset manager Amundi have joined the Caceis Tailored Electronic Exchange Platform for Investors
ECB to launch new faster payments system
22 June 2017 | Frankfurt | Reporter: Stephanie Palmer
The European Central Bank (ECB) is expanding its TARGET 2 instant payments system to facilitate retail payments throughout Europe
Clients demand innovation in custody
22 June 2017 | New York | Reporter: Stephanie Palmer
Custodians must embrace new technologies if they’re to survive in the digital age, according to a survey of sell-side executives by BNP Paribas Securities Services and TABB Group
Citi recruits Matthew Bax
21 June 2017 | London | Reporter: Barney Dixon
Citi has hired Matthew Bax as its Europe, Middle East and Africa (EMEA) head of sales for custody and fund services
Denise Voss re-elected as ALFI chair
21 June 2017 | Luxembourg | Reporter: Stephanie Palmer
The Association of the Luxembourg Funds Industry has re-elected Denise Voss to serve a further two years as chair of the board of directors
More news