FRANKFURT – BNP Paribas Securities Services has entered an arrangement with service providers in the German marketplace to enable Luxembourg and Dublin-based investment funds to have the same subscription and settlement services as domestic mutual funds.
In Germany, domestic retail investment funds execute through a central system Investro, run by BrainTrade, which is a joint venture of all the German stock exchanges. The Investro system is widely used for fund subscription and settlement for domestic funds.
BNP Paribas’ new partnership will allow BrainTrade to extend the services Investro provides to funds from these additional jurisdictions.
“Investro asked us if the concept could be extended in order to provide subscription coverage for funds based in Luxembourg and Dublin,” said Dietmar Roessler of BNP Paribas in Frankfurt. “As a result, we will run an ADR-type programme for these non-domestic funds, which we will make available through the German settlement system.”
For international fund groups based in these jurisdictions, this new platform means that they have immediate access to a wide range of major German institutions and distributors, said Roessler. “What we have created is a full delivery versus payment settlement and subscription service which is fully automated on to a system that is already sitting in practically all German banks’ front, back and middle offices.”
Up to now, the settlement process has involved a considerable amount of manual work, for example,by faxes to Luxembourg and Dublin and separate cash payments. Cost of individual transactions have been put as being anywhere from 80 to 120 euros.
Roessler said: “This will reduce unit costs and operational risks for fund promoters and distributors, by having a central system creating a low cost straight through processing environment.”
The new service is to be come operation in the next few weeks.
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