‘The manual processing methods employed are currently not as mature as for other asset classes like equities and fixed income,’ a Euroclear spokesperson said.
The Treasury has estimated that up to £290 million could be saved by the UK’s fund industry each year through automated transaction processing and promoting real-time reconciliation.
‘We expect to see real improvement in our transaction settlement, cash and fund unit balance reconciliations, re-registrations and portfolio transfers as a result of the electronic and automated features of Euroclear UK & Ireland’s investment fund service,’ commented Gary O’Brien, head of client services at Old Mutual Global Investors.
‘While having an automated service for order routing is important, moving to full automation across the entire transaction life cycle makes good business sense,’ he added.
Jeff Digweed, head of transfer agency at Liontrust, added that the system changes would be ‘invisible’ to investors who settled through Euroclear. ‘They will see the benefits quickly as they will experience a more efficient settlement process for their fund subscriptions and redemptions,’ he said.
There are currently 22 fund groups working with IFDS Group, a third-party administrator, of which eight – including the latest three additions – have joined Euroclear. Euroclear disclosed that a further two were expected to become members by the end of September, and the remainder by the end of the year.
‘We are seeing growing momentum in the UK fund community to reduce the risks and costs associated with fund transaction processing,’ observed John Trundle, chief executive officer of Euroclear UK & Ireland.