Calastone sees opportunity for European managers in Asian automation
Sebastien Chaker, MD of Calastone Asia, says latest developments in the the region affecting fund order routing automation point to growing opportunities for European managers, including SME sized boutiques.
Chaker’s comments come as Calastone, which supplies a transaction network for asset managers, said that it had signed additional offshore fund execution and order routing contracts with Taiwanese banks.
Landbank of Taiwan, Mega International Commercial Bank and Bank of Taipei have appointed Calastone for the execution of their offshore fund transactions via the Taiwan Depository Clearing Corporation (TDCC) fund order routing service, Calastone said.
It pointed to TDCC official figures indicating Calastone now has 32 fund ranges connected through the TDCC. Landbank was amongst a group of six banks in Taiwan that pioneered into fund automation in Asia about five years ago, when they implemented ISO 20022 connections into a number of offshore fund managers, Calastone added.
These developments bode well for Europe’s asset management industry, because concepts such as Ucits are well recognised and popular among Taiwanese banks and insurance companies, Chaker said.
“There are currently 54 offshore fund houses and over 1,000 offshore funds distributing in Taiwan with AUM of $86bn. However, Taiwan is also known for its very high fund trading volumes which account for about 50% of all manual orders processed by European Cross-border funds and Transfer agents. This often makes it uneconomical for mid-size and boutique asset managers to enter this market.”
“The drive towards trade automation in Taiwan is a huge opportunity for these Ucits fund managers to enter this market without having to set-up costly offshore fund operational centres in low cost offshore locations to cope with manual volumes. We therefore expect to see many new fund managers registering funds for sales in Taiwan in 2014.”
“As the Taiwan market progressively moves towards more automation, we see an increasing interest from other Asian distributors to adopt a similar model to automate their fund transactions. This is already the case in Singapore and is now starting in Hong-Kong. This will then make an expansion to Asia much more cost effective for mid-size and boutique asset managers in Europe.”