From a standing start, the project now has over 80% coverage of platforms and fund managers.
The first half of the year saw some significant challenges and somewhat justified resulting bad press. The second half however saw a dramatic improvement, with many more counterparties getting ‘wired up’. This resulted in a reduction of ‘manual paper’ transfers and re-registrations and transfer times tumbling from weeks to days and even hours.
In November, the open standard for transfers was expanded to include pension transfers, additional asset types (equities) and the automation of custodians (intermediate Unit Holders).
The main highlights were:
- 16 platforms operate live electronic transfers, representing over 80% of AUA on platforms (9 use the Altus Transfer Gateway).
- 51 fund managers are now doing live electronic transfers, representing 89% of UK FUM (32 use the Altus Transfer Gateway).
- There are now 5 vendors providing solutions all interoperating successfully.
- Transfer times have tumbled with the majority of electronic transfers completing within a few days.
- Many clients are now completing 75% of their transfers electronically.
- Volumes continue to increase dramatically with over 50% of all last years electronic transfers taking place in Q4.
So, what can we expect for the transfers market in 2014? It is likely to as eventful as 2013, perhaps even more so. We believe the main areas of development will be:
- More participants – the remaining retail investment platforms and fund managers will get ‘wired up’ and the number of ‘connected’ parties will continue to increase. The inclusion of Intermediate Unit Holders will allow wealth managers and many from the D2C market to benefit from electronic transfers. We expect a number of these participants to start live electronic transfers by mid-2014.
- Reduced Transfer Time – as more counterparties get connected (resulting in near 100% coverage) and existing counterparties improve their systems and processes to achieve full STP, we’ll begin to see transfers completed in 5 to 6 days as the norm.
- Greater FCA Scrutiny – as TeX members begin providing monthly performance information against SLAs we expect the FCA, who have expressed concerns on electronic transfer adoption, to ask questions of organisations holding investments in nominee structures and not completing transfers ‘in a timely manner’.
- Pension Transfers – with the inclusion in 2.1 of the open standards and extensions to the TeX legal framework to include pension transfers, we expect to see a wide range of pension providers benefiting from an open, interoperable and automated process, transfering pensions in days.
- Share Class Conversions – might be considered one of the most significant challenges facing transfers and re-registrations in 2014. We see it as an opportunity to automate further. The industry, led by TISA, are close to agreeing a standard for the completion of a share class conversions as part of the transfer process. Once this is agreed implementation of automated solutions will follow quickly.