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Cross-border funds order volume rises 5.4% in 1H

New report suggests ever-increasing parts of funds business are adopting an automated approach to funds transfers


David Robinson

The total order volume of cross-border funds increased by 5.4% to 20.3 million orders in the first half of 2018, up 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) in cooperation with the Society for Worldwide Interbank Financial Telecommunication (Swift).

The report highlights the evolution of automation and standardisation rates of fund orders received by transfer agents in the cross-border fund distribution centres of Luxembourg and Ireland during the first half of 2018, the two groups said in a statement.

In addition, the report highlighted that the manual processing rate of orders of cross-border funds fell to 10.6% in Q2 2018 from 12% in Q4 2017.

Whilst the use of ISO messaging standards decreased slightly from 55.5% in Q4 2017 to 54.7% in Q2 2018, the use of proprietary file transfer protocols increased to 34.7% in Q2 2018 from 32.5% in Q4 2017.

Peter De Proft, Efama director general said: “The success of both Ucits and alternative investment funds (AIFs) reflects 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 standardisation even more important.”

Janice Chapman, business standards manager at Swift, said the report showed further growth in the volumes of automated cross-border order flows as well as funds transfers. “More and more parts of the funds business are adopting an automated approach,” she said.

Swift provides a network that enables financial institutions worldwide to send and receive information about financial transactions in a secure and standardised environment.

Irish automation rate rises

The mid-year report had 28 transfer agents from Ireland and Luxembourg participating in the survey and combined 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.

The share of manually processed orders by Luxembourg transfer agents declined from 14.6% in Q4 2017 to 13% in Q2 2018.  The ISO automation rate remains stable at 69.6% in Q2 2018, while the use of proprietary ftp increased to 17.4% compared to 15.6% in Q4 2017.

The total automation rate of orders processed by Irish transfer agents reached 93% in Q2 2018, compared to 92.1% in Q4 2017. The use of proprietary ftp went up to 60.9% in Q2 2018 compared to 59.6% in Q4 2017, whereas the ISO adoption rate slightly decreased to 32.1% in Q2 2018, from 32.5% in Q4 2017.