Rathbone Brothers, a UK-based investment manager, has moved towards automating its fund settlement process by appointing Euroclear UK &
Ireland (EUI) for transactions processing.
Rathbones invests money for wealthy individuals, charities and investment advisors and had £22 billion (€28 billion) of assets under management as of December 31.
Wealth and investment managers are under ongoing pressure to automate fund processes from organisations such as the European Fund and Asset Management Association (EFAMA). Fund processing covers everything downstream from order placement though to settlement, transfer, reconciliation and corporate action processing.
The deal means that Rathbones can offer end-to-end services for the settlement of fund units and applicable cash movements to its entire distributor community, EUI says.
John Trundle, chief executive officer of EUI, says: “EUI’s delivery-versus-payment settlement means that cash movements related to subscriptions and redemptions are reflected on the register typically two hours after the notional units have exchanged hands electronically.”
By linking cash and unit settlement, firms can greatly improve their daily treasury operations, he says. Cash from proceeds is usually available between 6am and 8am on the intended settlement date and available for the entire business day.
Manual processing involves risks, costs and reconciliation complications of when payments are decoupled from the unit movements.
Andrew Butcher, chief operating officer at Rathbones, says that “having the benefit of full registry reconciliation transparency which automated settlement affords, plus easier cash management through the CREST cash memorandum account, will prove highly beneficial to our operations teams”.
EUI says that trade-to-settlement cycles are cut typically to four business days after the trade is struck compared with up to 10 business days today.
EFAMA, together with banking network Swift, regularly publish automation levels in Ireland and Luxembourg, the key cross-border fund domiciles. Automation should lead to efficiencies and lower costs for investors, as well as reduce risks.
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