ANNUAL GLOBAL FUNDS CONFERENCE 2017 - The World Connected irishfunds.ie - AWS
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ANNUAL GLOBAL FUNDS CONFERENCE 2017 The World Connected irishfunds.ie
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WELCOME
Pat Lardner, Chief Executive,
Irish Funds
It is my great pleasure to welcome Our conference theme is particularly I hope you find the conference
you to our 2017 Annual Global Funds apt given that our industry continues informative and thought-provoking.
Conference, under the theme “The to serve a vital role in connecting As always, please let us know if there
World Connected”. At last year’s investors and solutions, linking are additional areas or topics you
conference we celebrated the 25th consumers of capital with market based would like to see featured in future
anniversary of the establishment of sources of finance and supporting events. During the course of the
the association and, at the same time, investment in the real economy while conference, we hope to engage with
pondered the outcome of the United working to redress long term savings you on the evolving set of opportunities
Kingdom’s referendum vote which took gaps. To do this we are fortunate to be and challenges which exist and to
place while we were at the conference joined by a range of superb speakers create and support new relationships
sessions. - people with deep experience and which will be developed amongst the
broad perspectives. We thank them for participants – all living up to the idea
A year on the direction of travel is affording us the time to debate and of “The World Connected”.
now clear in respect to the United better understand the forces shaping
Kingdom’s relationship with the the industry. In lieu of speaker gifts we Thank you for joining us.
European Union but the detail of the will be making donations to basis.point
final destination and all the attendant and Help for Children, both very worthy Pat Lardner,
timings are still the subject of debate, causes which are strongly supported by Chief Executive,
comment and negotiation. This is our industry. Irish Funds
one topic which will we will cover
during proceedings but it is equally We would also like to extend our
important that we don’t lose sight gratitude to our sponsors and exhibitors
of the many other areas where our – their support is crucial to putting
industry is developing and changing. on a quality event as well as fostering
It’s also important that the matters the broader discussions and debates
we consider at the conference move around our industry – which is of
to action – one good example in this benefit to all. The work that occurs over
regard was last year’s FinTech panel, many months to organise and stage the
out of which we completed an industry conference remains largely unseen but
Blockchain Proof of Concept. We’ve is undertaken with serious commitment
also taken feedback from previous and enthusiasm by the Conference
conferences and other events to add Working Group and the Irish Funds
new elements – this year we welcome team. We thank them for their input in
a specific session on diversity and a making this event what I know will be a
delegation from China which are both great success.
adding significantly to the conference
content. We will also have an increased
number of overseas guests attending
the conference, further enhancing our
discussions and business networks.
A N N U A L G L O B A L F U N D S C O N F E R E N C E - PA GE 3
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WELCOME FROM
THE CHAIRPERSON
Tara Doyle, Chairperson
Irish Funds
As Chairperson of Irish Funds, I am funds industry. The Irish government I would like to express my personal
delighted to welcome you all to the is committed to supporting the growth gratitude to the members of the
2017 Annual Global Funds Conference. of our industry and the Irish Central Irish Funds Conference Committee
Our theme this year is “The World Bank is committed to delivering high and to all of the excellent panellists
Connected”, reflecting our belief that quality regulation and supervision. This they have secured to speak at our
Ireland is ideally placed to foster links commitment, coupled with the historic conference. Together they have created
and create and maintain connections in links of our diaspora to the United an extremely interesting and thought
the global investment funds industry. Kingdom, the United States and South provoking programme which I hope you
America and the links we are fostering will all enjoy.
Those of you who attended our in Asia, makes Ireland well placed to
conference last year may find that your serve as a bridge to Europe and from Finally, I would like to say that it is my
memories of that excellent event were Europe to the world. honour to serve as Chairperson of Irish
somewhat overshadowed by the United Funds and I look forward to making
Kingdom’s referendum on membership In addition to our fund domicile and connections with all of you over the
of the European Union which took servicing expertise, Ireland is also course of our conference and the year
place on the same day. The outcome the global technology hub of choice to come.
of that referendum is having, and will for the strategic business activities
continue to have, a significant impact of information communications and
on the future of our industry and no technology. The importance of Fintech
doubt will feature prominently not just to the development of our sector
in our Brexit panel, but in many of our and Ireland’s leading role in Fintech
panel discussions today. reinforces the connectivity of the
Irish funds industry to investors and
Ireland remains at the heart of Europe managers across the globe.
and Ireland, as a fund domicile and
a fund servicing centre, remains
committed to the global investment
A N N U A L G L O B A L F U N D S C O N F E R E N C E - PA GE 5
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FLOORPLAN
1 2
3 4
REGISTRATION 6 7
Pops-ups
REGISTRATION &
ENTRANCE Shared
Media
8 Tables
5 9
10 11 12
13
14 15 16
SEMINAR ROOM
Stand Numbers/ Company
1/ CIFDI 7/ Thompson Reuters 13/ Quest Recruitment
2/ FTSE Russell 8/ Carnegie Fund Services 14/ Multifonds
3/ Euroclear 9/ PATRONAS Financial Systems 15/ Calastone
4/ Financial Times 10/ HSBC 16/ aosphere LLP
5/ Haitong Securities 11/ eShare
6/ Metrosoft 12/ Donnelly Financial Solutions
A N N U A L G L O B A L F U N D S C O N F E R E N C E - PA GE 7
AGENDA
THURSDAY, 25 MAY 2017
ANNUAL GLOBAL FUNDS CONFERENCE 2017
INTERCONTINENTAL HOTEL, SIMMONSCOURT ROAD, DUBLIN, IRELAND
8.00AM 10.00AM and how this can vary by particular type of
REGISTRATION / BREAKFAST COFFEE BREAK - Sponsored by real asset. The panellists will also assess
Kindly sponsored by how Ireland is currently positioned to meet
these needs based on their experiences.
11.40AM
M.C. Declan Casey, Irish Funds 10.20AM KEYNOTE ADDRESS
PANEL DISCUSSION: SECURITIES
8.45AM LENDING Megan Greene, Manulife Asset
WELCOME ADDRESS Management
Tara Doyle, Matheson MODERATOR:
Andrew Dyson, ISLA 12.00PM
8.55AM PANEL DISCUSSION: BREXIT
GOVERNMENT ADDRESS PANELLISTS:
An Taoiseach, Mr. Enda Kenny, TD Craig Starble, eSecLending MODERATOR:
Stephen Kiely, BNY Mellon Pete Townsend, Norio Ventures
9.15AM Maurice Leo, Deutsche Bank
PANEL DISCUSSION: BUSINESS Karl Bishti, Credit Suisse PANELLISTS:
LEADERS Dr. Vincent Power, A&L Goodbody
The Liquidity Coverage Ratio (LCR) is one of John McGrane, The British Irish
MODERATOR: the key reforms of Basel III requiring banks to Chamber of Commerce
Kieran Fox, Irish Funds hold an adequate amount of unencumbered Jeremy Soutter, Standard Life
High-Quality Liquid Assets (HQLA) that Megan Greene, Manulife Asset
PANELLISTS: can be converted easily into cash in private Management
Deirdre O’Connor, markets. Featuring subject matter experts
Samantha McConnell, Willis Towers from the across the securities lending sector, While also featuring deep sectoral expertise
Watson our panel will discuss the importance of in asset management, our Brexit panel
Robert Rosenberg, Heptagon Capital lending including alpha generation in context will take a broader view across industries
Steve O’Hanlon, Rubrics of passive funds as well as the key trends to include perspectives on upcoming
shaping the sector today. The importance negotiations, dealing with uncertainty, and
Our first panel of the day brings together
of fixed income lending and the development the historical precedence for what is about
four leaders in asset management. We
of the HQLA lending market and borrower to unfold. We'll also explore Ireland's role in
will explore their views on the changing
motivations around HQLA will also be the proceedings, and Brexit-driven economic
environment in which our industry operates,
examined. policies that may start to form among
dealing with certain macro issues, as well as
supranational powers.
trends they see from their own businesses.
What influence are regulatory trends having 11.00AM
PANEL DISCUSSION: REAL ASSETS 12.45PM
on the market and on their operations? How
LUNCH - Kindly sponsored by
are they adapting to market and political
MODERATOR:
risk? What impact are investor demands
Ted McGrath, William Fry
and trends having on their businesses?
The panel will also address technology and
PANELLISTS:
infrastructure and we will explore their views
Craig Hughes, PwC
on models the industry may follow in years
Brian Moran, Hines 13.55PM
to come. And from a human perspective, the
Alan Synnott, BlackRock PANEL DISCUSSION: REGULATION
panel will discuss trends they are seeing in
Alison Manley, Goodbody Fund
relation to their own people and what they MODERATOR:
Management Ltd
see as the main human resources drivers for Sheenagh Gordon Hart, Fund Radar
the industry in the coming years. Our real assets panellists will share their views PANELLISTS:
on the current trends within the real assets Jim Reese, SEC
sector. We will discuss investor and promoter Antonio Barattelli, ESMA
preferences for real asset investment funds Grainne McEvoy, Central Bank of Ireland
PA G E 8 - A N N U A L G L O B A L F U N D S C O N F E R E N C E
Close to the finish line on meeting G20 16.15PM The Millennials & FinTech Panel comprises
commitments, policymakers in Europe are PARALLEL SESSIONS a dynamic mix of leading industry and
re-doubling efforts to introduce CMU the technology figures, including valuable
mid-term review for which has just been 1 - PANEL DISCUSSION: DISTRIBUTION representation of the Millennial generation.
completed, and of course the prospects for (Main Seminar Room) The Panel will explore the relationship of
CMU may be hobbled by Brexit. For asset Millennials with the funds industry and
managers, the MiFID 2 deadline looms closer, MODERATOR: the indisputable relevance of FinTech to
and there remain questions about “too big to Jim Firn its development. Discussion topics will
fail”; will the regulatory agendas of Europe include the role of Millennials as investors
PANELLISTS:
and the US now diverge after several years (focusing on the significance of socially
Cora Gibbons, Barings
on a common path? These are some of the responsible investing and FinTech's potential
Barbara Wall, Cerulli
questions our illustrious panel will consider. to encourage Millennial investment), the
Jaspal Sagger, Legg Mason
influence of Millennials working in the
industry on business culture, the "generation
14.35PM The panel will be discussing the impact of
gap" and how this is ultimately impacting the
FOCUS ON CHINA several key factors, including regulation,
value chain
technology and margin compression, on
INTRODUCTION: the distribution landscape in Europe. In
Eoghan Murphy, Minister of State with particular, the panel will explore how these
17.35PM
special responsibility for Financial factors appear to be affecting captive versus
CLOSING REMARKS
Services, eGovernment and Public third party distribution models, and will
Pat Lardner, Irish Funds
Procedure speculate on what distribution models might
look like in a three to five year timeframe.
•O utlook for China’s Macro Economy, 17.45PM
Chao JIANG, Haitong Securities NETWORKING DRINKS -
2 - PANEL DISCUSSION: DIVERSITY
• Overview of China’s Capital Market, Kindly sponsored by
(Breakout Seminar Room)
Jane YUAN, Haitong Securities
MODERATOR:
PANEL DISCUSSION: INVESTMENT
Marie O’Connor, PwC
OPPORTUNITIES IN CHINA’S CAPITAL
PANELLISTS:
MARKET
Amanda Pullinger, 100 Women in
Finance
MODERATOR: 19.15PM
Gareth Lambe, Facebook
Chao JIANG, Haitong Securities GALA DINNER - Sponsored by
Jean-Marc Crepin, BBH
PANELLISTS:
Four senior figures from the Funds and
Can ZHU, China Asset Management Co.
Technology industry will discuss their
Hao LUO, China Southern Asset
experiences and views on the success of
Management Co.
Diversity programmes in their sectors, and how
Qian ZHANG, GF Fund Management Co.
these can achieve results for companies who
successfully implement strategic initiatives.
With MSCI’s potential inclusion of China-A
Amanda Pullinger draws on her experience as
index, and the opening up of China’s fixed WI-FI SPONSOR
CEO of 100 Women in Finance. Gareth Lambe
income market to overseas investors, China’s
speaks on the Facebook approach. Jean Marc
capital market is gaining more and more
Crepin takes a wider European view, and Marie
attention from global asset managers. This
O’Connor moderates in her capacity as Country
panel will be a discussion upon investment SSID: IrishFunds
lead (Ireland) of the 30% club.
opportunities in China’s capital market. The Password: davy2017
experienced panellists from leading mutual
16.55PM
funds in China will exchange views on China’s AUDIENCE INTERACTION
PANEL DISCUSSION: FINTECH &
A-share market and bond market, and will also (Questions & Live Polls)
MILLENNIALS
explore questions including China’s capital • Connect to the conference Wi-Fi
market development and leading Chinese asset and open web browser.
MODERATOR:
managers’ investment strategies. • Visit www.sli.do
JAMES POMEROY, HSBC
• Enter event code: IFConf17
15.55PM PANELLISTS: •Y ou can ask questions and vote for
COFFEE BREAK - Kindly sponsored by Brian Kennedy, Davy the best ones
Pervaiz Panjwani, Citi •W e have also prepared a few polls
Chris Horn, Iona Technologies that we will be running later.
Bob Kneip, KNEIP
A N N U A L G L O B A L F U N D S C O N F E R E N C E - PA GE 9
BREAKING
PATTERNS
FOR 200 YEARS
...because the conventional way
isn’t always the best way.
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PROCESS OR A GAME OF
SNAKES AND LADDERS?
Ainun Ayub
Brown Brothers Harriman
In theory, launching an investment fund the fund’s target investments (i.e., how Climb the Ladder: Manage Investor
is a straightforward process: start at quickly investments can be liquidated to Expectations
square one, follow a logical series of pay investor redemptions). Balancing investor requirements with
steps, and arrive at the winner’s circle. the cost of running a fund is an art
In reality, the process can resemble In Europe, UCITS funds need to fulfil form in itself, as alternative funds can
the classic board game, Snakes and liquidity criteria for their investment have unique economic terms for various
Ladders. ‘Snakes’ are setbacks that hold portfolio to match the daily, weekly, or investors. Alternative fund structures
up progress and potentially delay a fund bi-weekly liquidity provided to investors. often include a main flagship fund for
launch or cause operational problems; Non-UCITS alternative funds generally multiple investors and a number of
‘ladders’ are steps that boost the fall under the AIFMD regime, and separately managed account vehicles
likelihood of success. managers have much more flexibility to for large single investors. Feeder fund
structure their funds’ liquidity terms. vehicles (that invest in a single holding
In the credit space, the recent surge Economic or political shocks like of a master fund vehicle) are simpler
of allocations to alternative strategies Brexit expose the inability of poorly than parallel master fund vehicles
has led to some interesting dynamics. matched funds to fulfil large volumes (that each holds a proportion of the
Fund managers well-versed in fixed of redemption requests, which damages underlying investment portfolio).
income have extended their scope to the reputation of both manager and
syndicated bank loan and illiquid private product. What seems like a ladder to Complex fund structures are most
originated debt. Alternative specialists in boost revenues can become a snake that successful and sustainable when there
mezzanine funds are moving into more sets the manager back in the long term. is close collaboration between front
liquid loan trading strategies. Often, this office negotiations with investors and
involves crossing the operational divide The graphic below illustrates areas middle- and back-office teams that
between commitment-based closed- of alignment in green and areas of need to deliver. Managers need to be
ended funds (zero investor liquidity misalignment in red. aware of how far their operating models
with a finite lifespan) and the more can flex before they break, and how
prevalent open-ended funds (no fixed expensive specially negotiated terms
end to the fund lifespan with regular can be to the overall operating model
investor subscription and redemption over time.
and fluctuating fund size).
Pre-launch considerations
Avoid the Snakes: Match Investor and
Investment Liquidity
When structuring a new fund, managers
need to match the liquidity provided
to investors (i.e., how frequently, if at
all, investors can buy or sell interests
or shares in the fund) to the liquidity of
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the logo are registered trademarks of Calastone Limited. © Calastone Limited. All rights reserved. Calastone Limited is registered in England and Wales
(no. 06298923). The registered office is 4th Floor, Birchin Court, 20 Birchin Lane, London EC3V 9DU. Calastone Limited is authorised and regulated by the
Financial Conduct Authority under the Firm Reference Number 487428.CONTINUED
A STRAIGHTFORWARD
PROCESS OR A GAME OF
SNAKES AND LADDERS?
Ainun Ayub
Brown Brothers Harriman
Closed-Ended Funds vs Open-Ended at the right time in the launch process, • Fund administrator for fund services
Funds to work out operational kinks of unique • Depositary in Europe for AIFMD
In drafting the key economic terms for fund terms. requirements
a new and unfamiliar fund product, • Corporate services provider for
care must be taken to understand For example, credit shops with an satellite and investment holding
the operational realities they conjure. operational set up geared for daily net company corporate vehicles
What is straightforward for open-ended asset values and daily processes will • Listing agent for listed fund vehicles
funds can cause complications in need to think through how a closed-
closed-ended funds. For example, multi- ended fund with quarterly reporting Post-launch considerations
currency share classes are common with cycles will actually work within
open ended fixed income and syndicated their environment. The systems and Structural and operational design does
loan funds. The performance fee payable processes designed for straight-through not stop with the launch of the first
to the manager is a percentage of the processing of high-volume trades that fund vehicle. New feeder, parallel,
increase in fund valuation over two are automatically priced daily need or alternative vehicles are often
points in time. adjustment to work with complex multi- introduced for new investors or unique
layered fund structures holding low investment opportunities. Again, strong
Offering multi-currency interests to volume and bespoke private deals that communication is essential between
investors is more complex for closed- are priced manually. the front office teams negotiating the
ended funds, as they are commonly new terms and the back office teams
limited partnership vehicles with no Time to Market that need to deliver on the day-to-day
units. Investors have a proportionate As with anything complex or new, operations.
share in the value of the fund that asset managers need strong project
is maintained as investor cash is management skills to ensure all the The winner's circle
drawn down into the fund to pay for moving parts come together efficiently. Stretching into new products and fund
investments and running costs. Offering Over and above securing investor types is becoming more commonplace
investors multicurrency drawdowns commitments, launch logistics for amongst asset managers, particularly
adds complexity to the incentive fee an alternative fund can be a lengthy, as large investors develop deeper and
calculation, called a carried interest iterative process taking six to twelve fewer relationships with managers.
waterfall. This calculation usually months or more. For master-feeder Being alert to the pitfalls that snakes
includes a cash internal rate of return fund vehicles in multiple jurisdictions, create and opportunities that ladders
(IRR) element that tracks the time value a manager would typically liaise with bring will separate those who meet
of every cash movement since inception. a number of advisers and service their fundraising and return targets and
providers: those who do not.
Reality Bites •O nshore and offshore legal advisers
Alternative fund terms can vary a great for fund documents and regulatory
deal, and fund documentation legalese approvals
needs to make common sense. The right • Tax adviser
operating expertise must be brought in • Auditor
This publication is provided by Brown Brothers Harriman & Co. and its subsidiaries ("BBH") to recipients, who are classified as Professional Clients or Eligible Counterparties if in the European Economic
Area ("EEA"), solely for informational purposes. This does not constitute legal, tax or investment advice and is not intended as an offer to sell or a solicitation to buy securities or investment products. Any
reference to tax matters is not intended to be used, and may not be used, for purposes of avoiding penalties under the U.S. Internal Revenue Code or for promotion, marketing or recommendation to third
parties. This information has been obtained from sources believed to be reliable that are available upon request. This material does not comprise an offer of services. Any opinions expressed are subject
to change without notice. Unauthorized use or distribution without the prior written permission of BBH is prohibited. This publication is approved for distribution in member states of the EEA by Brown
Brothers Harriman Investor Services Limited, authorized and regulated by the Financial Conduct Authority (FCA). BBH is a service mark of Brown Brothers Harriman & Co., registered in the United States
and other countries. © Brown Brothers Harriman & Co. 2017. All rights reserved. 5/09/2017.Trusted Cross-Border Expertise
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Matheson’s Asset Management and Investment Funds Group is the number one
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leading asset management firms. We have experience in UCITS and alternative Practice acting for 29% of Irish Domiciled
investment funds including property funds, private equity funds, ETFs, money market Investment Funds by AUM
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Pictured above at our Dublin office are members of the team, led by Tara Doyle, ICAV Deal of the Year 2016
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Dublin London New York Palo Alto www.matheson.comMONEY MARKET FUNDS
REFORM REGULATION
By-lined article for Barry O’Connor, Partner, Asset
Management and Investment Funds Group, Matheson
Matheson acts as legal counsel to interim ones) come to pass. The final The different valuation requirement
investment managers managing over position can be seen as a good result applicable to public debt CNAV
40% of Irish domiciled money market in that context and puts to bed almost MMFs and LVNAV MMF is one of two
fund assets and has been working to four years of uncertainty. distinguishing features between them,
shape the upcoming money market with the second being that public debt
fund reform regulation with clients, The Regulation covers a number of CNAV MMFs must invest 99.5% of
Irish Funds and other industry bodies different topics, more than the length their assets in government securities
since the initial proposals in 2013. of this piece could cover, but it is worth (either EU or non-EU). The restriction
highlighting the main ones, namely rules out the public debt CNAV MMF
It has been over four years since valuation, liquidity and redemption as a vehicle for a large number of MMF
the European Commission formally fees and gates. strategies.
published its roadmap to reform
for European money market funds Valuation Liquidity
(“MMFs”) and, after several twists Valuation using amortised cost is a key A large number of existing CNAV
and turns in the road, the destination component of a CNAV MMF and its MMFs voluntarily employ a 10% daily
is finally in sight. Fortunately for use will still be permitted under the / 30% weekly liquidity limit, though
the Irish funds industry, and in no new regime. Public debt CNAV MMFs to date that has not been a regulatory
small part thanks to the efforts of may use amortised cost accounting requirement in Europe. The new regime
industry participants during the in a way very similar to how they do will require that at least 10% of the
legislative process, the final MMF so today. LVNAV MMFs, on the other MMF’s assets be daily maturing and at
reform regulation (“Regulation”) will hand, may only use amortised cost least 30% be weekly maturing. Today,
offer a viable regime for constant accounting in relation to assets that MMFs which use the 10%/30% limits
net asset value money market funds have a residual maturity of up to 75 often allow themselves to include
(“CNAV MMFs”). In particular, the days and for assets with an amortised highly liquid government securities
final Regulation permits two types of cost price within 10 basis points of in the calculations, even where their
MMFs that operate as a CNAV MMF: their mark to market price. In addition, maturities are longer dated. The new
the public debt CNAV MMF and the low if the constant NAV calculated using regime also allows MMFs to include
volatility NAV MMF (or LVNAV MMF). amortised cost deviates from the government securities that are highly
marked to market NAV by more than liquid (ie, can be redeemed and settled
The headlines accompanying the new 20 basis points, the LVNAV MMF must within one business day and which
Regulation will have told you that these offer subscriptions and redemptions have a residual maturity of up to 190
two types of CNAV MMF offer realistic at the marked to market NAV. This days), but only in the weekly liquidity
and workable options for existing 20 basis point threshold is far lower bucket and only up to a maximum of
funds. The Regulation introduces new than the existing “break-the-buck” 17.5% of assets. Again, while more
rules and tightens some existing ones figure of 50 basis points but market restrictive than the current landscape,
which certainly make it more difficult reaction to date indicates that it is at the new rules are at least workable.
to operate a CNAV MMF but it is still least feasible, both operationally and
possible to do so, something that may in terms of the yield cost of having to Redemption Fees and Gates
not have been the case had the original hold shorter dated assets than would Technically speaking, redemption fees
2013 proposals (and some of the otherwise have been the case. and gates have always been a tool in
A N N U A L G L O B A L F U N D S C O N F E R E N C E - PA GE 1 7© 2017 Citigroup Inc. Citi et Citi with Arc Design sont des marques de service déposées de Citigroup Inc. The World’s Citi est une marque de service de Citigroup Inc.
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PA G E 1 8 - A NNUA L G L O B A L F U N D S C O N F E R E N C E
citi.com/progressCONTINUED
MONEY MARKET FUNDS
REFORM REGULATION
By-lined article for Barry O’Connor, Partner, Asset
Management and Investment Funds Group, Matheson
the arsenal of Irish regulated funds Other rules The partners at Matheson would be
but, for obvious reasons, they have The final Regulation introduces a series delighted to discuss with you any
never deployed by MMFs, even in of other rules, including rules requiring aspect of the MMFs regime and the
stressed market environments. That the regular publication of fund latest European proposals. Full details
mostly likely will not change in the information, new regulatory reports, of Matheson’s Asset Management and
new regime, but MMFs will at least be internal credit assessments, stress Investment Funds Group, together with
obliged to formally consider them in testing and “know your customer” further updates, articles and briefing
certain cases. Where the proportion requirements (in the sense of knowing notes written by members of the team,
of weekly maturing assets of a LVNAV their likely redemption requirements, can be accessed at www.matheson.com.
MMF or public debt CNAV MMF falls rather than AML).
below the 30% threshold and the net
daily redemptions on a single business Next steps
day exceed 10% of total assets, the At the time of writing, the final
MMF’s board must consider whether or Regulation is expected to be formally
not to apply liquidity fees, redemption published in the Official Journal of
gates or a suspension of redemptions. the EU at some point between mid-
Where the proportion of weekly May and the end of June 2017. Once
maturing assets falls below 10%, the published, the clock will start ticking.
board must implement either liquidity The regulation will enter into force 20
fees on redemptions or a suspension of days after its publication and will apply
redemptions. If, within a period of 90 to new MMFs 12 months after that
days, total duration of the suspensions date (ie, May or June 2018). Existing
exceeds 15 days, a LVNAV or public MMFs will have 18 months to comply
debt CNAV MMF will automatically (ie, by November or December 2018).
cease to be a LVNAV or CNAV MMF.
As with most financial services
External Support legislation, the story does not end
The most controversial aspect of with the primary regulation. The
the original reform proposals was a new Regulation provides for level
requirement for CNAV MMFs to put in 2 regulations to be issued by the
place a 3% capital buffer, which would European Commission and for guidance
be the only means for MMFs to receive and technical standards to be issued by
external support. The final text does ESMA. Work on all of these is currently
not include the buffer but does prohibit ongoing. Irish Funds and the Central
sponsor support. It remains to be seen Bank are involved in this process and
what exactly would constitute sponsor so while for all involved the bulk of the
support, but the text provides for a work on MMF reform has been done
broad definition and it may be that a and the end is in sight, there is a still
number of current practices (eg, fee significant amount of fine-tuning to be
waivers) could be prohibited in the new tackled.
regime.
A N N U A L G L O B A L F U N D S C O N F E R E N C E - PA GE 1 9www.pwc.ie/brexit
The signal
from the noise
Brexit: What do I do now?
Helping clients to find out the key value considerations that
businesses need to take into account around BREXIT
Andy O’Callaghan Olwyn Alexander
andy.ocallaghan@ie.pwc.com olwyn.m.alexander@ie.pwc.com
Ken Owens Marie Coady
ken.owens@ie.pwc.com marie.coady@ie.pwc.com
This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
© 2017 PricewaterhouseCoopers. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity.
Please see www.pwc.com/structure for further details. 06090_00_0517THE SIGNAL FROM THE NOISE
WHAT THE ASSET MANAGEMENT
INDUSTRY SHOULD BE DOING
TO PREPARE FOR BREXIT
Ken Owens
PwC
Now that the two year countdown to Key issues facing the sector include: Operating Model
Brexit has started, asset managers When asset managers and asset
and asset servicing firms should be Access to clients servicers look at Brexit, they see extra
planning for life after the UK departs The number one issue for asset costs. They expect these to arise from
the European Union. managers is access to clients, whether the extra licences and legal entities
on a segregated mandate basis or which they will need to enable them
Given the uncertainty about the via UCITS and AIFs. For UK based to continue to serve their clients. The
outcome of the Brexit process, all firms asset managers using funds which question of how much “substance”
should be planning for a worst-case are domiciled outside of the UK for is required and where that substance
scenario outcome. They should be European distribution, a major concern needs to be located is a critical
prioritising actions to ensure they will is whether these funds can continue to question.
be able to access clients and markets delegate the investment management
after the negotiation period ends. of these funds back to the UK after Firms will be making a mistake if they
Brexit. only look at this question through a
In many ways, Brexit is a challenge regulatory lens. One of the aims of
and an opportunity for Ireland. Ireland Given London’s position as Europe’s the OECD’s BEPS project is to realign
exports more to the UK than any other most important financial centre, it is taxation with economic substance and
EU country. Ireland will be the only not surprising that a large number of value creation, while preventing double
English-speaking gateway to Europe firms have their MiFID hub in the UK, taxation. Firms making decisions about
after Brexit. Ireland will continue to with representatives and branches the level of substance and operating
offer uninterrupted access to the EU located across Europe. model design following Brexit will
market of 450 million people. need to ensure they consider the
After Brexit, the question of whether a implications of BEPS and transfer
Ireland's exports include the sale into UK-based MiFID hub can continue to pricing.
the UK of UCITS and AIFs domiciled serve European clients as it did before
in Ireland or in other EU countries and is a concern for a significant number Talent
serviced in Ireland. Often, management of asset management firms. Many The asset management businesses
of the assets in these funds is firms are looking at alternative options located in London are there for two
conducted by investment professionals including management companies or main reasons. The availability of
based in the UK. They are keen to MiFID firms in Ireland. talent, and the fact that the UK is
ensure that they will be able to manage large market for retail and institutional
these assets after Brexit. Serving the large UK investment investment.
market is a consideration for many
Ireland has a strong, established Asset managers who currently passport According to the Investment
Management industry. It features non-UK domiciled funds into the UK. Association’s 2016 Annual Survey,
a strong pool of talent with deep Following Brexit, managers who wish to asset management firms believe that
knowledge and experience of working continue to sell non-UK funds to retail the long-term impact of Brexit would
with asset managers and investors investors in the UK will need to apply be judged based on the future location
across the globe. Additionally, there to the FCA for the fund to become a of new capacity in Europe as much
is a large pipeline of new talent Recognised Fund. as the potential relocation of existing
graduating from universities and third personnel.
level colleges each year.
A N N U A L G L O B A L F U N D S C O N F E R E N C E - PA GE 2 1Old Youghal Rd.
Richmond
Upper John St.
Cork is Ireland’s second-largest
financial services hub offering
Hill
you a competitive IFS solution
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PA G E 2 2 - A NNUA L G L O B A L F U N D S C O N F E R E N C ECONTINUED
THE SIGNAL FROM THE NOISE
WHAT THE ASSET MANAGEMENT
INDUSTRY SHOULD BE DOING
TO PREPARE FOR BREXIT Rd.
r Glanmire
Lowe
Olwyn Alexander
PwC
Alfred St.
Based on projects we have been • Is your analysis based on worst-case PwC has a multi-disciplinary team
involved with to date, it is evident that scenarios, with no passporting or that draws on subject matter experts
the
Penros e Qavailability of key talent is one of equivalence post-Brexit? in regulation, tax, Transfer Pricing,
uay
the primary criteria that firms are using • Have you considered what you need recruitment and consulting. We can
to decide where they should relocate to to do to ensure that EU firms and work with you to plan and put in place
y retain access to the EU single market. services can continue to access the your Brexit strategy.
Firms should be assessing the potential UK? If you would like to discuss any of
challenges that Brexit raises for the • What are your controls around the points raised in this article, and
retention of their key talent before it’s sensitive data? the effect of Brexit on your business,
too late. • What are you doing about your please contact us.
product mix offering?
Key questions each firm should be • Have you engaged with your Olwyn Alexander Irish Asset & Wealth
asking … uay stakeholders (for example: clients, Management Leader PwC Ireland
Albert Q Ken Owens Partner, Asset & Wealth
investors, counterparties)?
• If you have not started to consider • Do you have a five year business Management PwC Ireland
what life after Brexit will look like V plan for product offering and target
ict
for your business, the following or investors?
questions will help you: • Where do you need to locate your
• Are you engaging with trade business to achieve this plan?
Albegovernment
associations and rt Rd. to
ensure passporting arrangements and
strengthened equivalence are being
Alb
considered?
ert
St
nk R
.
d.
d.
ion R
Stat
A N N U A L G L O B A L F U N D S C O N F E R E N C E - PA GE 2 3custody
fund
servicing
State Street
in Ireland
From our offices across Ireland and
around the world, we put our resources to
work for you. We craft solutions for your
complex investment needs, so you can
get ahead of the competition — and keep asset
your business moving forward. management
statestreet.com/ie
©STATE STREET CORPORATIONDISRUPTING THE DISRUPTORS
Tadhg Young, Senior Vice President, Head of Global
Services Ireland and the Channel Islands
State Street
Disrupting the disruptors Street research found 52% of digital Data Intelligence is more than just a
Digitalisation is re-defining the product leaders were building an integrated, risk management tool
offering and processes of financial omni-channel approach, something Having sophisticated data intelligence
institutions. The challengers, who tend which will simplify their operating can help firms improve their
not to be tied to legacy technology and model. The more, larger financial performance and reduce risk. Many
unimpeded by excessive regulation, are institutions tend to host a significant firms have bought into this concept,
introducing highly accessible services amount of data, and simplifying with 63 percent of digital leaders
that remove many of the barriers and the aggregation process will be an surveyed for State Street’s report
costs traditionally associated with important factor in them gaining a stating that they were fully harnessing
investing. competitive edge over the fintech data and analytics to improve their
disruptors. decision-making processes. Using
Established institutions, however, do industry-leading technology to mitigate
have some notable advantages over Furthermore, new data warehousing risk is supported by investors, with
these newcomers, namely their brand technology is making it possible 39 percent of respondents telling
strength and reputations. This could to analyse data in near real-time, State Street that they expected their
give these organisations a competitive irrespective of whether it is structured investment firms to use the latest
edge over the fintech start-ups who are or unstructured. This can allow firms technology to provide sophisticated
entering the market. So what do the to verify the accuracy, integrity and data analytics. Firms have recognised
dominant financial institutions need to timeliness of any data as it is being this, and many are deploying data
do if they are to co-exist alongside the produced. If there is an issue with analytics to identify risk and gain a
digital disruptors? data, it can be addressed immediately real-time view of how shifting market
in this environment. conditions are impacting portfolios.
Effectively managing data will be a
huge determinant behind any financial Digital repositories enable investment Data intelligence – or advanced data
institution’s success over the next few firms to integrate third-party data analytics as it is often known – is not
years. In a recent State Street Survey1 – such as external benchmark data just a risk management tool. It can also
industry leaders stated that they are – with their own. Other unstructured be used in predictive analysis, be it
putting data integration, intelligence data feeds such as social media in scoping out future investor trends,
and integrity at the core of what they posts, video/audio files and email text understanding client needs and finding
do. will eventually be incorporated into new ways to benchmark performance.
the process. Firms will then be able In addition, predictive analysis can be
Data Integration – simplifying the to leverage artificial intelligence to used to better align investment firms’
aggregation process produce quality analysis of their data agendas with client needs.
Streamlining data management pools, which will allow them to identify
internally at any organisation can be trends or behavioural traits enabling Data intelligence can also be applied to
highly effective. At present, numerous a superior product or service to be expanding market share in new market
companies simply transfer their delivered. segments, or targeting individuals
information into a data warehouse through a highly-customised approach.
pending analysis, which can be Advanced data analytics can enable
cumbersome as the data needs to firms to segment their client base more
be cleansed and converted into a clearly, and this is an approach already
standardised format. The same State being adopted by 63 percent of digital
Finance Reimagined: Finding Long-Term Value in a Digital Age. Data taken from Wealth and Asset
1
Management 2021, Roubini ThoughtLab, sponsored by State Street. Based on extensive quantitative analysis
of 2,000 investors and 500 wealth firms; economic modelling and forecasting across 25 countries; and
expert opinions from more than 40 market leaders, economists, technologists, and investment specialists. A N N U A L G L O B A L F U N D S C O N F E R E N C E - PA GE 2 5STREAMLINE, TRANSLATE AND
TRANSFORM YOUR REPORTING
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PA G E 2 6 - A NNUA L G L O B A L F U N D S C O N F E R E N C E dfsco.com/emeaCONTINUED
DISRUPTING THE DISRUPTORS
Tadhg Young, Senior Vice President, Head of Global
Services Ireland and the Channel Islands
State Street
leaders surveyed by State Street. For Complacency is not an option
example, many organisations only use There’s no denying that digital
net worth to categorise clients whereas disruption is coming to the finance
predictive analysis can dig deeper industry, and no firm can afford to be
into client behaviour, allowing firms to complacent. As the research illustrated
better segment their stakeholders. in the State Street report, some
investment firms are already at risk of
Established market participants being left behind. However for those
naturally have a brand and reputation investment institutions that are bold
advantage over the relative newcomers enough to rethink their business models
to the market. This is apparent in the from the bottom-up around digital, and
State Street study, which found 53 are always looking to improve the client
percent of investors acknowledged experience, the future looks bright.
they trusted established wealth service
brands more than new entrants. This
is a huge advantage, and organisations
should leverage that to their advantage.
Sixty per-cent of respondents in the
State Street study said reputation,
brand and experience would be among
the most important qualities investors
look for in firms over the next five
years.
A N N U A L G L O B A L F U N D S C O N F E R E N C E - PA GE 2 7C
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PA G E 2 8 - A NNUA L G L O B A L F U N D S C O N F E R E N C E
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