1 Confidential Managing the Operational challenges of Fund distribution ACSDA- Leadership Forum Buenos Aires Diego Pizzamiglio November 2011

2 Confidential Euroclear Group World’s leading provider of post trade services US$ 30 trillion of assets under custody 150 million transactions settled, representing US$736 trillion in value Domestic securities from 44 markets Financial institutions from 90+ countries Settlement in 53 currencies More than 675,000 bonds, equities, DRs Europe 48.% UK 13% Asia - 10% Japan - 4% North America - 10% Latin America 7% Middle East – 7% Africa - 1% Australia 1% Broker/ dealers 49% Central Banks 6% Custodians 25% Investment Managers 18% Others 2% Euroclear Group in 2010 AA+ rated More than 60,000 mutual & hedge funds Euroclear group CSD markets 63% of European funds market (AUM) FundSettle

3 Confidential Trends in the fund industry European fund market Growth of the European fund market The dynamics of the growth: 1.Increase of X-border distribution 2.Increase of 3rd party funds distribution 3.Moving from closed - to open but guided architecture

4 Confidential Evolution of European 3rdparty Xborder activity Assets 2010 net sales net sales (bio €) % % United States 9,150 Europe (UCITS only)5605* Cross-border (LU-IE) 2, % % United Kingdom %90 12% Other dom mkts 1, % % France 1, %99 -50% Germany % % * total assets 7.5 trillion Continued shift to cross-border Increasing importance of non-European markets for x-border sales

5 Confidential The challenges of the European landscape LuxembourgFranceNetherlands UKSwedenFinlandSwitzerlandItalyGermany Ireland

6 Confidential Sales and marketin g Product definition Fund selection Asset servici ng Cash Settlem ent Order Routin g Poor level of service Very high back-office costs High risks & sensitivity to volumes Value-added services Banks Fund platforms Custodians Brokers IFAs consolidators TA FMC° TA FMC° TA FMC° Buy side intermediaries Value-added services Sell side Sharehol der services Sales & marketi ng Asset mgmt Fun d’b ank Institutional investors Retail investors Pension Funds FOF Multi- managers Operational challenges of Fund distribution

7 Confidential Reconcile balances Corporate Actions Application form & order placement Fund cash correspondent Cash Payments Contract note Shares Statement Corporate Actions Trailer Fees report agent identification lack of standard procedure manual handling of forms cut off time track receipt of confirmations lack of standard format manual handling cash management manual reconciliation of positions, cash payments and trailer fees. corporate actions Order Routing Settlement Asset Servicing Operational challenges of Fund distribution Fund Seller Transfer Agent: Registrar Trailer Fees Fund Buyer

8 Confidential Sales and marketin g Product definitio n Fund selection Asset servici ng Cash Settlem ent Order Routin g Value-added services TA FMC° TA FMC° TA FMC° Value-added services Sharehol der services Sales & marketi ng Need for a neutral market infrastructure Asset mgnt Banks B2B & B2C Fund platforms Custodians Brokers IFAs consolidators Sell side Low cost Low risk Straight through processing Buy side intermediaries Fun d’b ank Operational challenge of open architecture Market requirement Single entry point Automation Standardisation

9 Confidential Fund cash correspondent Fund transfer agent FundSettle Order confirmation Transfer agent selection Payment date cash credit/debit Validation Trade date Shares credit/debit Fund investor (Commercial banks, Private banks, Fund Supermarket,…) OrderConfirmation View orders to prepare payments Execute cash payments for subscription Collect cash for redemption Order processing: Custodians and Institutional investors access to FundSettle Cash Shares

10 Confidential Fund cash correspondent Fund transfer agent FundSettle Order confirmation Transfer agent selection Payment date cash credit/debit Validation Trade date Shares credit/debit Cash OrderConfirmation View orders to prepare payments Execute cash payments for subscription Collect cash for redemption Order processing: Custodians and Institutional investors access to FundSettle Fund investor (Pension Fund,…) Shares Custodian

11 Confidential Fund cash correspondent Fund transfer agent FundSettle Order confirmation Transfer agent selection Payment date cash credit/debit Validation Trade date Shares credit/debit Fund investor (Multimanager,…) Custodian OrderConfirmation View orders to prepare payments Execute cash payments for subscription Collect cash for redemption Order processing: Custodians and Institutional investors access to FundSettle Cash Shares Custodian

12 Confidential Conclusion Industry now recognises the need for a pan European infrastructure in the fund industry The industry is eager to solve market inefficiencies Need for standardisation to automate, generating the necessary savings and support for the growth of the fund industry

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