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EFAMA’s Updated Framework for Fund Processing Best Practices

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EFAMA today published new recommendations to increase efficiency in the processing of fund orders. The report was prepared by EFAMA’s Fund Processing Standardisation Group (FPSG). It consolidates the recommendations that were published in 2005 and updated in 2008, and extends the recommendations in two key areas.

Transfers of units between two accounts recorded in the legal register of fund holders are generally instructed using physical documents and faxes. As such, they require manual intervention, which makes them resource intensive and exposes them to the risk of human error. Moreover, their processing is usually not time-critical, leading to delays that can have a knock-on impact on a custodian’s ability to service their client effectively. The report makes concrete recommendations to improve communication between the actors involved, shorten processing timelines, thereby reducing the risk of human error.

The report discusses various aspects in relation to events that arise from or have an impact upon holdings of units in an investment fund. These events include fund reorganisations, income entitlements, unit holder meetings and other investor notifications. The recommendations aim at improving communication with the wider market in order that underlying investors and their services agents are able to receive and process the information in a timely fashion.

The report encompasses the full scope of activities that were envisaged when the FPSG was formed. To highlight the value of the FPSG’s recommendations for the industry, the report also includes a series of quotes from senior industry stakeholders.

Peter De Proft, director general of EFAMA, adds: “With the publication of this new report, EFAMA confirms its central role in leading the European fund industry’s efforts to make fund processing simpler and more automated. Harmonising fund processing practices in the direction recommended by the FPSG and accelerating convergence towards the proposed standards represent an effective approach for reducing operating costs and serving the interests of investors. We are encouraged by feedback received that the FPSG’s recommendations are taken seriously by market participants and infrastructure providers. Still, progress towards full implementation could be faster. We therefore call upon our member associations to accompany the release of this report with specific actions to foster a higher degree of convergence at national level, taking into account their specific challenges.”

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