Ann Bergin, DTCC’s Managing Director and General Manager, Wealth Management Services, recently spoke about DTCC’s strategy for making the European funds market more accessible to its clients with Asset Servicing Times, a digital publication covering the global asset servicing market.
Here are excerpts from the article, which appears in Issue 41 (06/13/12) of Asset Servicing Times. To read the full article, visit www.assetservicingtimes.com
How did DTCC get where it is today in the funds business?
DTCC, through its subsidiary National Securities Clearing Corporation (NSCC), launched Fund/SERV in 1986. It was for the U.S. market and primarily for load funds, which were sold through broker/dealers. The broker/dealers were aware of NSCC because they were processing equities through NSCC’s systems, as it was tremendously more efficient than the manual processes that were in place at that time. The broker/dealers were seeing similar operational inefficiencies in mutual funds, so they approached NSCC and asked if something could be done.
How did DTCC find the European market when it first arrived?
When we were considering our strategy in 2000, the market was quite vertical. The large broker/dealers had their own funds and they were distributing those funds to their clients. The horizontal model of open architecture was yet to be established in Europe and the European market was more focused on regulatory reforms.
"If European firms are interested in broadening their access to funds and European funds are interested in broadening their distribution, then I welcome the opportunity to show them what we have to offer."
How did you overcome this?
We realized that the way that we should be approaching the European market was to make it more accessible for our clients. We had clients that were trading cross-border funds, primarily in the Lux-Dublin domiciles, so they were very interested in access to those products. Working closely with our clients, we identified the funds they wanted and provided access to distribution partners.
What are you expecting to achieve in Europe, now and in the future?
What we really want to do is continue to explore where there are natural adjacencies to the services we are already providing, looking at how we can deliver the same level of value and service, but tailored to additional marketplaces.
We’ve identified a need to offer settlement in a variety of currencies. To that end, we’ve established an authorized payment agency under the U.K. Financial Services Authority called DTCC Solutions Worldwide Ltd., which is currently pending U.S. Securities and Exchange Commission review and approval. Its initial charter is to settle fund trades in euro and pound sterling; however, we anticipate expanding to additional currencies based on market demand and broadening the payment agent functionality.
How hopeful are you of cracking Europe?
We have a solid and comprehensive model that can work in Europe – one that has been tried and tested. If European firms are interested in broadening their access to funds and European funds are interested in broadening their distribution, then I welcome the opportunity to show them what we have to offer. In today’s competitive environment it’s all about choices. I’m confident that European firms and funds will see Fund/SERV as a good choice to lower their operational costs and risks.