The very first edition of the TA & Asset Servicing seminar in Hong Kong was a great success! More than 150 fund industry professionals gathered to exchange on matters focusing on the Fund Distribution Operations value chain.
Speakers at the event
Peng Choy, Vice Chairman, Board of Directors, Harvest Global Investments
Keith Hale, CEO, Multifonds, Luxembourg
Aaron Ng, Senior Product Manager, Asia Pacific Fund Services, HSBC, Hong Kong
Olivier Portenseigne, Managing Director & Chief Commercial Officer, Fundsquare, Luxembourg
What are the key take-aways from the event?
The panel highlighted different distribution strategies into key markets in the Asian region. A close attention was paid to the mutual recognition of funds between Hong Kong and Mainland China, as well as on the current development of passporting schemes. It was reported that these schemes are still challenging to reach economy of scale and therefore UCITS products remain the most widely distributed product. However UCITS is not always perfect and sometimes it has to be combined with a local domiciliated product in order to target specific type of clients.
For new managers entering the markets, it is fundamental to have a clear understanding of each jurisdiction of the Asian region, as the strategy applied by existing managers may not be easily replicated.
KYC / KYD
The industry needs to overcome some difficulties before reaching real efficiency :
- Long TA onboarding process, including document collection and translation;
- lack of harmonization of documents requirements;
- heavy management of both local regulation requirements and asset managers’ requests vs experienced onboarding staff assessing the investor / product risk.
There are several market initiatives currently under discussion focusing on risk assessment and document collection. Consistency & inclusion of all entity types is key e.g. non institutional investors, which enables all data / documentation to be obtained from a central source. This will be an important milestone to ensure that a successful model is created that can be used globally and within Asia.
PRIIPs, Fatca, CRS, Mifid 2 : This session aimed at demonstrating how these regulations are changing the current market environment and distribution services. The next four years will shape and cement how the future of the asset management industry develops.
The panel key word was “Disruption”. An analogy with the evolution of retail and music distribution models set the scene: giant innovators like Amazon and iTunes changed the overall distribution landscape and killed the previous distribution models.
The asset management industry is reaching its limits with tightened regulation and back office complexity. However, the future is shaping: block chain and big data are two of the major models arising to reduce cost of manufacture and delivery. The need to become digital / fintech focused is key in attracting new investors. An open & forward thinking market is also essential. Fund Promoters / Managers / banks & system vendors must move forward in the digital space, otherwise other players will do it for them e.g. Google / Alibaba