The investment industry is looking at ways to change how the £847 billion (€1.1 trillion) of UK-administered mutual funds are traded and settled.
The project, dubbed the UK Fund Trading and Settlement (UK FTS), includes 20 fund companies as well as representatives from the Investment Association, the Association of British Insurers, TISA, the Wealth Management Association and the UK Platform Group.
The group believes there is a widespread view that opportunities exist to improve operational processes that sit between fund managers and distributors in terms of fund settlement.
The group has identified that the size of the market is one issue. It says that with over 300 distributors and 200 fund managers operating in the UK, many of whom manage direct relationships with each other, this has created a complex and costly operating environment.
Another problem identified is the amount of manual processing still used in the industry which when compared to other markets such as the US, has led the group to believe that “there could be a radically different way of working”.
The group has appointed Ed Dymott, of Fidelity International, to chair the review. To support the initiative, consultancy firm EY and law firm Hogan Lovells have been instructed to ensure best practice is observed during the market-wide engagement process.
“Looking at other markets, such as the US, parts of Europe and Asia, there are clearly solutions that help fund managers reduce cost and risk whilst creating better client outcomes. These solutions need to be evaluated,” said Dymott.
The group will shortly be sending out requests for information to any supplier who feels they may be able to help support the initiative.
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