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Calastone is committed to 100% STP for 100% of the global funds market. These are the slides from our recent London event which was attended by 140 fund managers, distributors and TPAs.
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The Tipping Point
5th May 2010
The Great Hall,
The Institute of Chartered AccountantsLondon
Strictly Confidential Copyright Calastone 2010 2
9.00 am Kevin Lee, CEO: 100% STP for 100% of the market in 2010
9.30 am Dan Llewellyn, Head of Market InnovationRe-writing the rulebook on Settlement, Re-registrations and Reconciliations
10 am Coffee break and networking
10.30 am ‘The Business Case for STP’: Panel discussion and Q&A
Moderator: Edward James, Head of Operations, Octopus Investments Panelists: Christopher James, Director, Institutional Services, Cofunds
Andrew Smith, COO, NucleusIvan Goldsmith, Head of Retail Administration, Axa-FramlingtonKevin Lee, CEO CalastoneDan Llewellyn, Director of Market Innovation, Calastone
11am Finish
Agenda
Strictly Confidential Copyright Calastone 2010 3
Why The Tipping Point?
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Faxes = Risk and Cost
Strictly Confidential Copyright Calastone 2010
Challenges for the Industry
• 80% of fund processing costs are caused by 20% of the
market.
• Calastone’s commitment to a single pipe for the whole of
market includes that 20%.
Strictly Confidential Copyright Calastone 2010
• The Catcher’s Mitt (live demo)
• First 150 messages free for smaller fund managers
• Reconciliations & Settlement
• Free hosting of BIC Codes for all
distributors and fund providers
6
What’s New?
Strictly Confidential Copyright Calastone 2010
Transparent Tariff
7
• Underlying Principle : who benefits - pays
Main Benefit Fund Provider Distributor
Order Routing Fund Provider £2.70 - £1.50 Free of Charge
Settlement Service Equal 25p 25p/50p*
Payment Service Equal 10p 10p
SWIFT BIC Hosting Equal Free of Charge Free of Charge
Re-registrations/Transfers Distributor Free of Charge T.B.C.
• For Distributor clients not using Calastone
Strictly Confidential Copyright Calastone 2010
Calastone Pricing Model – Order Routing
• Price ranges f rom £2.70 to £1.50 per order
• Discount base on cum ulative volume regardless of client size
• Volume is never reset, so the price is guaranteed to reduce over tim e
• This will lead to a price of £1.50 an order for all clients eventually
• No additional annual fees, joining fees or hidden costs
8
Calastone client network
KeyLiveRoadmap 2010/11
Norway
US (via Sungard)
Taipei
Hong Kong
Australia
South Africa
France
9
LuxembourgUK & Ireland
Our flexible technology means that we can connect distributors with fund providers anywhere in the world.
Strictly Confidential Copyright Calastone 2010 10
You can follow an order from purchase through settlement: www.calastone.com/videoinfo.aspx
Execution Management System (EMS)
Live Demo
Order processing via EMS for boutique/offshore FMs
12
1. FundManagers (or TAs) can accept/reject
and price orders
2 (a) If the order is good, they accept
and a confirm is sent to the distributor.
2 (b) Orders can be rejected directly by
the fund manager (or TA)
3. The order is priced later that day.
80% of costs are caused by 20% of the market. We have a solution for the 20%.
Strictly Confidential Copyright Calastone 2010
To provide pre and post trade solutions to the mutual funds market that promote:
– User choice models
– Global interoperability
– Industry partnership relationships
– Reduced STP costs that benefit the whole market
– Clear and transparent tariff structures
13
Post-Trade Solutions: Our Objective
Strictly Confidential Copyright Calastone 2010
Proven Delivery
• Calastone Settlement offering announced 16th Nov
• Backed by major Industry players across the market
– Cofunds, FNZ, Nucleus– IFDS, Capita– Schroders, Hendersons, Gartmore
• Considerable second wave support
14
Strictly Confidential Copyright Calastone 2010
• Calastone Settlement offering announced 16th Nov
• Backed by major Industry players across the market
– Cofunds, FNZ, Nucleus– IFDS, Capita– Schroders, Hendersons, Gartmore
• Considerable second wave support
• Live 22nd March 2010
Proven Delivery
Strictly Confidential Copyright Calastone 2010
Calastone – Modularised Automation
16
Calastone Service Modules
Distributor AThird Party
Administrator ARe-Registration Module
Distributor B
Distributor C
Distributor D
Reconciliation Module
Income
ETV’s
Income payments and
ETV’s
Order Router Module
Third Party Administrator B
Third Party Administrator C
Fund Manager A
Fund Manager B
Fund Fund Manager
D
Fund Fund Manager
E
Fund Fund Manager
F
Fund Fund Manager
G
Fund Fund Manager
HSettlement
Module
Strictly Confidential Copyright Calastone 2010
Automated settlement is now available via Calastone with additional post trade services going live during 2010:
– Mutual fund settlement instruction matching and net settlement - Live
– Net settlement payment facility via SWIFT
– Re-registration, wrapped, unwrapped, nominee to nominee and own name
– Reconciliations, statement of holdings, transactions and valuations
– Income payment instruction with electronic tax information
– Corporate event information
17
Modularised Approach to STP
Strictly Confidential Copyright Calastone 2010
Primary market settlement module provides:
– Mutual fund settlement instruction matching
– Automatic calculation of net settlement position between buy and seller
– Net settlement payment facility via SWIFT
– Visibility of settlement exceptions via unmatched reporting
– Open architecture in re connectivity and message standards
– Full range of STP options from ISO messaging to File upload
– Market wide standardisation of settlement process
– Multi currency / Multi domicile
18
Mutual Fund Settlement via Calastone
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Distributors
Fund Provider / Third Party Administrator
1. Order instruction
Order Router
Calastone Mutual Fund Trade matcher and Settlement Net Calculator
2. Business Accept3. Price Confirmation
5. Net Settlement requirement sent to distributor
OptionalRegister Status
4.Client settlement Input
4.Client settlement Input
5. Net Settlement requirement sent to distributor
6. SettlementConfirmation
6. SettlementConfirmation
Your format
Your format
Calastone Settlement Phase 1
Strictly Confidential Copyright Calastone 2010
Calastone Settlement phase 2
20
Order Routing Settlement and Matching Hub
Distributors
Fund Provider / Third Party Administrator
1. Order instruction
Order Router
Calastone Settlement•Trade matching
•Net settlement calculator
Calastone Settlement and Payment System
Distributors Bank
2. Business Accept
Fund Providers Bank
5. Settlement requirement sent to distributor
Payment instruction generation
Payment
Client driven payment instructionAnd confirmation
4.Client settlement Input
4.Client settlement Input
5. Settlement requirement sent to Provider
6. SettlementConfirmation
6. SettlementConfirmation
Payment hub
Registered Message
3. Price Confirmation
Payment occurs outside of Calastone Network
Strictly Confidential Copyright Calastone 2010 21
EMS Screen new settlement option
Confirm settlement positions via EMS
Strictly Confidential Copyright Calastone 2010
Fair and transparent tariff structure for all participants:
Fund Providers
25p per trade settlement instruction
Distributors
Schedule 1 - 50p per trade settlement instruction
Schedule 2 - 25p per trade settlement instruction when using Calastone order routing
No membership fees or hidden costs
22
Tariff Structure – Phase 1
Strictly Confidential Copyright Calastone 2010
Integrated payment service using Calastone SWIFT connectivity:
Fund Providers
10p per SW IFT ISO payment
Distributors
10p per SW IFT ISO payment
Added benefits– Free hosting of client BICs– Reduced number of payments– Access to Calastone EMS payment screens in order to view, release, authorise and
track payments– Ability to see if counterparty have released their payments– Future proofed technology re ISO20022 and Single Euro Payments Area (SEPA)
No additional Calastone membership fees (SWIFT costs not included 8eur cents on shore 23eur cents off shore)
23
Tariff Structure – Phase 2
Strictly Confidential Copyright Calastone 2010
Calastone Re-registration Pilot
24
Wrapper Transfer
Platform /Distributor 1 (Ceding Nominee)
Platform 2/Distributor (Acquiring Nominee)
Calastone Core ISO20022 Translation EngineFund Manager /
TPA
Asset Transfer
1. Inforequest
1. Info Request
2. Info response
2. Inforesponse
4. Confirmation
4. Confirmation
1. Transfer out
3. Transfer in conf
1. Transfer out
2. Transfer out conf
2. Transfer out conf
3. Transfer in conf
YOUR FORMAT
YOUR FORMAT
YOUR
FORM
T
YOUR
FORMAT
3. Instruct
3. Instruct
Strictly Confidential Copyright Calastone 2010
Calastone Reconciliations Module
25
Calastone Core ISO20022 Reconciliation Translation
Engine
Fund Manager A
Fund Manager B
Fund Manager C
TPA 1
TPA 2
YOUR
FORM
T
YOUR
FORMAT
YOUR
FORM
T
YOUR
FORMAT
Distributor 1
Distributor 2
Distributor 3
Distributor 4
Distributor 5
Strictly Confidential Copyright Calastone 2010
Benefits
26
§ Need for automation and STP solutions in different areas of the mutual funds market
§ Platforms, retail distributors and fund managers all have different wants and priorities
§ Calastone STP modules enable market participants to develop and adopt solutions in line with their own development priorities
§ Calastone ’s core translation service will normalise all market input into ISO20022 so that participants do not have to incur back office development costs
§ Development of Calastone ’s STP modules are in line with agreed Mutual Fund UK and Global Market Practise
§ By adopting Calastone STP modules market participants will be able to future proof their technology spend regarding message standards and interoperability .
§ Clear and transparent tariff structures
Strictly Confidential Copyright Calastone 2010
Summary
27
• The Catcher’s Mitt Free to all fund managers
- Providing 100% STP for distributors
• First 150 messages Free for smaller fund managers every month
- No barriers to entry
• Reconciliations Free to all fund managers
- Providing 100% coverage with one connection for the distributor
• Settlement – Primary market service – no technology requirements available to all
- Nett payments, Group 1 & 2.
• Free hosting of BIC Codes for all distributors and fund providers
- 100 % STP for distributors
- Global reach for all
Strictly Confidential Copyright Calastone 2010
Panel discussion
28
Strictly Confidential Copyright Calastone 2010
Kevin Lee, CEOKen Tregidgo, Director of Business DevelopmentDan Llewellyn, Director of Market InnovationAlexander Hofmann, Sales DirectorSebastien Chaker, MD Luxembourg
Main: +44 (0)20 7367 5900
King’s House6th Floor36-37 King StreetLondon EC2V 8BB
29
Contacts
www.calastone.com