Article: Clearstream open for business in Australia
The full article was first published in the June 2020 edition of "funds europe"
Clearstream extended its investment fund services into Australia during 2019 with the acquisition of Sydney-based managed fund custodian Ausmaq Ltd Clearstream Banking S.A.’s CEO, Philippe Seyll, and Clearstream Australia CEO, Ravi Subramaniam, highlight how this will benefit the Australian funds market and its customers
Close to 12 months after Clearstream’s purchase of Ausmaq was approved by financial regulators, fund investors who sign up to Clearstream’s global Vestima platform can soon expect to benefit from greater product choice and improved operational efficiency in the Australian market.
An important landmark on 1 June was the launch of Clearstream Australia Ltd as the new operating company and the decommissioning of the Ausmaq Ltd brand. Equally noteworthy from a strategic standpoint will be the introduction in Australia of Clearstream’s global Vestima platform in Q4 2020.
Charged with implementing these changes on the ground, Ravi Subramaniam has been at the helm of the Sydney-based funds operation since 2013 when he took over as chief executive of the erstwhile Ausmaq Ltd. Prior to this, he held senior positions in London and Melbourne.
“The acquisition by Clearstream opens the door to service a wider community of client groups, particularly global custodian banks servicing large Australian superannuation funds and other institutional investors,” says Subramaniam.
In driving the acquisition, international players active in the Australian market have approached Clearstream to provide the same infrastructure service in Australia that it provides internationally, and to handle the link from the Australian funds market back into global markets. “With release of the Clearstream Australia legal entity, the message is that it is now open for business to support other global fund intermediaries that are seeking class-leading capability and efficiency in the Australian market,” comments Subramaniam.
Global fund intermediaries are pushing for Clearstream to deliver long overdue improvements in operational efficiency within Australia’s managed fund marketplace – an environment where, Subramaniam notes, faxed orders remain commonplace and lack of standardisation dictates that settlement confirmation messages can arrive in multiple formats.
For Philippe Seyll, this expansion into Australia’s domestic funds represents something of an adjustment in strategy for Clearstream’s investment fund services division, which has traditionally targeted cross-border third-party business. “As Vestima’s business has grown, we now have the scale also to target distribution support in domestic markets when the business case justifies it,” says Seyll. Australia is a logical candidate, given the size of its funds market and the significant concentration within the fund intermediary segment, with four transfer agents servicing more than 50% of fund transaction flow.
This Central Facility for Funds (CFF) model offers a standardised and automated settlement framework for investment funds that has been applied for all transfer agents (TAs) in Luxembourg. This provides a model that will deliver standardised and automated processing of investment funds transactions, using ISO 20022 standard SWIFT messaging, within Australia’s domestic market and for cross-border fund transactions.
Looking more broadly, Seyll notes that the expectations of fund services customers have extended beyond order routing and fund execution to a wider portfolio of distribution support services. This includes processing of rebates, access to fund research, communication of regulatory compliance and fund sales data, along with portfolio reporting tools.
Clearstream has strengthened its service portfolio with the purchase of Swisscanto Fund Centre London (to create Clearstream Fund Desk) and the acquisition of a majority stake in UBS’s Fondcenter to establish a business-to-business fund distribution platform with over €230 billion in AUA.
For Clearstream Australia, that has now moved into new offices on Sydney’s Bligh Street, this also represents a time of new direction and opportunity. By integrating its activities onto Clearstream’s global funds network, fund services customers will gain from automated access to the Australian funds market, while extending international reach, operational efficiency and wider product choice to Australian custodian banks, wrap platforms and wealth management companies.