• February 2007 - European Union UCITS III directive reduces barriers, allows mutual funds to invest in a wider range of funds including derivatives
  
• UCITS III implications
  • fund infrastructure upgrade
  • OTC processing complexity
  • independent daily valuation: risk requirements*
  • time to market ambitious reporting.

The Mutual Fund, Custodian Bank Challenge

Mutual funds and custodian banks share the challenge of in-house accounting engines struggling with both the volume and diversity of the new and/or different types of positions coming on stream, i.e. derivatives, leverage and the borrowing of both cash and securities. Being UCITS Ill-compliant requires a robust, scalable, high-quality middle- and back-office infrastructure that can be costly and time consuming to develop in-house. Significant IT and resource investment is required to upgrade in-house systems – many of which are spreadsheet-based - and provide sophisticated OTC processing and risk reporting services. It is a new, complex and rapidly expanding territory in which few mutual funds or custodian banks have extensive experience.

 

As an industry leader in OTC processing GlobeOp’s UCITS lll service package combines GoOTC™ and GoRisk^® Reports, two well-established services that offer:

• standardized data and processes to minimize operational and settlement risks
• independent, transparent, web-based valuations
• document and collateral management
• settlement
• comprehensive daily risk reporting
• online access to critical data for fund risk managers and financial control teams
• customized reports including position, liquidity and exposure; scenario analysis and stress test limits; correlation analysis; and value-at-risk (VAR).

 

GlobeOp’s UCITS lll solution: Client benefits

• more quickly take advantage of derivative market opportunities
• resolve trade processing infrastructure challenges
• respond to regulatory requirements
• increase their focus on generating returns
• benefit from a proven, scalable infrastructure
• reduce technology-related investment while continuing to access leading edge innovations

 

* Funds remain ultimately responsible for regulatory compliance, the specifics of which can vary from country to country.

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