European asset managers and transfer agents should be working towards a US-style distribution system in order to increase transparency, but the process could take some time, according to professionals at the International Transfer Agency Summit in Luxembourg this week.
One panellist proposed the French system of ‘earmarking’, whereby assets are given a unique reference number and designated for a particular purpose. Another speaker however, dismissed this as ‘very tidy, but maybe not that helpful’.
While there was agreement that more data should be supplied to fund managers, one participant pointed out that this will not solve any of the issues in the industry.
He said: “Even if we have all the data we shouldn’t ignore that working on this data will cost a lot for each manager.”
Generally, participants supported the idea of a system like the National Securities Clearing Corporation (NSCC) in the US, but the consensus was that, in Europe, this is unlikely to come easily.
One panellist expressed concern over the likely scenario of each jurisdiction creating its clearing solution, saying: “If we don’t have a collective version if what we are working for, it will be very hard to learn to walk, let alone run.”
He suggested that, if the industries in each country addresses the issues of data transparency, then they can begin to work together.
He added: “We want to figure this out properly because it benefits us all.”
An audience member also suggested that the European area will have to approach this in a different way to the US, saying: “We are always going to have a very different view of the world”
He also pointed out that, while this issue is important, many firms are prioritising regulatory compliance at the moment.
The was a discussion over whether additional regulation may be needed to encourage companies to implement these changes. The panel was split, with some panellists adamant that the regulators should not be involved, others feeling that the only way to achieve transparency would be through mandatory change.
One panellist suggested that the regulators could offer some help, but that it is mainly down to industry players. He said: “We should try to go in that direction, and I believe the regulator will help us to do so. Let’s start to dig in and have more concrete standards.”
Another audience member, who spoke on an earlier panel, stated that she hopes not see regulators getting involved, but accepted that it may become necessary. She brought the issue back to the core issue for the end clients, saying: “We have to make a start, have those discussions and see how it pans out, but if we sit here and do nothing we’re going to have continuous issues [and] we’re going to really irritate our clients.”
