The total order volume of cross-border funds increased by 5.4 per cent to 20.3 million orders in the first half of 2018, from 19.3 million orders in the second half of 2017, according to a new report from The European Fund and Asset Management Association (EFAMA), published in cooperation with SWIFT.
The report focusses on the evolution of automation and standardisation rates of fund orders received by transfer agents (TAs) in the cross-border fund distribution centres of Luxembourg and Ireland during the first half of 2018.
The manual processing rate of orders of cross-border funds fell to 10.6 per cent in Q2 2018 from 12 per cent in Q4 2017 meaning automation rates reached 89.4 per cent. The use of ISO messaging standards meanwhile decreased slightly from 55.5 per cent in Q4 2017 to 54.7 per cent in Q2 2018, the use of proprietary file transfer protocols (ftp) increased to 34.7 per cent in Q2 2018 from 32.5 per cent in Q4 2017.
The share of manually processed orders by Luxembourg TAs declined from 14.6 per cent in Q4 2017 to 13 per cent in Q2 2018. The ISO automation rate remains stable at 69.6 per cent in Q2 2018, while the use of proprietary ftp increased to 17.4 per cent compared to 15.6 per cent in Q4 2017.
The total automation rate of orders processed by Irish TAs reached 93 per cent in Q2 2018, compared to 92.1 per cent in Q4 2017. The use of proprietary ftp went up to 60.9 per cent in Q2 2018 compared to 59.6 per cent in Q4 2017, whereas the ISO adoption rate slightly decreased to 32.1 per cent in Q2 2018, from 32.5 per cent in Q4 2017.
Peter De Proft (pictured), EFAMA Director General, notes: “The success of both UCITS and AIFs reflects the investors’ interest in these products and the ability of fund managers to improve their competitiveness, notably by eliminating manual processes, which are costly and subject to operational risks. Looking forward, the European Commission’s ambition to tackle remaining barriers to the cross-border distribution of funds will contribute to further support investor demand and will make fund processing standardization even more important.”
Janice E Chapman, Manager, Investment Funds, Standards, SWIFT, adds: “It is pleasing, yet again, to see the growth in the volumes of automated cross-border order flows. It is also pleasing to see the volumes of funds transfers also increasing significantly. More and more parts of the funds business is adopting an automated approach with ISO 20022 message standards and with the advent of an enhanced ISO 20222 funds reference report message in 2019, this will, indeed, complement this continued growth.”
The Mid-year report, which had twenty-eight TAs from Ireland and Luxembourg participating in the survey, combines the Luxembourg and Ireland data into one single cross-border fund processing report, providing statistical evidence on the advancement of automation and standardisation rates of cross-border fund orders. The report also provides data on standardisation levels of fund orders in Italy.