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ESG data evolution raises challenges

Constantly evolving ESG data is the biggest challenge for financial firms in Europe, according to Bloomberg research. Institutional Asset Manager’s editor, Gill Wadsworth, reports that more than two-fifths (41 per cent) of financial market participants in London, Stockholm, Geneva, Amsterdam, Frankfurt, Paris, and Milan, say processing new sustainability information is problematic.

This challenge is compounded by the fact that complying with ESG regulations was respondents’ biggest data challenge. More than a third (35 per cent) of firms reported that fulfilling regulatory requirements was the highest priority for accessing ESG data, followed by meeting climate risk and net zero objectives (18 per cent).

The problem stems, according to the research, from “coverage and quality issues with company-reported ESG data”, which was cited by 63 per cent of respondents as their biggest concern.

Alternative fund administration firm, Apex, has launched a new platform allowing for the tokenization of alternative funds in order to enable their access by smaller investors. Apex’s head of digital assets, Bruce Jackson, explains to IAM that Of Apex’s USD3 trillion in AUA, USD2 trillion is in relatively illiquid alternative strategies, with the remainder in open ended funds and SPV holding structures for institutions and large investors. Jackson says that the firm’s digital team is leading the industry in tokenising these conventional fund products for their clients.

“We enable our clients to put conventional fund products into digital accounts, by creating a digital share class, and a blockchain-based registry,” he says.

This month, the Luxembourg regulatory regime has given approval for Sygnum Bank, Hamilton Lane and Apex to create this structure, offering a digital share class of the Hamilton Lane GPA Fund for subscription, directly into a Sygnum Bank crypto account.

“We will administer this using the blockchain as the book of record,” Jackson adds.

The firm is also acting as a white label platform for digital asset ETP launches in Switzerland, with its new company, Issuance.Swiss AG launching its first such product, a Cardano staking ETP.

Jackson adds that what Apex brings to the offering is the depth and breadth of its corporate and administration services. “We can do this quickly, in six weeks, and inexpensively,” he says. “We have negotiated a series of relationships, and compressed the fee structure, so that our clients, the asset managers, and distributors, could issue a new fund with as little as USD10 million AUM, and still make money. We structured this to enable testing a new market idea and remain in the black.”

Beverly Chandler, Managing Editor, Institutional Asset Manager

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Alternative asset administrator, Apex Group, with USD3 trillion in AUA, oversees a sizeable cryptocurrency fund business of 70 plus cryptocurrency funds and is stepping further into crypto and tokenisation.

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Constantly evolving ESG data is the biggest challenge for financial firms in Europe, according to Bloomberg research.
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