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ACSA RELEASES ROLE OF CUSTODIAN WHITE PAPER

Monday, 10 February 2020   (0 Comments)
Posted by: Kate Dent
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Sydney, AUSTRALIA – The Australian Custodial Services Association (ACSA) today released a white paper describing the evolving role custodians play in Australia’s institutional investment landscape.

 

The paper, Institutional Investor Services, highlights the size of the sector (some $3.7 trillion) and the dramatic changes underway in the asset servicing industry. 

 

Custody and investment administration are services provided to institutional investors, including major superannuation funds, on an outsourced basis. ACSA hopes to promote a greater understanding of the behind-the-scenes role played by custodians and the continued evolution of the industry. 

 

ACSA CEO, Mr Robert Brown said “Custodians are continuously evolving through their focus on operational efficiency and in support of the growth and sophistication of key client sectors. Supporting the efficient implementation of regulatory change, client access to new markets and ways of investing, plus keeping up with necessary market infrastructure like the ASX CHESS Replacement make for a dynamic landscape”.

 

The paper describes key industry trends including:

  • Larger and more complex funds
  • Internalisation of investment management
  • Demand for data in investment decision making, risk control and more efficient operations
  • Support for environmental, social and governance (ESG) considerations in portfolio construction, reporting and member engagement
  • Use of new technologies, with distributed ledger technology an operational reality

 

The white paper updates an earlier version published by ACSA in 2010. Mr Brown said “It is interesting to reflect on the level of change the industry has experienced in the past decade. One of the most significant trends has been growing demand for data, along with a growing awareness by clients that one size does not fit all. A simple example is how asset valuation from the custodian provides an independent basis for comparing investment performance, enables fund fiduciaries to monitor risk, and underpins the calculation of individual member account balances. The key is to recognise that each data set requires different controls, classification and enrichment to be fit for purpose.”

 

The paper highlights the breadth of potential services available to institutional clients. It also emphasises the importance of engaging with the custodian as a key service partner early in the change cycle. Mr Brown said “ACSA has a 25-year history of advocating positive change. Experience shows that better outcomes are achieved through early engagement and consultation at an industry level. This benefits all stakeholders by targeting more efficient implementation, policy alignment and avoidance of unintended consequences. The same principle applies to funds looking to their custodial service partner to support change and efficiency – talk early and talk often.”

 

The White Paper is available here.

 

Click here for a copy of the media release.

 

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Media enquiries

Kurt Graham, Sefiani

0431 478 558

kgraham@sefiani.com.au

 



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