Vestima provides fund distributors with a single access point to route orders to multiple execution venues. Clients simply have to define whether Vestima should send an order to the transfer agent (TA), Central Securities Depository (CSD), to the corresponding hedge fund administrator or to a trading platform/stock exchange via an execution agent.
The order routing service populates orders with reference data to avoid errors and reduce risk. In addition to the order information itself, messages are validated against fund distribution restrictions, settlement currencies, etc. Trading and settlement-related information is automatically added, based on the standing data stored in the order issuer’s profiles.
Orders are then forwarded to the relevant order handling agent. If accepted, a confirmation is sent electronically to the order issuer. All orders processed are tagged with a Distributor Identification Code (dealer code, agent code, register number, etc.), so order handling agents can easily and correctly identify the order issuers.
Order issuers receive immediate access to the latest information on the status of their orders. Fund portfolio and transaction reports are available in various formats and frequencies. The Transparency of Holdings Report enables order issuers to maintain a comprehensive view of their orders at all times.
Over the past years, Clearstream has continually reduced the lead times between the Vestima cut-off and the fund cut-off time. Order Issuers benefit from more time to collect and prepare orders received from their customers and thus lower the risks of handling late orders.
For more than 90% of investment funds available for order routing on Vestima, we offer a lead time of 15 minutes or less before the fund cut-off time.
For orders to transfer agents (TAs) who recognise Vestima as a ‘trusted source’, the Vestima cut-off time is fully-aligned with the official fund cut-off time. The ‘trusted source’ concept was introduced in 2009 and has proven very successful.
Clearstream guarantees that all orders received by the Vestima cut-off deadline will reach the TA before the fund cut-off time. Valid orders are forwarded promptly to the TA, independently of the Vestima cut-off time.
The cut-off times and other details for each individual fund are indicated on the “Supported Funds” list.
Managing risk in trading activity is becoming increasingly important in light of the growing market volatility and the complexity and diversity of investment funds. Tight control on order size and total outstanding trading volume is crucial in avoiding costly errors and limiting potential exposure.
Vestima’s Trading Limits service enables order issuers to set limits on the individual order sizes, and on the total order volume outstanding, without impacting automation or dealing with deadline offsets.
Trades failing the limit check will become subject to additional approval/verification by the order issuers before being released to the market. Order issuers are therefore in full control of setting their limits and releasing or cancelling orders that exceed the limit.
The Vestima Trading Limits feature covers all orders and is independent of the chosen connectivity method or the place of trade (primary or secondary market).
Two different trading limits can be set in EUR independently of each other:
- Single order limit: Limit on individual order size applied to subscription (buy) only or all orders
- Total order limit: Limit on total outstanding order volume applied to either subscription (buy) only; subscription (buy) less redemption (sell); or subscription (buy) plus redemption (sell).
Third party approval
In the context of a custodian having an account with Clearstream, it is possible for its customers to approve any order entered before it gets forwarded to the transfer agent.