UK-headquartered fund transaction facilitator, Calastone, has established a beachhead in NZ with two foundation clients confirmed this week.
Calastone, via its Sydney office, signed up Auckland-based investment admin firm, MMC, and Public Trust, to the service that allows funds to transact seamlessly in any format and across borders.
Sarah Hayward, Calastone Australia head, said the group was in talks with the “larger” NZ investment platforms as well as a range of domestic fund managers to join the “global fund transaction network”.
“The [Calastone] system works best when the whole market is in the network,” Hayward said.
“As pioneers MMC and Public Trust get up and running in NZ and show the back-office efficiencies Calastone provides we would hope to get to tipping point in NZ.”
She said since launching in Australia five years ago Calastone has been adopted by up to 85 per cent of the investment platform market and about 60 per cent of the managed funds industry.
In a statement, Hayward said: “Our expansion has been primarily driven by our Australian clients wanting access to cross border opportunities and New Zealand clients embracing automation.”
Tom Reiher, MMC co-founder, said Calastone significantly reduces the workload for administrators when processing orders from multiple managers and platforms.
For example, Reiher said if just three of NZ’s investment platforms – Aegis, FNZ and Rabobank – joined the Calastone network, that would automate up to 9,000 transactions per year which MMC currently has to process manually.
“Calastone improves the efficiency of the industry and it’s reasonably easy to implement,” he said.
MMC has just over $25 billion under administration at last count, amounting to about a quarter of the total funds under management in NZ.
Under the system, Calastone charges the receiver of the information a fee while sending is free.
According to Hayward, Calastone acts “like the United Nations translation service” for the managed funds industry, allowing investment managers, platforms and administrators to send transaction instructions in any format without requiring messy manual processes along the way.
“For example, some managers still use faxes to confirm transactions,” she said. “… Our biggest competitor [in Australasia] is probably the fax machine.”
Tony Nejasmic, Calastone business development director, said as well as introducing back-office efficiencies, automation can ‘derisk’ businesses by removing the potential for human error in rekeying data or any other manual process.
Nejasmic said NZ clients would be serviced from Calastone’s Australian office and London operational centre.
“Calastone is an online business so we can look after clients remotely,” he said. “But we’ll get over to NZ as often as clients want us to.”
The company, which launched in the UK nine years ago, now operates in 29 jurisdictions – although not in the US – with offices in London, Luxembourg, Hong Kong and Sydney.