Share Class Conversion Steering Group

Transcription

1 Share Class Conversion Steering Group Minutes of meeting held on 24th October 2013 Euroclear, 33 Cannon Street, London, EC4M 5SB In Attendance: Actuare Altus Ltd BNY Mellon Bravura Bravura Calastone Conach Financial Euroclear Euroclear IFDS IDFS Investec AM James Hay Northern Trust PwC Skandia Standard Life State Street Transact Zurich Zurich Dialling In: Fidelity SEI Investments Apologies: Henderson Global Investor Nucleus Financial Group SEI Investments Walbrook Partners Charles Kilkenny, CEO Ben Cocks, Director Martin Morgan, Business Re-engineering Manager Trevor Brown, Business Architect Matt Pells, Product Manager, GTAS Senior Business Analyst Carl Wright, Senior Business Analyst Gerry Purcell, Senior Operations Analyst Dan Thomas Martin McHarg, Head of Product Development Andrew Baldock, Funds Industry Liaison & Standards Kerry Winder, Product Manager Stuart Louden, Director, Library Information Services David Zwirm, Business Development Darren Porter, Senior Technical Manager David Moffatt, Group Executive Mike Langdon, Fund Operations Technical Director Chris Smeaton, Head of Product Development Andy Tamlyn, Head of BPA EMEA Phillip Ball, Director David Aspinall, Investment Specialist Emer Murray, Senior Operational Development Cons Andrew Strong, VP regulated funds tax Nicky Riddell, Business Analyst Ruth Kelly, Investment Strategy Specialist Lou Whitcombe Jeffrey Mushens, Technical Director Peter Smith, Head of Distribution, Engagement Marita Margerum, Secretariat Gavin Wilson, Head of Distribution Services Joanne Coles Peter Plant, Head of Strategic Relationships Martyn Bailey, Operations Manager Jeffrey Spence, Wrap Operations Director Dave Jenkinson, Head of Business Transitions Mark Lester, Director 1

2 1. Welcome and introductions: JM welcomed members and thanked AB and Euroclear for hosting. JM reminded members of confidentiality rule. 2. Minutes of previous meeting and Actions Log: Minutes from 2 nd October and 17 th October were agreed as an accurate account.. All Actions in relation to the Statement of Practice to be closed. Action 12 Meeting was held. It was concluded that share classes with differing XD dates and charging were not an issue. However, conversions from a Net to Gross share class (and vice versa) were of concern. The current solution with 3 Valuation Points is not ideal. Action 16 Cover in Agenda Action 18 No Comments received close Action 3. Discussion on proposed solutions Previous solutions discussed were for the ceding party to convert to a common share class and then re-register to the acquiring party. This would involve an A to B to C share class conversion. o This solution may detriment clients sitting in the common share class, who have no link to the conversion. A subsequent discussion took place to investigate if it would be better for the Platforms and Fund Managers to agree to have all share classes on all platforms, thus facilitating an A to B conversion and reregistration. o This has been a suggestion in previous meetings, but there was pushback as legally platforms can not hold all share classes (platform specific share classes) A definition of the word holding needs to be given. It might be possible to hold Platform Specific share classes for transitional purposes. o Also this would entail all platforms to have increased static data, and require them to obtain rates for assets that they can not hold. Concerns with this were raised in that with an increased number of funds, there was an increased risk of error. Additional reconciliations will need to be carried out if holding an increased number of funds. o Distributions would also need to be run for funds that the

3 Platforms can t usually hold. Distribution data will need to be made available for every share class. o If all Platforms hold all share classes, the ceding party would re-register to the acquiring party, and the acquiring party would carry out the conversion. o Platforms are nervous of this solution as it is unknown how many extra share classes they will need to hold on their systems. Dealing with an increased volume of funds will be a challenge. The cost of setting up a fund is approximately 20k plus approx. 15k p.a. o If the acquiring party does not hold the share class, there will be a delay in processing while the share class is set up on the system. o Fund Managers will need to inform the Platforms when new Share Classes are set up. SL from advised that they have signed agreements with ISO and Asset Managers with details of all fund share classes. He advised that this could be available for Platforms to absorb into their own systems for a nominal licence fee. SL to send the hierarchy tree to MM to distribute to the Group o A question was raised as to whether there were any alternative providers to. Not that they are aware of. would like to promote competition and not create a monopoly. o A question was raised as to whether the information Fund Library provides would include Hedge/non Hedge funds. Platforms would like this information in advance so that they have the ability to inform the client if there will be a switch or a conversion. asked what data would be needed. When a new product is set up, also set up what it can and can t be converted into. o asked if there was any other additional information that may be needed. For example, if going from Superclean to Clean, the adviser may need to inform the client that they are moving to a fund that may detriment them. SL from to send hierarchy tee to MM to distribute to Group DP of IFDS to ask Fund Managers if they are comfortable in allowing

4 It was pointed out that details of the TPA and their location would be required. o In terms of datafeeds, it was agreed that standards should be set up. This would be beneficial to and to any other data providers. o The difference between other Vendors and is that have existing contracts with Fund Providers. They would not need to re-engage with them to obtain the required data. It was pointed out that if a Platform can hold an asset for x period of time, then fund managers need to be aware that this may not be brief if manual processes are involved. A question needs to be asked to the Fund Managers: o Are they comfortable in allowing Platforms to hold unauthorised assets for a Transitional period. DP to ask this question In terms of the technical aspect of re-registration, the Adviser will use an illustration and he will use the Target Class. The Acquiring party will do the Conversion, subject to holding all the funds and mapping being provided. It is felt that this solution would be the most favourable to the Client, as there will be no common share class and when they move they will see their old share class on the new platform, and then the old converted to the new. The Acquiring Party and the Fund Managers would be doing the bulk of the work. The onus will therefore be on the parties who are winning the business. A re-registration message set and conversion process are already established. The consensus is that this is the way forwards, pending agreement of the Fund Managers. Do we need to examine the TeX SLA to make provision for specialised conversions. JM to investigate A number of firms do not set up funds ad-hoc; they perform a monthly/quarterly exercise. This would be an issue for this solution. A question was raised as to what the current FCA view on Share Class Conversions was, now that it is actually happening. o More competition Platforms to hold unauthorised assets for a Transitional period JM to examine TeX SLA to see if we need to make provision for specialised conversions

5 o More variety. A question was raised as to how many VPs the Market Standard should be for conversions. 4. Next Steps o Depends on reporting of Fund Manager to Platform o Depends if electronic or manual. o Most agreed it should be the next day s VP. o It was felt that we are not yet in a position to set a Market Standard. A Wrap and Platform meeting is due to take place on 4 th November and responses will be gathered to fire back to the FCA. The meeting on 4 th will also discuss the meeting with HMRC on 7 th. Summary of today s meeting: o Discuss with Fund Managers the possibility of holding all share classes on all platforms. o Look at the impact of holding these extra funds. o Agree a common standard for datafeeds o The FCA need to understand that there is a limit to the number of funds Platforms can deal with. 5. Date and time of next meeting Tuesday 10 th December 10:30 12:30 Meeting room needed for approximately 30 persons if you can host, please can you inform Dee Wastnedge Attachments: Actions Log