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Clearstream's Central Facility for Funds opens up to the UK market
The UK is the fifth market in Europe (after Luxembourg, Belgium, Ireland and Switzerland) to open up to CFF. CFF was launched in March 2007 initially for investment funds domiciled in Luxembourg, the largest market in Europe for international funds. Today, CFF counts 31 members and offers access to more than 22,000 fund classes.
The operational features offered by CFF, in particular the centralized settlement and position keeping, enable fund distributor to access a broader range of investment funds while benefiting from a safe, efficient and harmonised process across the various investment funds domicile and jurisdictions. The streamlined process will eliminate for the distributors the need to manage the account opening, the check processing, the paper based reconciliation and fax ordering.
CFF offers all participating transfer agents(1), fund distributors and fund promoters one single set of settlement and payment instructions for all eligible funds which accelerates and simplifies operational processes as well as reduces risks. CFF provides post trade services, with an architecture open to the various order execution processes and is fully integrated with Clearstream's existing ICSD custody and settlement services. This allows CFF participants to keep their funds holdings in the same custody platform as the one already used for other share classes.
Clearstream designed CFF as an answer to growing market demand in Europe and in Luxembourg. The industry has grown 80% since 2005 but its post trade area is still characterized by high fragmentation, little standardization and thus operational risk. According to a study by Deloitte, a consultancy, the cross border investment funds industry could save up to 30 percent of processing costs and gain over € 300 million by streamlining the processes of cross border mutual funds distribution.
Philippe Seyll, Head of Investment Funds services, Clearstream said "we are delighted to further expand the reach of our CFF product to a new market demonstrating its ability to adapt to local market practices. We genuinely
believe that CFF's versatility will greatly facilitate the way in which our client can interact with foreign counterparties, and will hence improve their operational reach and capacity. CFF acts like a funnel that brings multiple transfer agents and multiple distributors in touch with each other through one single point of access".
(1) Transfer agents are banks or financial institutions that keep track for a fund promoter of the individuals and entities that own fund shares of this promoter's fund.
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