6 March 2017 - Irish Funds
Transcript of 6 March 2017 - Irish Funds
77
Moderator:
Panellists:
irishfunds.ie
Evolution of Product Design and Distribution
Panel Discussion
Bilal Nasreddine, Putnam
Joe LaRocque, Legg Mason
Stuart Fross, Foley Lardner
Matthew Appelstein, RBC Global Asset Management
Chris Christian, Dechert
99 irishfunds.ie
Key message
Ireland: Your Brexit solution
► We have a range of options…
► …to suit managers of all shapes and sizes…
► ….available now.
1010 irishfunds.ie
Agenda
► Transitioning investors to a new context
► Maintaining our partnership: Solutions
► Strengthening our partnership: Growth
1111 irishfunds.ie
Transitioning investors to a new context• Ireland is a long-established partner of the
international asset management sector, with over
14K employees in the Irish funds industry and 35K in
the IFSC overall.
• As a leading global domicile and servicing centre
for investment funds, we provide a time-tested
launchpad for:
– Investment in global markets
– Distribution within the EEA and beyond
• The post-Brexit landscape poses a challenge for the
European funds industry as a whole.
• Our response to these challenges focuses on the
continuity and interdependence of:
– UK investors as shareholders in Irish-domiciled
funds
– UK firms providing investment management to Irish-
domiciled funds.
• Simultaneously, the new context presents opportunities
to strengthen our partnership for the benefit of
European and global investors.
DistributionManagement
Models
Growth
“Our three key
themes are
interdependent.”
1212 irishfunds.ie
Maintaining our partnership: Management models
Management
Models
SMIC 1
• Simple option for single/umbrella fund
• Required to delegate day-to-day portfolio management
Super ManCo 2
“v1 & v2”
• ‘v1’: widely used standard model w/ delegation option
• ‘v2’: ‘add-ons’ enable ManCo to operate w/out MiFID manager as delegate
MiFID Firm2
• Wider range of permissions available
• Enables “silo” of business lines into different regulatory entities3
Maintain continuity of UK firms providing
investment management to Irish fundsChallenge
Options
SolutionProvide UK managers with flexible options based
on existing legislation in Ireland.
NOTES:
1. SMIC = Self Managed Investment Company
2. SuperManCo v1/v2 and MiFID options all enable passporting
throughout the EEA
3. Examples of entity types for “silos”: broker-dealer, AIFM, UCITS
ManCo, etc.
1313 irishfunds.ie
Structuring options: Management models
MiFID Firm
Super ManCo w/ Add-on Authorisations (‘v2’)
Super ManCo w/ Delegates (‘v1)
SMIC• Simple option for single umbrella fund
• ‘v1’: widely used standard model w/ delegation option
• ‘v2’: ‘add-ons’ enable operating w/out MiFID manager as delegate
• Wider range of permissions available
DEFINITIONS:
• ‘MiFID Firm’: Investment firms authorised under Markets in Financial Instruments Directive (2007, to be replaced by MiFID 2 / MiFIR in January 2018)
• ‘Super ManCo’: authorised to provide services to UCITS and AIFs w/ the option of add-on authorisations for segregated mandates
• ‘SMIC’: Self-Managed Investment Company
Global
Asset
Managers
Regional
Asset
Managers
Management
Models (‘Delegation’)
1414 irishfunds.ie
Strengthening our partnership: Growth
Growth
‘The Basics’
•Predictability / efficiency of regulatory process
•12.5% corporate tax rate
•Common law system
•Only English-speaking country in the Eurozone
•Less expensive than Zurich, Paris & Luxembourg1
Asset Manager Activity
Infra-structure
Re-affirm Ireland’s attractiveness as an
international asset management centreOpportunity
Benefits
SolutionProvide UK managers with options to support the
establishment of a physical presence in Ireland
NOTES:
1. Source PwC
2. http://www.iaim.ie/why-ireland (STEM = Science, Technology, Engineering &
Mathematics) & http://www.hea.ie/sites/default/files/awards_-
_all_undergraduate_by_level_and_field.xlsx
3. IFS 2020 Action Plan 2017 (http://finance.gov.ie)
4. MiFID firms, UCITS ManCos, Irish AIFMs & Non-Irish AIFMs
• Space for 60K new employees by 2020, 100K new houses3
• Leading global tech centre & fintech location
• London-Dublin: Most flight options in Europe
• 35K+ employed in international financial services in Ireland, 14K in funds industry
• 130K degree-level graduates across business, law and STEM w/ 20K new grads p.a.2
• 800+ investment firms active in Ireland4
• Increased presence of front office activities
• 18 of the top 20 global AMs have Irish funds
• €3.5trn total AuM, €300bn managed from Ireland2
• AM counterparties already in transit from UK
Since the GFC Regulators, across the globe, have acted to increase financial stability whilst protecting the investor. This has resulted in an increasing regulatory burden which is impacting the bottom line.
REGCHAIN – CONTEXT & BACKGROUND
Increasing Regulatory Requirements – A Varied Industry Response
Additional Resource Offshore Re-engineer Shoe Horn Excel
Add resources and teams to existing capability to meet the new requirements
Move functions and teams to lower cost centres to help manage the cost of servicing
Re-engineer internal processes for more effective regulatory processing
Shoe horn new and regulation bespoke solutions into the legacy system architecture
Develop working models in excel for the completion of regulatory reports
Result
Increasing Servicing Cost Lower Profitability No Real Customer Differentiation
MMIF is the primary control for Irish Domiciled Funds into the Central Bank of Ireland. It is reported on a quarterly basis and populated via Microsoft Excel.
REGCHAIN – MMIF: A CASE IN POINT
As-Is Process
Transfer Agent Regional Regulator
Domestic Regulator
Pro
cess
Ch
allen
ges
Esti
mate
d C
ost
Data Extraction Maker Review Control Checks Beta Checkers Submit via ONR
Manual Processing Data Integrity Regulatory Changes Cost
400 90 600
Total Irish
Domiciled Funds
Average time (in
minutes) taken to complete process
Total hours spent
completing MMIF reports per Quarter
43.5 14
Total hours
available to complete MMIF
reports
Number of
resources required for
MMIF/qtr
x = ÷ =
Number of
resourcesrequired
Annual cost for non-
revenue generating MMIF
report**
€840K60Kx =
Our vision is operational efficient regulatory reporting, providing insightful analytics whilst increasing transparency, auditability and overall industry safety.
REGCHAIN – OUR VISION
Admin 1 Admin 2 Admin 3 Admin N
Domestic Regulator Regional Regulator
Data Integration Services / Interfaces
- Access to submitted
regulatory reports- Ability to run industry level analytics both domestically and regionally
- Have a single view of
data- Ability to receive industry level and firm level analytics in line with data privacy- Streamline regulatory reporting
- Create an immutable repository for all fund information - A RegChain that is regulation agnostic- Central point of change for new regulatory updates
REGCHAIN –Funds Blackbox Reports
Engine
Smart
ContractsPermissioned Blockchain
Immutable Ledger
Analytics Engine
Document Storage
REGCHAIN – OUR PROOF OF CONCEPT FOCUS
Our vision is operational efficient regulatory reporting, providing insightful analytics whilst increasing transparency, auditability and overall industry safety.
REGCHAIN –Funds Blackbox
Admin 1 Admin 2 Admin 3 Admin N
Domestic Regulator Regional Regulator
Data Integration Services / Interfaces
PoC Focus
Reports Engine
Smart Contracts
Immutable Ledger
Analytics Engine
Platforms
1
2
Document Storage
3
4
5
6
1
2
3
4
5
6
6
Upload data to the RegChain
Encrypt and store data with IPFS
Maker reviews data and runs report
Executes requirements of the regulation
Checker reviews and submits to the regulator
Regulator reviews filings and assesses industry analytics
Permissioned Blockchain
4
Streamlining compliance with ancillary benefits for industry.
REGCHAIN – THE BENEFITS
The Benefits
Process Efficiency Security Analytics
Access IFPS
Decrypt the file
Modify the file
Encrypt the file
Access to RegChain
Modify Smart Contract
Network accept modification
To hack the proposed technical structure of RegChain you must:
2525
Moderator:
Panellists:
irishfunds.ie
Innovation Initiatives
Panel Discussion
Shane Brett, Gecko
Hicham Allouani, Pioneer Investments
Meredith Moss, Finomial
Cillian Leonowicz, Deloitte