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Monday, 27 April 2009 16:32

SWIFT goes live in Australia for managed funds processing

HSBC Securities Services, RBC Dexia Investor Services and Vanguard Investments Australia have now gone live in Australia with automated funds transaction processing over SWIFT.

Announcing the live launch of the service, Tim Hamer, SWIFT Securities Commercial Manager for Australia & New Zealand, Tim Hamer, said today “the go-live of the three companies” followed a two-year project involving market practice work and a pilot to establish local market practice rules for the use of the standards to automate local investment fund transactions.
Hamer also said he now expected additional local industry participants to adopt SWIFT’s transaction automation standards for funds as part of a global move toward risk reduction and cost efficiencies, with automated funds transactions replacing faxes and other manual processes used for financial information exchange.

HSBC’s Australian head of securities services, Peter Snodgrass, said that “just as automation has benefited the equity and debt markets in Australia, we see industry adoption of SWIFT’s transaction automation standard as a crucial step in the growth of Australia as a financial hub capable of leading the region in terms of standards and efficiency.”

However, according to Swift’s announcement today, global investment management consulting and IT services company Morse Consulting believes the cost savings created through funds transaction automation could be even higher than industry assessments.

Morse’s Tim Worner says experience suggests paper-based transactions can often cost funds managers as much as A$40 each for simple processes, and, he adds, “complex transactions can cost even more.”

“Adopting automated processes can significantly reduce these costs. Also, paper-based transactions increase the risk for human error. Automating the dealing and reconciliation processes reduces that risk and at the same time promotes improved customer service.”

The processes automated so far by HSBC, RBC Dexia and Vanguard Investments include applications, redemptions, confirmations, status reports and reporting, which are sent using SWIFT Funds ISO20022-compliant messages across the SWIFT network, which SWIFT says, connects more than 8,500 institutions in over 200 countries around the world.

RBC Dexia’s head of operations and fund services, Gordon Little, says the deployment of the new automated service to the Australian market is a natural extension of the company’s global operations.

“For Australia we have deployed our global unit registry system, which already had the SWIFT capability, and which we deployed in Europe over seven years ago as a pilot member of the SWIFT modelling committee.”

And, according to Mr. Roger Leahy at Vanguard Investments, the SWIFT initiative is part of an effort to create best practices in the funds management industry.

Leahy says STP is now a reality for Australian fund managers through the use of the standard protocol and the SWIFT network, and enables all participants in the institutional funds management industry to “interact in the same manner, handling scale without increasing risk.”

Snodgrass also claims that demand among investors for seamless communication between the client and the investment point is increasing.

“As well as providing transparency of the transaction lifecycle, SWIFT’s transaction automation standard reduces transaction times, increases capacity and, perhaps most importantly, reduces processing risk for our clients,” Snodgrass adds.

SWIFT’s Tim Mamer says the expectation now is that more funds participants will join the automation initiative before the end of the year, with six other firms already committed in May 2008 to going live before the end of October 2009.

“I expect that when the global SWIFT community comes to our annual Sibos conference and exhibition in Hong Kong this September, they will certainly be looking at the example of the Australian community as a clear indication of the inevitable move towards standardisation across the industry,” Hamer claims.

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