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KAS Selections KAS Selections is a quarterly newsletter from KAS BANK N.V. Although the information in this issue is drawn up with the utmost precision, no rights can be derived from it. Volume 18, Issue 3, October 2011
Editorial Governance, or ‘good management’, is paid a great deal of attention by all the stakeholders who have something to say about it, or think they do: supervisory authorities, institutional investors, fiduciary managers, consultants, the media, politicians and trade unions. As a major governance partner in the Netherlands, we participate fully in
Contents: KAS BANK Governance Event 3 New Clients 5 Personnel notes 5 Laurens Vision 6 LSP Life Sciences Fund 8 A successful decade - 10 years of MultiManager Fonds 11 Effective transition management saves time and money 12 DPN Roundtable on ‘Administration’ 14 Mark Schilstra appointed Head of Client Management 16 Achieving best-execution through outsourcing 18 Global Custody Network News 19 ASEAN EXCHANGES aims at regional integration of capital markets 21
discussions by developing practical solutions concerned with
Comments on this issue, suggestions for future articles and mailing list requests should be addressed to:
more about it later in this edition of KAS Selections.
Netherlands Clearing & Banking Services Associate director: jeroen.duijn@kasbank.com
governance and by bringing people together and sharing knowledge. Because that’s what we want to do for you: be a reliable partner that helps you think through the challenges facing your organisation and works out solutions to them. To broaden the discussion of governance, we organised a major Governance Event on Thursday 15 September, with special guest Kofi Annan. In his talk, Annan emphasised that, as a large international investor, the Dutch pension sector can play a very important role in promoting proper management in countries and companies in which funds are invested. All those present, myself included, were very impressed by what he had to say. I could easily devote this entire foreword to the special event. Fortunately, you can read
In the meantime, life continues as usual. And many other interesting subjects besides governance are being discussed in the financial sector. For example, are pension funds, like companies, subject to VAT or should they be exempted from it? Which management
Fund & Insurance Services Associate director: sicco.plesman@kasbank.com
models are most suitable for pension funds 2.0? What is the significance of MiFID II
Institutional Services Associate director: tamis.stuker@kasbank.com
between seven regional stock exchanges create a major boost for the Asian economy?
Sales & Busines Development (S & BD) Head of S & BD: mark.van.weezenbeek@kasbank.com
intake procedure for a new listed fund, in this case the LSP Life Sciences Fund?
German Branch Managing Director: frank.vogel@kasbank.com KAS Investment Servicing GmbH CEO & Managing director: joerg.sittmann@kasbank.com UK Branch Managing Director: laurens.vis@kasbank.com Institutional Investors Business development manager: stephen.isgar@kasbank.com Translation: Wilkens c.s.
(Markets in Financial Instruments Directive) for the securities industry? Will cooperation What are the benefits of effective transition management? And what is involved in the
That briefly sums up the subjects covered by this edition of KAS Selections. They reflect the emphasis we place on compliance services, risk control and management information. Mark Schilstra, our new head of Client Management, will be committing himself entirely to them. However, these subjects also symbolise the change KAS BANK is experiencing: from a volume-driven securities specialist to a supplier of ‘high value data’ and independent management information. After all, to enable effective decisionmaking, management has to have an insight into the fund’s performance vis-à-vis the social and financial objectives. Analyses of this kind enable management to fulfil the social demand for transparency and accountability in the investments and the investment policy. KAS BANK assists you with this.
Text editor: Matthew Binnington Editor: Carla Boogers KAS BANK N.V. Marketing & Communication P.O. Box 24001, 1000 DB Amsterdam The Netherlands +31 20 557 5812 carla.boogers@kasbank.com Graphic Design: Ebbenhorst Design, De Meern Print: KAS BANK, Document & Systems Services
Good governance helps restore the trust of citizens in authorities, institutions and companies. That is in everyone’s interest, as Kofi Annan argued. I’d like to express my agreement with that on behalf of KAS BANK. After all, without trust, our sector is like a cavalryman on foot rather than a knight on a horse. Sikko van Katwijk KAS BANK Managing Board
Special guest Kofi Annan speaks on ‘good governance’
KAS BANK Governance Event As a large international investor, the Dutch pension sector can play an active role in promoting good management throughout the world. In the words of Kofi Annan, who addressed KAS BANK’s Governance Event in Amsterdam on Thursday 15 September, “Good governance is global governance”. KAS BANK is an important governance partner in the Netherlands, Germany and UK. We want to develop this role even further in dialogue with our clients and the market. In order to introduce greater depth into the discussions on this subject, a huge Governance Event was held in KAS BANK‘s Amsterdam offices on 15 September. During the morning session, around 45 pension fund managers, bankers and consultants discussed the theme of (pension fund) governance. In the afternoon, they, and many other guests, enjoyed a special governance lunch. During lunch, the special guest, Kofi Annan, spoke about the most important conditions for good governance. Work streams The morning session consisted of three work streams,
Kofi Annan during his speech
during which four statements on governance were discussed. The streams were introduced by three external
During the discussions, three important aspects of
experts: Arnoud Boot, Guus Boender and Willem Noordman.
governance repeatedly cropped up: responsibility, trust and transparency. The majority of the participants agreed that (the recovery of) trust was currently the main focus for
Arnoud Boot is Professor of
pension funds. In this context, one thing that is certainly
Corporate Finance and Financial
desirable is the provision of independent information about
Markets at the University of
the risks and composition of the investment portfolio, for
Amsterdam and director of the
example, via KAS BANK’s Investment Management
Amsterdam Centre for Law &
Services.
Economics (ACLE). He is also a member of the Social and
Furthermore, most of the managers agreed that pension
Economic Council of the
funds must bear a certain degree of social responsibility,
Netherlands (SER) and of the
although their primary duty remains safeguarding the
Bank Council of De Nederlandsche Bank (the Dutch
interests and pension entitlements of all the stakeholders in
Central Bank).
the fund. “The aim of pension funds is not to save countries,” according to one of the participants, summarising the
KAS Selections • October 2011
3
viewpoint of the majority of the pension fund managers. However, investment returns and good governance do not
Willem Noordman is a member
need to be in conflict with each another. On the contrary,
of the executive board of FNV
investing in underdeveloped or emerging countries can, in
Bondgenoten and is involved in
fact, make a significant contribution to improving local
ensuring good pensions for
employment conditions, human rights and the environment.
employees and pensioners. Noordman is chairman of
In general, there was a negative reaction to the statement
Stichting Pensioenfonds FNV
that there should be external members on the boards of
(the FNV Pension Fund). He is
pension funds in order to strengthen the level of expertise.
also the employees’ chairman of the Vereniging van
“Expertise should not be confused with good sense,”
Bedrijfstakpensioenfondsen (Dutch Association of
commented one bank executive. By relying solely on
Sector Pension Funds).
experts, the independence of the board would be diminished rather than enhanced. Directors should be generalists; generalists who are supported by experts when necessary.
In his characteristic way, Annan elucidated the need for good governance from three perspectives. On a global level,
Among the reactions to the final statement, one comment
the discussion is still being dominated by the old economies.
was that there was not so much a need for figures but more
This particularly applies to the permanent members of the
a need to have “peak through” information about the sectors
United Nation’s Security Council. The emerging countries
and funds invested in by pension funds.
are still not seeing their changed position sufficiently translated into an equivalent political role on the world stage.
Governance lunch
Consequently, decisions are still being made about them
The work streams discussions were followed by a
rather than by them.
governance lunch in the impressive hall of the KAS BANK
Annan then turned his attention to the current crisis in the
office. The special guest Kofi Annan, winner of the Nobel
European Union which, in his opinion, is primarily a crisis of
Peace Prize and former Secretary-General of the United
trust. Consequently, regaining trust is one of the main
Nations, spoke on behalf of the Kofi Annan Foundation
challenges facing both political leaders and the business
about the enormous importance of good governance
world. Finally, Annan singled out the financial crisis as the
throughout the world.
cause of the decline in the level of trust that ordinary citizens have in their leaders and good governance. Guus Boender is Professor of
In response to a question from one of the guests about the
Asset Liability Management at
relationship between returns and good governance, Annan
the VU University Amsterdam
said that he believed the two could easily go hand-in-hand.
and a co-founder of ORTEC
He then referred to Africa where good returns can be earned
Finance, an authoritative Dutch
while, at the same time, pension funds can help promote
consultancy in the field of Asset
good governance by paying heed to employment conditions,
Liability Management.
human rights and the environment in the countries being invested in; whether the investment is direct or indirect. Referring to the Greek crisis, Annan pointed out the need for government leaders to keep communicating with all the
4
KAS Selections • October 2011
New Clients parties involved. And he emphasised that, when doing so, these leaders should not only consider economic aspects
Stichting Bedrijfstakpensioenfonds voor het
but also take serious account of the interests of the Greek
Levensmiddelenbedrijf
citizens. If not, they could lose their legitimacy with
Global Fund Services; Compliance Monitoring; Financial
potentially serious consequences, as the events in North
Accounting; Investment Accounting; FTK-reports;
Africa have shown.
Performance Measurement; IMS-Dashboard
Inspiring
St. Bedrijfstakpensioenfonds Verf- en
Kofi Annan’s speech was warmly received by all those
Drukinktindustrie
present, and the meeting had clearly inspired them to place
Compliance Monitoring; Financial Accounting; Investment
governance and pension fund governance more
Accounting; FTK-reports; IRM Monitor; Performance
emphatically on the agenda. KAS BANK would be happy to
Measurement; IMS-Dashboard
offer support in this respect. At Kofi Annan’s request, his good friend Mohammad Yunus was a last minute guest. Yunus is the founder of the
Personnel notes
Grameen Bank. This institution
UK
provides
Steven Polese started 1 September as Relationship
microcredit to the
Manager Institutional Investors at KAS BANK UK.
poorest people in the world so that
Institutional Services
they can become
As of 1 August 2011, Caspar Nijland and Jesper
creditworthy and
Kuyvenhoven started as Account Managers.
financially
Pol de Jaeger was appointed Relationship Manager as of
self-sufficient. In
1 October. Maurits Klaassen started as trainee from
2006, Yunus and
22 August 2011.
the Grameen Bank received the
Funds & Insurers Services
Nobel Peace
As of 1 August 2011, Jaap Piek is appointed Relation
Prize.
ship Manager and Sander de Boer as Account Manager. Clearing & Banking Services As of 1 August 2011 Astrid Helms was appointed Relationship Manager.
KAS Selections • October 2011
5
Laurens Vision As one worldly philosopher said:
post-trade integration. Mission accomplished? Not quite.
“The enjoyment of living is not
Although nearly blinded by the regulatory light, a few dark
where we have been, it is always
omens have been observed.
looking forward to another day, to another event, to another year.”
The benefits of competition – Adam Smith’s invisible hand – have not touched all investors alike. The level playing field
And so it is in our business lives.
between investment firms and venues is at risk due to
For instance, with the last country
technological developments, and the financial crisis has
Laurens Vis, Managing
(Spain) having endorsed the
wreaked havoc amongst those trading in instruments other
Director, KAS BANK UK
Markets in Financial Instruments
than shares.
Directive only recently, we are already hearing the knock on the financial door of MiFID ‘2’
And, as we know, even darker linings have been seen in the
(its façade having changed beyond recognition). And so we
dark clouds gathering above Europe. Monetarily speaking, it
are looking forward to “targeted but ambitious improvements
is not raining on us, it is pouring. But help is at hand. The
of the comprehensive rules of MiFID 1”.
revised MiFID will not only be instrumental but integral to the reforms’ aims for a safer, sounder, more transparent and
Slightly disappointed that the proposal of the European
more responsible financial system working for Europe’s
Parliament and Council was not prematurely leaked, I have
economy and society at large. We have reached page five of
the official 169-page printed version in front of me. Heavy
the document, where we come across a plea to member
stuff to take with you on the train or for bedtime reading.
states to refrain from isolated national intervention resulting
And even more alarming is the lack of an Executive
in regulatory arbitrage and distortion of competition.
Summary (or how to bluff your way in MiFID 2). So without further ado, let the reading commence.
By now, requirements have been carefully calibrated, investor protection and market efficiency finely balanced and
To support you in your own MiFID explorations, I have made
the public interest and cost-efficiency of the measures have
the following notes to accompany the next instalment of the
been taken into due consideration. And, last but not least,
gripping story of Europe’s Financial Instruments Directive.
the European Securities and Market Authority (ESMA) is waiting in the wings to claim centre stage in the
As we know, even darker linings have been seen in the dark clouds gathering above Europe
implementation of the new EU-wide framework. Here we go. Soon the reader finds himself wading through an avalanche of initiatives. For instance, the term ‘MiFID
Since Europe is convinced that the strength of its financial
compliant services’ is introduced, offering uniform protection
fabric can only be enhanced through free-roaming
to all investors in the European market no matter the location
competition between member states, trading venues and
of the service provider. Under MiFID 2 all investors are equal,
service providers, the explanatory memorandum is jubilant
with the exception of the unfortunate collective investment
on just this point. Greater competition has resulted in
undertakings and pension funds, who must fend for
increased investor choice in financial instruments, set
themselves outside the regulatory fortifications.
against lower transaction costs and enhanced pre- and
6
KAS Selections • October 2011
And the market itself receives a fresh set of definitions
avoided and for this purpose boards are well advised to be
encompassing all modes of organised trading and not
sufficiently diverse with regards to age, gender, provenance,
restricted to equities alone. In addition, a brand new
education and professional background in order to ensure a
category is introduced: the organised trading facility (OTF),
range of views and experience. It is true: men and
which encompasses all forms of organised execution and
testosterone have created many a financial crisis. And it is at
trading “now and in the future”! This new category allows the
this point that MiFID 2 makes a clear break from its
operator to decide how a transaction will be executed but,
predecessor by asserting that the “gender balance of the management board” is of particular importance to ensure
A brand new category is introduced: the organised trading facility (OTF)
the adequate representation of demographic reality. If and when realised, sound and prudent management will be the reward and the market will be a better place for traders and investors alike.
unlike his colleagues in the regulated markets and multilateral trading platforms, never against his own
Before I leave you with the decision to have a go at the
proprietary capital. He will, however, be able to decide who
proposal yourselves, a quick glance at the provisions
can join and who is refused at the door. Let the battle
regarding central counterparties, clearing and settlement
between rule- and contract-based trading venues
systems and the right to “designate settlement systems”.
commence! The articles in question require that members or participants And then we enter the next phase of the document: the new
of regulated markets, MTFs and OTFs are not unduly
and amended articles of the proposal itself, covering page
restricted in their choice of systems and service providers,
after page after page. Just as fatigue sets in and the eyes
but are free to make their decisions based on non-
start to burn, we read to our delight that there is agreement
discriminatory, transparent and objective criteria. If such
among regulatory bodies at international level that
choice ensures the efficient and cost-effective settlement of
weaknesses in corporate governance in “a number of
the transactions in question and, in general, supports the
financial institutions” – including the absence of effective
smooth and orderly functioning of the EU Market, then who
internal checks and balances – have been a contributory
would argue. But I for one expected nothing less!
factor to the financial crisis. It is duly noted that excessive risk taking may lead to the failure of financial institutions and even cause problems in member states and beyond. How about that! Minimum standards are called for that must take into account the nature, scale and complexity of ... investment firms! Limits will be imposed on transferring the title of clients’ financial collateral to cover a firm’s own obligations. And the management body of these firms should have sufficient knowledge, experience, skills and time to understand their own businesses. Groupthink must be
KAS Selections • October 2011
7
Listed investments in biotechnology
LSP Life Sciences Fund Investing in specialist biotech companies and affiliated sectors is still relatively new territory in the Netherlands.
Mark Wegter, an economist, has
Investments are mainly made via private equity and
been working for LSP since
venture capital. An important player in this market is the
1998 and became a General
investment firm Life Sciences Partners (LSP), which has
Partner in 2001. Together with
registered offices in Amsterdam, Munich and Boston. In
Joachim Rothe, he set up LSP’s
April 2011, LSP was the first Dutch company to launch
Munich office at the end of 2001,
a listed life sciences investment fund. The LSP Life
since when the company has
Sciences Fund, listed on the NYSE Euronext Amsterdam,
continued to establish a
focuses on investments in small and midcaps, primarily
reputation in Germany and Switzerland. After his return
European biotechnology companies with a stock market
to the Netherlands in 2007, Wegter initiated the LSP
listing. As a listed fund was something new for LSP,
activities related to investments in listed companies and
it approached KAS BANK for support in this process.
has since continued to expand these activities.
Mark Wegter (General Partner) and Merijn Klaassen (Chief Financial Officer) were pleasantly surprised by the way in which KAS BANK managed the entire intake
sector. That fund also developed very successfully and a
process. “From our first contact, KAS BANK actively
second fund was launched in 2001. From the start this fund
helped us think about specific issues related to our fund.
was somewhat larger and we have since continued to
This enabled us to reach a number of unique solutions
expand and are now a specialised investor with three
together.”
offices, 25 employees and invested capital in excess of EUR 600 million.”
LSP is principally known for its private equity activities. Can you tell us a bit more about the company’s background? Wegter: “LSP was established in 1998 as a spin-off from
Almost exclusively institutional investors invest in this kind of venture capital fund
Euroventures, a pan-European investment firm primarily funded by the pension funds of multinationals. Euroventures had capitalised on the growing demand for venture capital
Klaassen: “Investing in biotechnology or life sciences is
which it felt was an important motor behind economic
almost always a question of perseverance. Investors in these
growth and economic success. However, the scope of
types of companies are not looking for short-term profits.
Euroventures turned out to be too broad. Consequently,
It is, therefore, almost exclusively institutional investors who
Euroventures Benelux turned its focus on investments in
invest in this kind of venture capital fund. In particular, we
high-tech IT and life sciences. The life science portfolio
offer them our expertise. All our employees are highly
developed particularly well in the period ‘88-’98, prompting
qualified, having 10 PhDs between them. They have a
the Dutch partners of Euroventures Benelux to set up their
strong academic background in subject areas of relevance
own investment fund (LSP) focusing on life sciences in 1998.
to the sector – molecular biology, biochemistry, medical
The start-up capital – a modest EUR 25 million – came,
biology – as well as considerable experience of the business
once again, from institutional investors who also recognised
world and the financial sector. As a team, we are well
the potential of venture investments in the life sciences
qualified to assess the products and working methods of
8
KAS Selections • October 2011
start-up firms within the context of potential long-term investments.” In April 2008 you entered into a strategic
Together with the intake team, solutions were worked out which were fairly unique in the market
alliance with APG. How did that come about? Wegter: “Our private equity activities were doing very well.
doesn’t apply. In fact – besides our private equity activities
Nevertheless, there was a sense that we were missing an
– we have added a second activity and, consequently, a
opportunity as we felt there were numerous ways we could
second branch to our company. Because other investors
use our expertise in the field of public equity. Consequently,
were increasingly asking us to help them gain access to this
in 2007, we started talking to potential investors about
complex segment, after three years we decided to establish
setting up a fund which would focus exclusively on the
a listed investment fund, the LSP Life Sciences Fund. As the
stock-exchange listed segment of the life sciences sector.
fund is freely marketable, it provides the necessary liquidity
We also started discussions with APG about a partnership
– a pre-requisite for a number of investors. Moreover, new
which was eventually announced in April 2008. To date,
investors wishing to build up exposure in the life sciences
both parties are entirely satisfied with this collaboration; and
sector – via LSP as a specialist fund manager – are free to
it goes without saying that the results are also satisfactory.”
join the fund.”
Klaassen: “What is particularly satisfying is that the
You then selected KAS BANK to act as the
confidence APG displayed in us has enabled us to build up
Fund Agent guiding LSP through the steps to
our own track record in the listed segment. We used to hear
the market. What were your considerations in
from other institutional investors that investing in public
this matter?
equity required an entirely different expertise than that
Wegter: “We had an awful lot of questions but not everyone
required for private equity. We have now demonstrated that
provided answers to our RFPs. KAS BANK not only
– in this sector and with our investment strategy – this
provided answers but, right from the start, helped us think about how our fund should be established. LSP Life Sciences Fund is exceptional because it is a listed fund
Merijn Klaassen, an economist,
investing exclusively in listed biotech companies which are
is LSP’s Chief Financial Officer.
lagging behind the rest of their sector. Amongst other things,
Prior to joining LSP at the
this has consequences for the prospectus, the listing and
beginning of 2008, he worked
delisting and the redemption mechanism. Together with the
for Amgen, an important human
intake team, solutions were worked out which were fairly
therapeutics company in the
unique in the market – something I gradually realised during
biotech industry, and as Finance
the process. What is also exceptional is that the flotation
Manager for Amgen Europe.
occurred without any advisors or distributors. Nor did we
At LSP, Klaassen is responsible for all financial and
embark on extensive marketing. Instead we focused on
administrative matters related to the investment
raising money for the flotation and, in so doing, received the
companies’ investments and divestments, including
one hundred percent support of KAS BANK. While others
financial due diligence and other fund-related business.
were telling us it wouldn’t work, KAS BANK was saying it would help us find a solution.”
KAS Selections • October 2011
9
At KAS BANK, new clients are allocated an intake team. What was your experience of the intake process? Klaassen: “Very professional and down to earth. Naturally, KAS BANK is a highly respected name in the Netherlands and that is certainly an important consideration for institutional investors when deciding whether or not to do business with LSP. As far as we were concerned, your
On 31 July 2011, the five BMW MultiManager Fonds administered by KAS BANK Germany celebrated their
Performance is key when convincing future investors
10 year anniversary. We met the two fund managers from BMW Bank: Dr Holger Bachmann and Markus Baumgartner to get their thoughts and impressions on the past 10 years.
broad range of products was also important. LSP’s added value is primarily its ability to take the correct investment
Could you begin by giving us some background
decisions, and we are happy to use the knowledge and
on how the funds came about?
infrastructure of specialist service providers for the support
Bachman: “Certainly. BMW Bank began the securities
processes. We therefore purchase quite a number of
business 10 years ago with the launch of the MultiManager
products from KAS BANK and believe it’s much easier to do
Fonds 1-5 on 31 July 2001 with Delta Lloyd Investment
business with just one contact person. At the same time,
Managers GmbH as Master KAG which was subsequently
however, I’m aware that there’s a whole team of specialists
taken over in 2008 by KAS Investment Servicing GmbH.”*
behind this individual contact person. We also find KAS BANK’s enthusiasm infectious; because ultimately we
Have you both always managed the assets of
think that attention and expertise are more important than
the funds yourselves?
the lowest price.”
Baumgartner: “In order to offer an exclusive concept for securities investing, we initially enlisted Frank Russell as
The EUR 40 million flotation of LSP Life
Asset Manager. The funds were then taken over by Eckhart
Sciences Fund was extremely successful. Are there any new flotations in the pipeline? Wegter: “In Europe there are about 230 small to mediumsized biotech companies with a total market value of between 30 and 35 million Euros. That’s the segment we are currently focusing on. However, the total sector – take the US alone – is several times larger. We believe there are opportunities there too. So yes, we definitely feel that there are more investment opportunities than the assets we currently have. However, first we want to make a success of this fund and build up a good track record. Performance is key when convincing future investors. In this context, KAS BANK’s performance reports and other tools form a valuable instrument.” Fund managers Dr Holger Bachmann and Markus Baumgartner from BMW Bank
10
KAS Selections • October 2011
Words from Wiesbaden
A successful decade - 10 years of MultiManager Fonds Sauren in 2004 and were eventually taken over by ourselves
during 2002 and 2005 or parties who had exposure to Bear
in 2008, which was also when KAS Investment Servicing
Stearns or Lehman Brothers during 2007/2008 would
took over from Delta Lloyd.”
almost definitely have lost all of their investment. However, in the fund industry, through the diversification of holdings and
You mention five different funds: MultiManager
therefore risk, a total loss of value was generally avoided. In
Fonds 1, 2 and so on. Could you explain the
terms of operations, having a separate Master KAG and
differences between the five funds? What are
advisor helps too, as each partner can concentrate on their
your roles?
own particular area of expertise, so the fund (and investor)
Baumgartner: “The MultiManager Fonds range from 1 to 5
receives the best results from each partner.”
representing the level of risk within each fund. MultiManager Fonds 1 is a defensive fund and with each fund the inherent
Since you took over the funds, I believe you’ve
risk increases up to MultiManager Fonds 5 which employs
received some awards?
an aggressive strategy. Since 1 December 2008, Dr Holger
Bachman: “Yes, in 2010 we came second in the ‘Deutschen
Bachmann and 1 have acted as the asset managers/
Fondspreis’ in the category of ‘Dachfonds Anleihen Global’
investment advisors for the five balanced funds.”
(Global mutual bond fund) with MMF 1 and third in the category of ‘Dachfonds Globale Aktien’ (Global equities fund)
The funds must have seen many highs and
with MMF5. Furthermore, in September 2010 Standard &
lows due to the turbulent markets over the
Poor’s rated the funds 1 and 3 with an A rating for manager
past 10 years?
quality and MMF 1, 4 and 5 received the €uro fund mark
Bachman: “Yes, we’ve had many difficult periods, for
of 2.”
example after the stock markets crashed in 2001 following 9/11, the geo-political crisis in the Gulf in 2003 or most
Congratulations! And finally, how would you
recently the nuclear catastrophe in Japan. However, what
summarise the past 10 years?
we must remember is that the markets always bounce back
Baumgartner: “The development of the markets in the past
eventually. Even after two massive crashes – the dot.com
decade has contradicted everything we were previously
crash and the financial crisis which culminated in the
taught: that after 5-7 years, equities will/can only generate
bankruptcy of Lehman Brothers, four out of five of our funds
profit. This has proved not to be the case. It is important to
still achieved an out-performance. The Multimanager Fonds
take particular care with regard to the structure and direction
1 and 2 enjoyed most success, however, while 3, 4 and 5
of the portfolio, not simply to invest in stocks and sit back
still achieved acceptable performance figures.”
and wait. However, we do believe that the market still has opportunities, as proved by the performance of
Sounds like a success story! What do you think
Multimanager Fonds 1, for example.”
was the secret of your success? Baumgartner: “That was definitely down to diversification
* KAS BANK took over the entire Master KAG business of
within the funds. Investors who invested in individual stocks
Delta Lloyd Investment Managers GmbH in 2008 and
and bonds suffered most. For example, those investors who
re-named the entity KAS Investment Servicing GmbH.
invested in companies like Parmalat, Worldcom or Enron
KAS Selections • October 2011
11
Effective transition management saves time and money These are turbulent times for pension funds. Regulators
Furthermore, asset managers are regularly replaced on
continue to issue requirements for improving the funding
account of their poor performance, for example. Finally, cash
ratio. Investments are being closely scrutinised. As a
transfers to and from the portfolio are sometimes so large
result, many changes are taking place in the composition
that they are best treated as transitions.
of the pension fund investments. Transition management is increasingly being employed to ensure that these
Transitions can have a significant impact on the pension
changes are implemented efficiently. KAS BANK offers
fund. A transition process is quite complex. Besides having
a unique service in this field.
a good transition plan, coordination is required between the many different parties involved in the process. Not just the
Transitions are common in pension fund portfolios, for
fund managers, but also the administrator, risk manager,
example when the strategic and/or tactical asset allocation is
overlay managers, fiduciary manager, custodians and
modified. But also when existing investments are adjusted in
brokers all have to be informed of which steps need to be
line with the strategic and/or tactical asset allocation.
taken when and in what manner.
Managing transitions Risk management
Cost reduction
Operational efficiency
Transparency
Risk reduction due to extensive analysis and knowledge
Minimisation of all transition costs
Reduction and transfer of execution risk
Accountability through insight and reporting
Project management
Pension fund remains ‘in control’
Market risk Sector Execution risk
Explicit costs • Transaction expenses • Dealing costs • Taxes
Implicit costs • Bid-offer spread • Market impact • Opportunity risk
Trade management • Source and target portfolio • In-kind deliveries • Cash management • Hedging
Settlements • Shares, foreign exchange and cash
12
KAS Selections • October 2011
Comprehensive reports as per T charter Full insight into all actions No hidden costs
A pension fund that fails to properly control the transition
different types of activity. (See the diagram opposite for a
process is exposed to unnecessary costs and risks. Say, for
summary of the main elements in the transition process.)
example, that you want to replace one of your asset KAS BANK has a unique approach to transitions. We
The timing of the sale by the former manager will not dovetail with that of the purchase by the new manager
analyse what expertise is required for each transition. Different specialists are then assigned to a project team, including a representative from the pension fund. We thus ensure that all the necessary know-how and expertise is present in the team. As the details of your mandates are
managers. Both employ the same investment strategy.
already known in our systems, lines of communication are
There is then a strong likelihood that the desired portfolio of
short. You will be assigned a single point of contact from
the new fund manager will include positions that also feature
within the project team.
in the portfolio of the former fund manager. In the case of a traditional transition process – the former fund manager sells all his/her positions and hands over the cash to the new manager – positions are bought and sold unnecessarily. This entails high transaction costs. Additionally, the timing of the sale by the former manager will not dovetail with that of the purchase by the new manager. As a result, the pension fund will temporarily take a cash position. This means that
Besides expertise in the field of crossing, netting and trading algorithms, knowledge is also required of custody, coordination, settlements, corporate actions, risk management, monitoring and legal affairs
the return on the assets can show a stronger deviation from the benchmark, since the return of the cash position may
Our transition services also highlight the independence of
deviate significantly from that of the benchmark.
KAS BANK. During more complex execution phases, we use our extensive network of brokers, all of whom have been
So, the operational risk in the case of a transition is quite
selected on the basis of high quality criteria. For example,
considerable. One error in communication can lead to an
they must offer ‘best of class’ trading facilities, provide
incorrect buy or sell decision. Even a failure to correctly
customised services and preferably act solely as an agency
coordinate corporate actions might mean that the new fund
broker.
manager is burdened with unwanted positions from the corporate action. This, too, inevitably entails costs.
During and after the transition, you will be provided with transparent reports in accordance with the T charter. You
In summary, a transition consists only partly of buying and
will also receive regular updates and there will be regular
selling activities. Besides expertise in the field of crossing,
feedback and coordination. This ensures that you constantly
netting and trading algorithms, knowledge is also particularly
remain ‘in control’.
required with regard to custody, coordination, settlements, corporate actions, risk management, monitoring and legal affairs. In order to introduce structure into this process, it can be divided into different phases. Each phase involves
KAS Selections • October 2011
13
DPN Roundtable on ‘Administration’ Recently, the German trade journal DPN organised a roundtable session on the theme of Administration, during which seven experts discussed recent trends in the German market.* Jörg Sittmann, Managing Director of KAS BANK Germany represented KAS Investment Servicing GmbH in these discussions. KAS Selections summarises his contribution to this lively discussion, which was a follow-up to the DPN roundtable discussion held in June 2010. One of the first questions put to the participants was whether or not they expected further consolidation in the German market and what role foreign providers could offer in this context. This question was prompted by the increasing number of regulatory measures confronting the administrators of funds, such as KAS Investment Servicing, in Germany. Sittmann: “As far as the smaller players in the market are concerned, the challenge is to ensure further growth, of course. Consolidations will carry on unabated as the German market is not growing sufficiently for all the competitors to have a healthy business model. This is
Jörg Sittmann, CEO and Managing Director,
already predictable. In the case of smaller KAGs (capital
KAS Investment Servicing
investment funds) which have insufficient assets under administration, the costs will not outweigh the benefits.”
changed and tightened up. Furthermore, we will have to define our position in relation to the Luxembourg market
Do the impending changes in the supervision
within the framework of Ucits IV and Ucits V. In Asia, it’s
and regulatory measures pose any problems?
simpler to trade a Luxembourg fund than a German fund.
“The transition is difficult for us too. However, as a relatively
No-one knows why this is, but many foreign managers
small organisation with only about 30 employees, we can
would obviously rather go to Luxembourg than Germany.”
manage a transition more easily than a large Master-KAG which has between 200 and 300 employees. We have
A consolidation process is underway in the
greater flexibility to adapt our processes.”
German market and foreign providers are also entering the market. Are you considering an
What will have most impact on administrative
acquisition in the next few years?
work in the next three years?
“We made an acquisition two years ago. It may not have
“Without doubt, the area of regulation will continue to be
been a huge acquisition, but it did involve assets worth Euro
14
KAS Selections • October 2011
1.3 billion. Within the year, we had completely absorbed these funds into our administration. Consequently, I believe that acquisitions can be profitable. The question is whether
An acquisition is certainly not something which earns money within one or two years
you acquire someone who uses the same system or whether you have to choose between two different systems.
the event of any infringements, even obtain risk
For the latter variant, there are providers in the market who
assessments. This is primarily interesting for new asset
offer a high degree of computerisation when transferring one
managers as they wouldn’t need to maintain their own infrastructure but could use an Application Server Provider
New asset managers wouldn’t need to maintain their own infrastructure
(ASP) solution for a Master-KAG instead.” What are your clients’ most important issues? “Insurers are particularly concerned with Solvency II, even
of the two systems via well thought out interfaces. However,
though the exact requirements, which become applicable in
an acquisition is certainly not something which earns money
2013, have not yet been determined. We are increasingly
within one or two years. You have to view acquisitions in the
being asked how we can help insurers fulfil these
longer term.”
requirements or manage investments in a way that ties up their capital for the shortest possible time.”
Do you see export opportunities for the German Fund administration model?
What’s the situation regarding securities
“Eastern European countries, such as Poland, Slovakia and
lending as a supplementary service? Can this
Romania, certainly offer opportunities. The volumes are not
succeed in the current market?
large enough yet, but they will be eventually. Without the
“We use our parent company in Amsterdam for this. In the
financial crisis of 2008, we would already have made greater
Netherlands, we are seeing a gradual recovery in the
strides in this respect. However, I think it would be difficult to
confidence of market participants after the enormous blow
export the administrative model of a German fund to Italy or
of 2008. These days, however, counterparty risks play a far
Spain, for example. Our domestic market is not growing as
greater role than they did in 2006 and 2007.”
fast as we would all like. Large mandates are always being reissued, but they are currently too large for us or they are
What innovation plans do you have for the next
only issued to test the inner workings of the market as far as
twelve months?
price is concerned. These sorts of market movements
“KAS BANK has developed an app for the iPad which
continue to be very normal. In any case, we would like to
enables Dutch pension fund directors to directly access their
continue to grow both organically as well as inorganically.
fund’s performance data and risks. We would like to adapt
This would enable us to spread the system costs over a
this app for the German market within the next months.”
larger volume of assets and, consequently, be more profitable. I definitely see opportunities in services with a
* The entire article can be read online by going to:
front end tool for smaller asset managers, as well as in a
www.dpn-online.com/news, then clicking ‘Roundtables’
system whereby they can import transactions and,
in the left-hand menu.
simultaneously, have compliance checks carried out and, in
KAS Selections • October 2011
15
Mark Schilstra appointed Head of Client Management On 1 August 2011, Mark Schilstra was appointed Head of Client Management for KAS BANK. His new job seems a bit like a homecoming. “At KAS BANK, I am once again aware of the advantages of a relatively small and specialised organisation: no unnecessary ballast, solutionoriented, intensive contact with clients, all making it possible to act quickly.” For the past few years, Schilstra worked for Fortis Bank (NL) and ABN AMRO as Director of Central Risk Management, a position in which he was responsible for the bank’s operational risk policy. Prior to that, he was employed by Fortis Bank as a risk manager in the merchant bank, where he acquired knowledge of the clearing and custody processes as well as the associated risks. These are subjects he will be involved with again at KAS BANK. He views his experience as a risk manager as particularly relevant to his new commercial function. “From a risk
Mark Schilstra, Head of Client Management, KAS BANK
perspective, it’s also in our clients’ interests to raise the alarm internally if necessary.”
Mees Pierson. His return to a relatively small organisation was a conscious choice. “Precisely due to this specialisation
“In my view, my banking experience as a risk manager has
and the fact that the bank was a niche player, the
several aspects in common with my new job as Head of
employees were extremely committed and it virtually went
Client Management. Due to tighter regulatory measures and
without saying that the client was central. After only three
requirements related to ‘being in control’, risk management
months at KAS BANK, I have the same feeling as I had
has become one of the most important topics for banks,
15 years ago; the only difference being that I now also have
pension funds and insurers. But even in the traditional
experience of large financial organisations. That’s an
transaction and asset servicing sector, we are witnessing a
important difference given the fact that, as Head of Client
more rapid launch of new risk monitoring tools. At KAS
Management, I will be far more involved in giving direction to
BANK, we attach great value to having further discussions
the bank’s policy. From my perspective, this will also enrich
with our clients, prospective clients and consultants about
me as I’ve primarily been operating in risk-related bodies in
their requirements and wishes in this field. This enables us to
recent years.”
collectively achieve solutions which benefit the client and allow KAS BANK to distinguish itself from its competitors. In
Despite having worked in the financial sector for 15 years,
this way, substance will be given to an active partnership.”
KAS BANK remained, to some extent, the ‘great unknown’ as far as Schilstra was concerned; a fact he acknowledged
Schilstra started his banking career in the mid 1990s as an
with a slightly embarrassed chuckle. Although familiar with
Account Manager for Derivatives and Structured Products at
the bank’s custody and clearing services, he had no idea of
16
KAS Selections • October 2011
the numerous other services provided by KAS BANK which
subjects. Here I can adopt a far broader view. The point of
add value. “Here, traditional service provision in a beautiful
departure of everyone here is substance. What does the
old building goes hand-in-hand with state-of-the-art service
client want? How can we offer our clients solutions to their
provision in the area of risk and management reporting.
problems? Naturally, money has to be earned but not to the
However, it’s vital for us to draw even more attention to our
exclusion of everything else. A long-term relationship is
specialism and our specialised products. Moreover, we
literally worth a fortune. By offering a central contact point
mustn’t just sell them by smooth talking but, together with
for all available (banking) products and services, including
our clients, seek solutions that fulfil their wishes and
financing and related risk management reports, I hope to
requirements. In that respect, market trends are on our side.
raise the quality level of both our products and services even
Banks, insurers and pension funds are currently being faced
further. Neither the market nor our clients should be
with ever more stringent regulatory measures imposed by
surprised about what we can actually do. In fact, it should be quite the opposite. They should all be saying: you should
“From a risk perspective, it’s also in our clients’ interests to raise the alarm internally if necessary.”
go to KAS BANK for that. Together with my team, I’m really looking forward to meeting this challenge.”
the regulators. In addition, general standards are increasingly
CV Mark Schilstra
insisting that pension fund managers can demonstrate that
In 1994, Mark Schilstra (1971) obtained his master’s
they are ‘in control’ of the risks of their investment policy.
degree in business economics. In 1997, he graduated
Earlier this year, the DNB also announced four themes
with a distinction in econometrics from the University of
relating to pension fund regulation on which it intends to
Amsterdam. In 2003, he completed his post-doctoral
focus in the coming year. In particular, these focal points are
programme in Financial and Investment Analysis (RBA,
governance and the so-called ‘countervailing power’.
MFA, C(E)FA). Currently, he is following a post-doctoral
Through the services offered by KAS BANK, we will be able
programme in Risk Management for Financial
to help our clients with the details of these points of
Institutions at the VU University in Amsterdam. In
attention. Our expertise is in the area of performance, risk
addition, Schilstra has written a number of academic
and compliance. We know how to translate this expertise
(and semi-academic) publications.
into innovative products, such as the Pension Fund Monitor app for the iPad. Regarding brokers, we can concentrate on
RBA
= Registered Investment Analyst
intraday risk monitoring, which we can do without any
MFA
= Master in Financial Analyses
conflict of interest arising between us and our clients. As
C(E)FA = Chartered (Effas) Financial Analyst
a former risk manager, KAS BANK’s ‘pure play’ strategy
Effas
appeals to me very much.”
= the European Federation of Financial Analysts Societies
Schilstra is greatly looking forward to working with the more than 50 specialists in his Client Management team. This cooperation will also broaden his personal horizon. “As a risk manager, my primary concern was with risk-related
KAS Selections • October 2011
17
Achieving best-execution through outsourcing MiFID opened the door for competition in the marketplace
the number of central counterparties and securities
by recognizing two new types of trading destination
depositories: just one in the US (the Depository Trust &
beyond the incumbent regulated markets: multi-lateral
Clearing Corporation, or DTCC) but no fewer than 23 in
trading facilities and systematic internalisers. MiFID’s aim
Europe.
was to pursue best execution through competition. But from the start the definition of best execution was broader
This scenario has clear implications for the long-term ability
than merely obtaining the ‘best price’ during trading,
of the European markets to attract global investment. In
demanding as it did an unprecedented level of pre- and
many quarters the DTCC, as the exclusive depository
post-trade transparency. In reality, though, the envisaged
gateway in the US, claims the credit for attracting the
outcome has been much harder to realise.
investment capital that fuels the US economy, by means of an efficient, low cost and centralised infrastructure. In
Introducing competition among trading venues has had two
comparison, Europe continues to limp along with an
major effects: trading fees have fallen significantly, but there
infrastructure that remains completely fragmented along
has also been a corresponding fragmentation of liquidity,
national lines.
increasing the costs of finding it. Trades are now executed in much smaller fills, with clear implications for the post-trade
Post-trade consolidation
environment, which has become increasingly complex.
This is partly due to the European Commission’s unwillingness to make up its mind on how best to tackle the
Meanwhile, in the US a very different and much more
substantial challenges of achieving cross-border post-trade
efficient picture emerges. It is striking to note not only that
consolidation. The inescapable question is how to divide this
the US produces roughly the same gross domestic product
project between the private and the public sectors. To date,
(GDP) with 200m fewer people, but also that the companies
the Commission has opted for a bottom-up approach,
representing that GDP are quoted on four systemically
relying on competition among market participants to drive
important trading venues, compared with approximately 28
efficiency. But, as we have seen, this has resulted in a
venues in Europe. The most notable difference, however, is
negative correlation between the respective efficiency of the front and back offices. The process of competition, while driving down the cost of trading itself, has increased complexity and with it overall costs. There is no doubt that competition has an integral part to play in lowering costs and driving innovation, but for this to work there must be a level playing field to facilitate the corresponding post-trade efficiencies. Unfortunately, voluntary interoperability between central counterparties across Europe remains a distant prospect. As a consequence the European markets neither enjoy the benefits of an efficient monopoly (as in the US) nor operate in a landscape that allows genuine competition.
18
KAS Selections • October 2011
Global Custody Network News Europe A single, pan-European central counterparty to clear trades per asset class, for example, would allow European brokers
Europe – EMCF says yes to CCP interoperability
to benefit from post-trade costs on a par with those enjoyed
European Multilateral Clearing Facility (EMCF) has
in the United States. But for this vision to be realised, there
announced that it will interoperate with competitors servicing
is a clear requirement for vision and leadership from the
European MTFs and exchanges. EMCF has informed the
European Commission.
trading venues Chi-X Europe, BATS Europe and NASDAQ OMX of its intention to enter into interoperability agreements,
Decreasing costs
the timing and progression of which will be determined in
Until Europe achieves a genuinely unified market – a process that took the United States nearly 25 years to complete – it is certain that the scenario outlined above will continue to affect the overall cost of trading across national boundaries. Therefore traders will find capital efficiency increasingly difficult to attain. In other words, due to widespread uncertainty as to how these many issues and developments will pan out, the likely market structure in three years – let alone five or ten – remains clouded. Market participants, faced with almost daily upheaval and a constant drip-feed of communication from a variety of sources, are hard pressed to define strategies over timescales of longer than 12 months.
coordination with the platforms and interoperating CCPs in the coming weeks. EMCF aims to conclude the
Challenge
interoperability arrangements by 1 January 2012, subject to
And while the broker community in Europe is facing upward
regulatory approval. When EMCF becomes interoperable
pressure on both their internal and external costs, end-
with LCH.Clearnet Ltd, SIS x-clear and EuroCCP, clearing
investors are becoming increasingly aware of the need to
members will benefit from a broader range of interoperating
mitigate counterparty risk on the execution side. In the short
CCPs. A single CCP could be selected to clear the
term, the post-trade landscape as outlined is forcing brokers
transactions executed on platforms that offer their trade feed
to address another very real challenge: how to link the
to the interoperating CCPs.
back-office to the front-office in order to reduce this inherent complexity, risk and cost.
KAS BANK trading member clients already benefit from many of the advantages interoperability would offer.
KAS BANK offers brokers an effective tool to meet this
KAS BANK’s single platform, uniform reporting and
challenge. Our Transaction Management Services combine
integrated credit model (encompassing cross
clearing and settlement across all the major European
collateralisation and innovative margin financing) enable us
markets with an integrated back-office solution.
to provide a single account structure, communication protocol and clearing agreement across all the major European markets.
KAS Selections • October 2011
19
ESES/France – Denomination of French debt
Outside Europe
instruments will change from units into nominal amount As from 24 October 2011, the denomination used for the
Brazil – Short term tax reinstatement on some corporate
listing and trading of French debt instruments on the NYSE
bonds
Euronext regulated bond markets will be harmonised from units (UNT) to nominal amount (FMT), bringing the French marketplace in line with international standards. The change comes in the context of French market reforms to simplify the process of listing and trading French bonds. Bonds with the following characteristics will not be included in the scope of the change in denomination to FMT: • Bonds with a decimalised (other than 0.10 and 0.25) or atypical nominal • Bonds with a decreasing nominal.
The Brazilian government has published a new decree reinstating the short-term IOF tax on some Brazilian corporate bonds, purchased from 25 May, 2011 onwards. From this date, corporate bonds are subject to IOF on capital gains whenever the investment is held for less than 30 days. The publication reinstated the short-term IOF tax for all corporate bonds except for those below: • Debentures; • Corporate Financial Bills (Letras Financeiras de Empresas Privadas); As a consequence, these bonds will no longer be cleared by LCH.Clearnet SA, and will be removed from the regulated
• Real State Receivable Certificates (CRI – Certificados de Recebíveis Imobiliários)
markets trading engine. In addition, for those bonds whose expressions of quantity are migrating to FMT, two additional
Kenya – Change of settlement cycle
trading groups, 4Y and 4Z, have been added to the list of
As of 4 July 2011, the
new trading groups.
Nairobi Stock Exchange and Central
The change will also have an impact on the settlement
Depository have
processing on the ESES markets. French bonds that will
changed the
change of denomination will settle in FMT on all ESES
settlement cycle for
markets as of 24 October 2011. French bonds that do not
equity trades from T+4
change of denomination will no longer be guaranteed by
to T+3.
NYSE Euronext and will settle in UNT as a non-guaranteed instrument.
20
KAS Selections • October 2011
ASEAN EXCHANGES aims at regional integration of capital markets ASEAN Exchanges is a collaboration of seven exchanges*
capacity and risk management to promote national and
from Indonesia, Malaysia, Philippines, Singapore, Thailand
regional growth. The second is to cooperate to reduce
and Vietnam to promote the growth of the ASEAN capital
vulnerabilities to external shocks and market volatility, a
market by bringing more ASEAN investment opportunities
point that became clearer after the Asian Crisis of 1997 and
to more people. This will be accomplished by driving
is underscored by the present global financial crisis. In this
cross-border collaboration, streaming access to ASEAN,
context, regional integration can facilitate both domestic
creating ASEAN centric products and implementing
capital market development and global integration by
targeted promotional initiatives. The ASEAN countries all signed the ‘ASEAN Economic Community (AEC) Blueprint
We envision an ASEAN which is competitive, inclusive, equitable, sustainable and resilient
2015’ back in 2007 committing themselves to creating a single market by 2015. ASEAN Stars ASEAN Exchanges will provide an easily identifiable
providing the liquidity, scale and capacity to compete
reference for investors in the form of the ‘ASEAN Stars’.
globally. Moreover, integration will contribute to financial
ASEAN Stars will comprise 210 ASEAN blue-chip stocks
stability by expanding the market which can be accessed by
representing the most exciting 30 companies of each
regional players, hence facilitating diversification and
member exchange as ranked by investability in terms of
reducing domestic volatility resulting from global shocks.
market capitalisation and liquidity. To build the interest and momentum of these large and
Challenges
liquid stocks, partnerships with providers will be established
Progress toward the regional integration of capital markets
to create investment platforms and integrated data feeds. In
has been constrained by the great differences in the levels of
order to coordinate information regarding the formation of
development and in the observance of regulatory standards,
the ASEAN Stars services, a website has been launched:
capital controls, fragmented infrastructure and insufficient
www.aseanexchanges.org.
coordination and monitoring mechanisms. The key challenge is therefore to set up a well sequenced programme of
Regional integration
regional integration initiatives supported by embedding
According to ASEAN Exchanges, there are two main
regional considerations into domestic capital market
reasons for supporting regional financial cooperation and
development programmes and reinforcing the above
integration. The first is to strengthen financial intermediation,
through a well designed ASEAN-level monitoring and
* ASEAN exchanges include the following:
-
Indonesia Stock Exchange
-
The Stock Exchange of Thailand
-
Bursa Malaysia
-
Hanoi Stock Exchange
-
The Philippine Stock Exchange Inc
-
Hochiminh Stock Exchange
-
Singapore Exchange
KAS Selections • October 2011
21
coordination mechanism. The two-way interaction between strengthening domestic capital markets and fostering integration requires proper sequencing and coordination of domestic capital market reforms and measures to enhance
A well sequenced programme of regional integration initiatives will be supported by embedding regional considerations
greater cross-border access, based on: - Common international standards,
“This year’s ASEAN Economic Ministerial meeting takes
- Judicious use of mutual recognition in finance and
place at a critical juncture when there is so much uncertainty
business,
about the global economy given the fiscal situation in the
- Further liberalisation of capital controls and exchange restrictions,
United States and members of the European Union. From Indonesia’s perspective, it is imperative that ASEAN
- Further strengthening of prudential safeguards and risk
implements the AEC Blueprint 2015 on time as this will
management capabilities to help manage volatility and
benefit all its members and allow ASEAN to grow together
compete effectively.
with our dialogue partners,” said Indonesian Trade Minister Mari Elka Pangestu.
The discussion is expected to end the competitor relationship between the three exchanges
She also said that member countries need to strengthen ASEAN’s connectivity with the rest of Asia Pacific to ensure ASEAN is well integrated into the global supply chain. “What we envision is an ASEAN which is competitive, inclusive,
AEM Meeting
equitable, sustainable and resilient,” said Pangestu.
At the 43rd ASEAN Economic Ministers (AEM) Meeting hosted in Manado, Indonesia, from 9 – 13 August, the
Besides ASEAN ministers, economic ministers from
Association of Southeast Asian Nations (ASEAN) was urged
ASEAN’s dialogue partners were also present for
to implement the ASEAN Economic Community (AEC)
consultations with the AEM. These ministers from Australia,
Blueprint 2015 in good time.
China, India, Japan, Korea and New Zealand joined senior trade representatives from the United States and Russia.
Indonesia
22
KAS Selections • October 2011
Malaysia
Philippines
These countries represent more than 43% of the total global
include, but are not limited to, the development of index and
trade in 2010.
other equity derivative products, and the compilation of new indexes.
Joint venture with Chinese Stock Exchanges
The discussion is expected to end the competitor
The Board of Directors of HKEx agreed in principle to enter
relationship between the three exchanges. Joint
into detailed discussions with the Shanghai Stock Exchange
development projects could facilitate cross-border listings or
and Shenzhen Stock Exchange with a view to establishing a
cross-border trading.
joint venture company to be incorporated in Hong Kong. The possible areas of business operation of the company
Singapore
Thailand
Hanoi
Ho Chi Minh City
KAS Selections • October 2011
23
NETHERLANDS
NETHERLANDS
UNITED KINGDOM
KAS BANK AMSTERDAM P.O. Box 24001 1000 DB Amsterdam The Netherlands Spuistraat 172 1012 VT Amsterdam The Netherlands T: +31 20 557 59 11
GERMANY
KAS BANK LONDON 5th Floor 10 Old Broad Street London EC2N 1AA United Kingdom T: +44 20 7153 36 00
KAS BANK WIESBADEN Biebricher Allee 2 65187 Wiesbaden Germany T: +49 611 1865 3800
www.kasbank.com