The UK has over 200 fund managers and 300 distributors trading in mutual funds with a market value of over £870bn.
Despite efforts over the last 20 years to improve automation, much of the process remains manual, with limited integration and a lack of common standards.
The UK Fund Trading and Settlement (FTS) initiative has been created to address this opportunity, working with a group of cross industry firms to identify potential solutions that could transform fund distribution. The 5 major industry associations—The Association of British Insurers, The Investment Association, TISA, The Wealth Management Association, and UK Platform Group—have united with over 15 major financial services firms to engage in a review process.
The group recognises that solutions may come from a range of different areas—through existing providers already operating in the UK, suppliers offering services in other markets, and/or though considering emerging technology, such as Blockchain. FTS is seeking to options that can deliver key objectives.
FTS is looking at solutions that include:
- Integration of fund trading, settlement and reconciliations
- Standardisation of key processes
- Net settlement models to reduce the money flows between participants
- Improvements in asset reconciliations
- Greater automation of corporate action processing
- Improvement in asset reporting between firms
- Simplification of legal and service level agreements between firms
- Removal of duplication of operational processes within firms
FTS also recognises that there may be opportunities that go further, driving even greater benefits. The process being undertaken, therefore, will seek to understand potential solutions that may provide benefits to the distribution of UK mutual funds.