Euroclear’s Vincent Clause talks to Jenna Lomax about the company’s new service for private market funds and what it is planning for 2024
A global provider of financial market infrastructure services, Euroclear settles domestic and cross-border securities transactions. Now celebrating 55 years in operation, Euroclear boasts €37.6 trillion assets held in custody for its clients and 1.7 million securities held on its books. In July 2023, the company completed its acquisition of UK-based fintech Goji. The move assisted the build of Euroclear’s new service for private market funds. The new service utilises Goji’s technology to cover the entire investment lifecycle, from initial commitments and capital calls to asset servicing and distribution. The private market service is integrated into FundSettle, Euroclear’s automated order routing service.
As Vincent Clause, global head of funds strategy and business development at Euroclear, explains, the initiative is an essential cog to help the company expand its suite of funds services.
“We are very well connected to custody and wealth managers and have global asset managers already promoting mutual funds onto our platform, so this new solution acts as an extension of our services,” Clause affirms. “It is the answer to our clients’ needs.”
Identifying clients’ needs is something Clause has a lot of experience with. He has served at Euroclear since 2005, starting his tenure there as a quantitative analyst. Since then he has been global head of pricing and market research, where, from 2015 to 2018, he was responsible for business performance and financial forecasts. He also served as director of corporate strategy and partnership from 2018 to 2020.
From these roles, Clause knows all too well that “data demands that we offer existing services of mutual funds to the private funds, particularly when it comes to customers as distributors.”
Asset servicing
Outlining why data holds the key, Clause explains that the new service for private market funds is an “extension of its custody services, as well as the distribution and data sharing that it already offers across all asset classes.” He affirms: “We want to extend that to private funds.”
When asked how investors will benefit from the digital solution, and how it will aid asset servicing and distribution capabilities in particular, Clause states that it is important to remember that a lack of standardised automation across the industry remains a hurdle.
He says: “When you take the current status of private funds, as opposed to the other asset classes, they are still highly manual and not automated. The essence of our initiative is automation and digitisation.
“Our paramount angle is to address operational improvements through digitalisation. What we really want to bring is digitisation for the entire investment cycle within a private fund — from the initial commitment to the management of the capital call and the investor onboarding. We are introducing a free digital solution that will ultimately enable scalability in the process. This will reduce the time it takes to access private funds.”
Utilising Goji’s capabilities
Explaining Goji’s role in increasing Euroclear’s scalability, Clause asserts. “The company has been instrumental in the development of our services. We have entered this market very fast; Goji has been key to accelerating the successful delivery of our services.”
The company’s decision to acquire the business has proved a successful one, as Clause explains. Barely four months after the acquisition, “the work is already underway.”
“On a white label basis, we can combine Goji’s technical capabilities with Euroclear’s fund platform,” he affirms. “We’ve already launched the first stage of our project, but we know there is much more to do, and that’s precisely where Goji fits into the picture. It is a central part of our strategy in the private markets space.”
What the future holds
“Asset managers like platforms such as Euroclear because of our stability and our network. We are connected to more than 2000 distributors worldwide,” says Clause, when asked to outline the reasons for Euroclear’s international success.
“We are connected to all the major financial institutions across the world, and we look after more than 35 trillion of assets,” he continues. “If an international investor wants to be exposed to an international range of investors, Euroclear is the place to be. In terms of our reach, we have a high exposure throughout Europe. We have a presence in Asia and we are rapidly expanding into Latin America. It’s all about utilising the distributor network of Euroclear throughout these three key continents.”
When asked what the future holds, Clause shares: “Next year, we want to expand our distribution capabilities. By entering into distribution agreements with Euroclear, asset managers can tap into our extensive network and investors can access a wider range of investment strategies.
“At the moment, the aggregation of orders is often conducted on a one-to-one basis which then sets the bar quite high for minimum investment in private market funds. Therefore, we want to further expand our aggregation capabilities to allow banks to reduce the barriers to entry to private funds, by pooling subscriptions from multiple investors.”
He adds: “Although, today asset managers and distributors can already connect to each other, technically and operationally, we want to create what we refer to as a ‘digital marketplace’, whereby asset managers will be able to exchange information about the funds that they create in a more transparent way.
On the one hand, this approach empowers asset managers to effectively promote their capital-raising initiatives. On the other, it ensures that all investors are promptly informed about promising investment opportunities relating to private market funds.
Clause concludes: “Euroclear has a key strategic ambition in the global funds space. We have invested, and we will continue to invest, because there is a market demand for our new platform and the features that we are currently building.
“We’re actively pushing the boundaries and growing in this market — you’ll be hearing more from us in this space.”
