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Local paying agent in the Italian market

The Italian asset management market is experiencing an extended period of growth, with inflows reaching €40bn just in the second quarter of 2015. Since January 2013, monthly net inflows have increased continuously and about 60% of this growth is attributed to nondomestic investment funds. So, there is a growing trend among fund distributors to adopt an open architecture structure in order to meet the demand for an extensive range of foreign UCITS. As a result of this demand, international asset managers are actively launching strategic initiatives to enter Italy’s high-potential market.

International asset managers entering the Italian retail market are legally required to appoint a local distributor to collect investments made into their funds. For reasons of operationally efficiency and in order to be fully compliant with regulatory and fiscal issues, local fund distributors usually delegate most of the related activities to a local intermediary. This intermediary is known as the Local Paying Agent (or Soggetto Incaricato dei Pagamenti, SIP).

The LPA acts as a facilitator between managers of funds domiciled outside Italy and their distribution networks, which include banks, SGRs, SIMs (Italian investment companies) and financial advisors. The LPA’s primary role is to capture individual orders for specific UCITS funds via STP from the distribution network on behalf of retail investors, aggregate these into a single order, which is then executed via the TA’s omnibus account (bulking and order routing activities). The Local Paying Agent also maintains a...(Read more)