Central Facility for Funds
The Central Facility for Funds (CFF) is the post-trade infrastructure designed to provide greater efficiency and cost-effectiveness in the settlement and custody process.
CFF provides standard settlement services based on the synchronous exchange of cash and securities between:
- Fund distributors
- Custodians
- Transfer agents
The processing risk is significantly reduced compared to still prevailing processes in the industry where cash and securities settlement is separated.
Furthermore, CFF enables the management of corporate actions and the distribution of trailer fees. All of which is backed up by efficient reporting services on settled positions and the provision of a central source of static fund data.
Benefits
The industry benefits of a central hub solution are cost reductions and simplified operational procedures leading to greater standardisation. Naturally, a structured market of this kind enables a reduction of systemic and operational risk.
The CFF provides the market with a secure infrastructure that enables further growth of business volumes.
Openness
The openness of the infrastructure enables multiple order-routing mechanisms that exist today (SWIFT, Vestima Order Routing, etc) to seamlessly integrate with CFF.
Users benefit at each level of the processing chain:
- Distributors value an infrastructure that re-uses proven processes, in particular settlement and safekeeping, and integrates with trading activities such as transfers and OTC trading.
- Fund promoters receive access to a central hub that supports international distribution and provides the required granularity of related information.
- Transfer agents benefit from a structure that reduces risk and reconciliation efforts while increasing STP processing and holding information at the distributor level.
For easier implementation, CFF does not force the commercial relationships between order issuers and order handling agents for order execution to change.