Market ready for re-registration?
Trevor Brown, Bravura Solutions’ (Bravura) resident re-registration expert, discusses his role in the industry initiative that will see fund managers and platforms adopt a common process to enable automated re-registration by the end of 2012.The initiative will offer real benefits to consumers, with platform-to-platform re-registration in a manner that is timely and easy.
What is your role at Bravura?
I am a Business Architect within the Product Management team and I am the subject matter expert for straight-through processing (STP), working internally with peers on the continuous development of our STP financial messaging solution – Babel. Externally, I work directly with the various standard bodies and service providers, including but not limited to; Calastone, Clearstream (Vestima), DTCC (NSCC), Euroclear (FundSettle), Euroclear UK & Ireland (EMX/CREST), Findel Group Luxembourg, FundSERV Canada, Origo, SWIFT, TISA, UKFPMG and ViaNova.
How did you get involved with the TISA (The Tax Incentivised Savings Association) re-registration project?
In March 2010, TISA recognised that the impact of the Financial Services Authority’s (FSA) ‘Platforms: delivering the RDR’ document was really a call to action for the industry to agree on a common approach for the registration of assets between platforms.
The key driver for change was a paragraph that stated: “Due to the potential for customer detriment, we are minded to make it compulsory for platforms to allow assets to be re-registered off their platform no later than the implementation of the RDR on 31 December 2012”.
It was quickly agreed that this common approach should be based on the work being done by the UK Funds Market Practice Group (UKFMPG). As co-chair of the UKFMPG transfers working party, I became involved and a month later, TISA co-ordinated industry approval for electronic re-registration to be based on IS020022 file formats – a common language for cost-effective financial communications.
What did your/Bravura’s role with TISA entail?
In June last year, TISA started its re-registration programme office. I was asked to lead the business processes workstream of the Executive Committee (a high-level steering group driving the project) and its hand-off points to the UKFMPG.
The aim was to produce a set of standard message formats and associated business process guidelines to be adopted as best market practice.
Bravura was also represented on the Executive Committee by Tony Klim, our CEO.
You mentioned involvement with UKFMPG; what is that?
UKFMPG is the UK arm of the Securities Market Practice Group (SMPG). The SMPG is a not-for-profit global securities industry group, comprising national market practice groups and certain other affiliated organisations. The SMPG’s mission is to create globally harmonised market practices to enhance straight-through processing at an industry level. The UKFMPG is divided into a series of separate working parties which are set up and run for the duration of specific projects.
What are the UKFMPG Transfers Market Practice group’s objectives?
To produce an agreed UK market practice for the interpretation and usage of ISO20022 messages for the purposes of transferring portfolios of one or more investment fund assets, as well as uninvested cash balances held within the portfolio, between securities account providers and to/from the ultimate account holder.
The principal is to facilitate more efficient processing with regard to holdings in UK investment funds. Primarily, the guidance is aimed at:
- Fund management companies and fund registrars (transfer agents);
- Fund platforms, custodians and asset servicing hubs;
- Investment managers (including wealth managers);
- Banks and building societies (when transferring cash ISAs providers of fund-based ISAs);
- Financial institution investors (e.g. insurance companies); and
- Distributors of investment funds.
What is your role as Co-Chair of the Transfers Market Practice Group?
Each UKFMPG working party has two co-chairs. In the Transfers Working Party, I share this role with David Broadway of the Investment Management Association. Our role has been to facilitate and co-ordinate open industry meetings which have led to the agreement of an industry-wide UK standard for investment portfolio (ISAs) and fund transfers.
The first phase of the TISA re-registration programme / SMPG UK Transfer Market Practice has focused on ISA products and SIPP holdings.
The re-registration deadline is approaching. What progress have you seen?
The TISA programme of workstreams covering the business processes, message formats and quality performance service-level agreements (SLAs) have been completed and published, with a number of organisations conducting proof of concept testing based on these.
With the recently established TISA Exchange Limited (TeX), its ‘legal contract club’, the Executive Committee has effectively completed the initial part of the project. TeX is now responsible for delivering the next stage in the programme; the agreement of the legal framework necessary to make the industry wide re-registration initiative a reality.
Is the market ready for re-registration?
It’s certainly getting there and the recent announcement that the UK Platform Group (AXA Elevate, Cofunds, Fidelity FundsNetwork, Hargreaves Lansdown, Skandia and Standard Life) have signed up to the TISA ‘contract club’ (TeX)is a great boost and an important step forward.
Do businesses need to put new technology in place before the re-registration deadline?
Every business has different needs and priorities. A number of organisations are initially looking for a semi-automated solution that provides options for both manual and full STP integration. The FSA’s platform paper does not make automation of re-registration mandatory, only that from the end of the 2012 RDR deadline, organisations must be able to support re-registration of platform assets.
However, re-registration volumes are expected to grow and the benefits of a fully automated solution are clear:
- Greater efficiency – improved scalability of operations and reduced costs, resulting in greater profitability for players and lower costs to investors;
- Reduced operational risk – through the replacement of manual re-keying of orders by straight-through processing; and
- Enhanced service – through improved response times and standardised interfaces.
What are the benefits of an end-to-end STP solution for re-registration support?
Straight-through processing eliminates the manual tasks involved in re-registration, ensures automatic, transparent, electronic and secure controls are in place, and drives measurable improvement in dealing with large volumes of transfers.
Does Bravura offer a solution for re-registration?
Yes, Bravura offers platforms and fund managers a powerful, technology-driven solution for managing ISA transfers and asset re-registration. The solution leverages Bravura’s existing Babel STP financial messaging capabilities.
It supports the full TISA re-registration ISO 20022 model with the client as the acquiring party, ceding party or external fund manager. Options for manual and full STP ISO20022 integration with re-registration counterparties are available.
Babel is already widely used across the industry for automated messaging and back office integration services and will provide the ability to re-register assets within just one day.
What changes have you implemented to help your clients prepare at Bravura?
We have one solution with two different approaches that are dependent on how much change a business wishes to absorb at one time.
The phased implementation approach is a semi-automated solution that can be implemented without impacting client’s back-office systems. It provides options for both manual and full STP ISO 20022 integration with re-registration counterparties based on the UKFMPG market practice.
The full-scale approach provides seamless integration between Babel and a client’s back office system. It uses the client’s preferred technology infrastructure and bespoke lifecycle processing.
Successful implementation of either approach will enable our clients to comply with the end of 2012 RDR deadline.
How do you see the re-registration market developing in the future?
The first phase of the TISA re-registration programme / SMPG UK transfer market practice has focused on ISA products and SIPP holdings. However, the ISO20022 messages used are extensible and TISA has already stated that further phases are envisaged.
In respect to the Bravura re-registration solution, we have designed the Babel solution to be totally extensible beyond the narrow scope of ISA wrappers and are already talking to providers and users of global wealth management solutions across the wider industry.