Tuesday 13th October 2015
NEWS TICKER, OCTOBER 12TH 2015: Segulah IV LP has sold Etraveli Holding AB to ProSiebenSat.1 Media AG for some €235m. For ProSiebenSat.1, Etraveli represents its largest international investment in eCommerce to date and it complements its travel portfolio brand 7Travel. Etraveli is one of Europe’s largest Online Travel Agents and is headquartered in Uppsala, Sweden, and operates in 40 countries and four continents. In 2014, Etraveli generated around €900m in Total Transaction Value and €69m in net revenue. In the first six months of 2015, net revenue growth was 34% year on year. Arma Partners acted as exclusive financial advisor to Segulah IV - Joint venture partners Lionstone Investments (Lionstone), a privately owned, US-based real estate investment company, and Hermes Investment Management, the £29.8bn manager focused on delivering superior, sustainable, risk adjusted returns to its clients – responsibly, have acquired One Bunker Hill, a landmark Art Deco office building located in the heart of Downtown Los Angeles. Lionstone and Hermes Investment Management will renovate the 273,000 sq ft building, preserving its character while converting its more traditional offices into creative workspaces suitable for technology, media and entertainment companies desiring a downtown location. Jane Page, CEO at Lionstone, says, “The resurgence of the Downtown submarket of Los Angeles, along with the unique features of this historical property, make this investment very attractive. The partnership will embark on an extensive capital renovation program to reposition the building and transform conventional office space into a creative, amenity-rich environment.” - Morningstar has moved the Morningstar Analyst Rating™ for the Royal Corporate Bond fund to Silver. The fund’s rating was previously Under Review. Prior to being placed Under Review, the fund held a Gold rating. Ashis Dash, manager research analyst at Morningstar, says, “Following a recent Morningstar Analyst Ratings meeting, we have moved the Royal London Corporate Bond fund to a Morningstar Analyst Rating™ of Silver. The fund’s rating was previously Under Review following the announcement that manager Sajiv Vaid would be leaving Royal London Asset Management (RLAM). Prior to being placed Under Review, the fund held a Gold Rating. Jonathan Platt, the co-manager of the fund and head of fixed income at RLAM, took over sole managerial responsibility for the fund in May 2015. Platt joined RLAM in 1985 and has been instrumental in developing RLAM’s fixed income expertise and shaping the fund’s investment approach. While we view Vaid’s departure as a significant loss, the continuity to the investment process provided by a seasoned manager in Platt and the support he receives from a close-knit fixed income team at RLAM continue to drive our positive view on the fund.” - Fidessa group plc (LSE: FDSA) says it is providing CIMB Securities (CIMB), with its derivatives platform. Justin Llewellyn-Jones, Global Head of Derivatives at Fidessa, views the expanded partnership with CIMB as timely given the current trends in global derivatives. "Interest in Asian derivatives is on the rise with exchanges, clearing houses, brokers and vendors all making significant moves in the region," he said. "CIMB's implementation of an integrated system will enable their local, regional and global clients to participate fully in global markets in any way they choose, and take advantage of our real-time monitoring and reporting capabilities as well as our sophisticated algorithms and controls." With the futures and options platform co-located with SGX in Singapore, CIMB's clients will enjoy low-latency access to Asian derivatives markets. They will also be able to take advantage of Fidessa trading screens themselves, enabling them to both monitor order progress and execute their own DMA trades. David Polen, Global Head of Electronic Execution at Fidessa, adds: "Managing execution in Asia has always been a nuanced business. There is a tremendous velocity of regulatory and technical change across all jurisdictions. On top of this, buy-sides require flexibility in how their orders are handled.” – Emerging markets’ foreign exchange reserves have dropped about $650bn (7% of total reserves) since reaching a peak of $9.4trn in June 2014 says Jan Dehn, head of research at Ashmore. Emerging markets control nearly 80% of the world’s FX reserves. Currency movements are the big determinant of reserve levels. Huge shifts in exchange rates, particularly in the value of the USD have affected central bank reserves since mid-2014. Nonetheless, Dehn suggests that reserves in many emerging economies are of a level that any appreciation in the US dollar is unlikely to pose a major risk to their overall reserve position. Dehn says the dollar is now so strong that it is hurting US growth and its strength has become the most important factor influencing the Fed’s decisions on rates. “This means that the two most compelling reasons for the dollar to continue to rally – higher growth and higher rates – are losing steam,” he states - National wealth manager Bellpenny says it has completed two more transactions involving IFA businesses. The deals bring combined funds under management of over £150m and more than 500 active clients. This takes Bellpenny’s total number of acquisitions since launch to 32. The acquisition of Cambridge-based IFA, Ashton KCJ Financial Planning LLP, encompasses around £60m of funds under management. The business was jointly owned by Ashton KCJ Solicitors and Price Bailey LLP. The second purchase is that of Horsham-based IFA, Principals in Practice Limited (PIP) and involves £90m of funds under management - ETF Securities and ISE ETF Ventures have launched an equity index ETF, the ETFS ISE Cyber Security GO UCITS ETF from the ETF Securities product family, in partnership with ISE ETF Ventures on Xetra and Börse Frankfurt. The ETF’s ISIN is DE000A14ZT85. The ETFs’ total expense ratio is 0.75%, has an accumulating distribution and is benchmarked against the ISE Cyber Security UCITS Index. The ETF gives investors access to companies around the world whose business focuses on cyber security, including protecting websites and networks against unauthorised access, developing the requisite hardware and software as well as offering advisory services in this area. The new ETF only includes companies with a minimum market cap of $100m and a minimum daily value traded of $1m. ISE, which is part of Deutsche Börse Group, has calculated the underlying index since August 26, 2015 with a base date of December 31st 2009 - Stocks in China and Hong Kong rallied Monday on stimulus measures from Beijing and signals of reform in the country's telecommunications sector. The Shanghai Composite Index rose 3.3% while Chinese firms in Hong Kong led theHang Seng Index up 1.3%.China's central bank announced over the weekend that it would expand a pilot program that would boost banks' lending abilities. The plan, currently in place in Shandong and Guangdong, allows banks to pledge certain assets to secure loans from the central bank. It will be expanded to nine provinces including Shanghai and Beijing. The Straits Times Index (STI) ended 51.47 points or 1.75% higher to 2998.5, taking the year-to-date performance to -10.90%. The top active stocks today were DBS, which gained 1.55%, SingTel, which gained 2.12%, Noble, which gained16.05%, Keppel Corp, which gained3.91% and UOB, with a 1.84%advance. The FTSE ST Mid Cap Index gained 1.32%, while the FTSE ST Small Cap Index rose 0.93%. - Glencore--the world's largest copper supplier and third-largest copper miner—is reported to have initiated the sale of its Cobar underground mine in Australia's New South Wales state and its Lomas Bayas open-pit operation in northern Chile. The company is reported to have begun the sales in response to a number of unsolicited expressions of interest from various potential buyers. Interested parties will be able to place an offer for one or both of the mines. Cobar was valued at $329m by Glencore at the end of 2013 following a $137m write-down on a revised mining plan, while Lomas Bayas mine, located in northern Chile's Atacama region is valued at $335m. Australian press reports say Bank of America Merrill Lynch and UBS are advising Glencore on the sale. - In Turkey, headline inflation accelerates to 7.9% year on year in September, due to a stronger FX pass-through and higher food prices, says National Bank of Greece. The country’s trade balance improved significantly in August, mainly on the back of a lower energy bill and weaker domestic demand, while core inflation rose to an 8-month high in September, reflecting a stronger pass-through from a weaker TRY (the depreciation of the TRY against the basket of “50%*TRY/EUR+50%*TRY/USD” accelerated to a 1½-year high of 20.9% year on year in September from 16.6% in August). The CBRT’s favourite core inflation measures, i.e., CPI-H (that excludes energy, unprocessed food, alcohol, tobacco and gold) and CPI-I (that also excludes processed food) rose to 8.3% year on year and 8.2% year on year, respectively, in September from 7.8% and 7.7% in August. Furthermore, food prices (comprising 24.2% of the CPI basket) increased by a 4-month high of 10.7% year on year in September against 9.7% year on year in August (adding 0.3 percentage points to headline inflation). – The European Investment Bank has filed a notice with the Luxembourg Stock Exchange that it will redeem all the outstanding notes of its $50m callable zero coupon bonds due October 31st 2042 (ISIN: XS0847990768) at a redemption price of 112.4864000% at the end of this month – Bulgaria reports that its consolidated budget recorded a surplus of 0.7% of GDP in the first eight months of 2015 compared with a deficit of 1.6% in the same period in 2014. This was the best performance since 2008, and was mainly driven by an across-the-board improvement in budget revenue (up 2.2 percentage points of GDP year on year in between January and the end of August). Specifically, tax revenue surged in 8M:15 (up 1.3 percentage points of GDP year on year), largely attributed to strong base effects.

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A streamlined approach

Friday, 15 June 2012
A streamlined approach The European asset management industry has grown considerably over the last ten years. Assets under management (AUM) stood at €3trn at the end of 2001, and had reached €7.89trn by the end of the second quarter (Q2) 2011. This growth, which will support the savings and retirement of a large portion of the European population, means asset managers have an enormous responsibility to their end clients. By Ann Doherty and Brian Coughlin, JP Morgan Worldwide Securities Services (WSS). http://www.ftseglobalmarkets.com/

The European asset management industry has grown considerably over the last ten years. Assets under management (AUM) stood at €3trn at the end of 2001, and had reached €7.89trn by the end of the second quarter (Q2) 2011. This growth, which will support the savings and retirement of a large portion of the European population, means asset managers have an enormous responsibility to their end clients. By Ann Doherty and Brian Coughlin, JP Morgan Worldwide Securities Services (WSS).

It is inevitable that asset managers want to retain their investment gains by reducing uncertainty and risk from their activities as much as possible and increase straight through processing (STP) and transparency, particularly in today’s volatile environment. One way to achieve that is to use a custodian that can provide all of these benefits through a streamlined product offering to help reduce both costs and risks while keeping up with the ever-

changing regulatory environment.

The objectives of asset managers present their own challenges, particularly with a regulatory reform agenda framed by G20 commitments, which culminated in the Dodd Frank Wall Street Reform Act and the European Market Infrastructure Regulation (EMIR). Since 2008, regulation has been constantly evolving and expanding. In addition to those two regulations, investors also have to adjust to the second iteration of the Markets in Financial Instruments Directive (MiFID II), UCITs IV, AIFMD, FATCA, Basel III and Solvency II.

To understand and execute on what regulators expect from them, asset managers today look to their service provider for help with the provision of an industry-leading  global custody and securities services offering with innovative technology to meet their daily requirements; seamless execution to increase STP and reduce risk; thought leadership to help them understand how regulation and potential market events could affect them (as well as their end-clients) and provide appropriate and timely data analysis.

Inevitably, the most sophisticated asset managers want to work with a securities services provider that can provide global reach and which has sufficient resources of capital to invest in industry-leading systems and technology. That means all of their requirements are met in one place. Investors then benefit and can have confidence in the fact that whatever complexity is injected into the market, whether by unexpected market events or by regulators, their custodian will be able to manage it.

Next, asset managers want seamless execution to help them eliminate risk and costs. Recognising the important role that asset managers play in the savings and pensions industry, regulators are putting pressure on them to provide their end clients with transpar­ency and as little risk as possible.  To do that, fund managers must tighten up the chain in their post-trade activities. 

For their part, custodians have been moving into more consultative technology-driven services for years, which asset managers and other users of custodian and related securities services have greatly benefitted from. Increasingly, these users of securities services are looking to their providers to move even closer to their front office, even coming just after the trading and investment decision. 

In the past, using one firm’s investment bank to execute trades and using the same bank’s custodian arm might have raised concerns about whether this one-stop-shop provided the best execution and cost in the market. ­Regulations, particularly MiFID, have removed that uncertainty.

Finding a provider that can tick the first two boxes as well as provide the critical consultative thought leadership all asset managers look for to keep up with regulatory and market changes, isn’t easy. Asset managers look to their service providers to provide ­information about changes arising from the rapidly evolving regulatory environment, to ensure that new requirements are understood and ­prepared for. Large international firms that are present in multiple jurisdictions are best placed to have a view of regulatory changes and to adapt their services to new requirements on a global basis.

Lastly, asset managers also rely on service providers to help them provide up-to-date and transparent data ­analysis, which is a critical reporting requirement to regulators, governments, trustees and other stakeholders, and is part of their own internal risk reviews.

This means asset managers want detailed information about their ­transactions, securities held, and ­breakdown of the core characteristics of those assets. They also want this data delivered in a fast and efficient manner, which requires a strong STP framework. This presents a challenge and an opportunity for service providers as it is not an easy task pulling together different sets of data and presenting it in a format that asset managers can consume and customise.

To meet all of these requirements, a service provider has to continuously invest in technology, and have ­regu­latory experts who can quickly analyse new regulations and understand how they will fit and potentially impact existing regulations with which asset managers are already complying. This re­quires a delicate balance between investing in business enhancements and people, while maintaining required capital levels. Large global custodians with the capacity to invest in its technology and systems are more able to make these investments than smaller firms.  

Asset managers are looking to ­securities services providers to act more strategically then ever before. By using one bank for all activities following the investment decision, asset managers are recognising their ability to cut potentially weak links from their post-trade chain, and rationalise the number of providers they use. This coordinated servicing effort across a firm, usually a bank, enables the large and fully-integrated players to really understand an asset manager’s needs, requirements, product and geo­graphical expansion plans. This support across many distribution channels helps fund managers reduce cost,

outsource the risk by leveraging ­operational cap­abilities, risk management capabilities and therefore offers a much better and broader value proposition. Today, a service provider must have all the ­necessary tools in the tool box and be willing and able to use them.

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