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Calastone Expanding Services to Wrap Platforms and Fund Managers

Posted: 01 Feb 2012

Given the size and structure of the Australian managed funds market and the legislative and regulatory push for greater efficiencies and risk management around operations, Calastone co-founder Kevin Lee says the firm’s offering should be suited to wrap platforms and fund managers looking to automate processing without having to make investments in new IT.

Calastone began processing electronic trades of managed funds last month and will launch its net settlement and reconciliation services this year. The firm has already gone through a “phase one” pilot test with a small number of wrap platform and fund providers, and it is expected that a further six of the “top 10” platform providers will come onto the Calastone platform in the next six months.

Calastone already works with organisations with Australian operations that operate in other markets, such as RBC Dexia, BNP Paribas, J.P. Morgan and State Street. Australian fund managers that outsource registry functions to those organisations should easily be able to link into Calastone via their providers, Lee says.

“For the platforms, it is less about cost savings and more about reduced risks,” he says. “You have an opportunity here to go from faxed instructions to straight-through processing, and moving from one to three business days for a confirmation to five to 15 minutes.”

Calastone offers a full funds service from account opening through to settlement. The firm is independent and provides its services via a fee-for-service model.

“We understand the pressures on business to justify investments, even if the investments increase efficiencies,” Lee says. “We are unique in that we don’t ask organisations for license fees, technology fees or charge a subscription. “We try to make the service objectionless – i.e., you can’t find a reason not to do it.”

Although Calastone has started its Australian campaign with processing electronic trades, Lee says that the full STP suite that is on offer in other markets can provide additional efficiencies for clients. For example, Lee says that European clients that use the platform for monthly reconciliation can reduce the process from 21 days to three days after the close of the month.

(RA)

If you have any comments about this story or news tips, contact Christopher Gohlke in New York at cgohlke@globalcustodian.com or Janet Du Chenne in London at jduchenne@globalcustodian.com.