Industrialisation & agility

CACEIS enjoys a hard-earned reputation on the international investor services market for the high levels of quality we achieve across our broad product range. The standard of service CACEIS strives for in daily operations has never been achieved by just doing a little extra, rather we view quality as a way of doing business that is present at every level of our organisation and throughout our business processes.

Our operations need to be of a robust nature as they form the foundation of business development, namely bringing in new clients, servicing existing clients, and creating new services to suit evolving client requirements. By nature, the production side of our business must be reliable, in that it is on time, accurate and free of operational risk. Furthermore, being competitive is an essential element both to attract prospective clients and ensure that existing clients know they are getting value for money. Finally, the production side must also incorporate a high degree of flexibility allowing it to be innovative in terms of products and adaptable in terms of client configurations.
From this solid base, the front or distribution side of our business is able to carry out its two principal roles, developing sales to existing clients as well as potential customers and identifying the innovation needs of clients in order to remain an efficient and valued business partner.

It is seldom easy for a business to find the right balance between sales’ needs and operations’ capabilities but within CACEIS, we have made major inroads into increasing the industrialisation of our business, whilst maintaining our all important agility. Whereas an industrial approach favours lower costs, it also leans towards an inflexible standard offer where adaptations are made as late as possible. On the other hand, a sales driven, bespoke approach offers extensive flexibility in terms of tailoring services to complex products, however the costs associated with this type of service are very high. CACEIS has identified the strengths of both servicing models and in doing so has managed to forge a model that exploits the best of both worlds, allowing controlled costs yet high adaptability.

By creating a company with a solid operational founding and the adaptability required for sales generation and client satisfaction, CACEIS has become known as the company that best supports clients’ business development. Our effective securities services in combination with the close, partnership relationship that we seek to build enables us to gain many new clients through word of mouth alone, which says a great deal about the effectiveness of our continuous efforts to achieve high levels of client satisfaction. Indeed, in many countries where we operate, we are proud to count the top performing investment managers among our most valued clients ■ 

Patrick Lemuet and Marco Wilms respectively Head of Business Development in France and Germany, talk about the experience gained by CACEIS on regulated markets for derivatives. They point out that the Group’s buy-side clients have a single entry point from which to access the full range of markets. This allows institutional investors to minimise their middle-office costs and consolidate their reporting.

What does the exchange traded derivatives market look like today?

Marco: Eurex is the leading European market and one of the top markets worldwide for exchange traded derivatives. The crisis has not robbed Eurex of its leadership position, and more generally, there has been no change in the global market rankings. Regulated derivatives markets have held up fairly well and are almost back to 2008 levels.

What reasons do institutional clients (asset managers, banks, insurance companies, pension funds, etc.) give for choosing CACEIS as their clearer?

Patrick: Our system is quick and easy to implement. It lets clients deal with their prefered brokers on any financial market, while having a single contact for "post-trade" transaction monitoring. As Newedge, the world leader in futures, is our sub-clearer, CACEIS operates all types of transactions (futures and options on fixed income, equity and currency markets and indices) on every market. The reliability of our services is also a selling point: we have a skilled operational team that is specialised in this activity with over a decade of experience, using the same IT platform as the one employed by the world’s principal clearers.

Marco: Clients can benefit from the financial appeal of such an outsourcing service, which allows them to cut administrative costs and mitigate risks. It offers reliable infrastructure and economies of scale are achieved by CACEIS. We now handle exchange traded derivatives transactions for 50 or so institutional clients throughout the Group and will soon roll out this service successively also to countries such as Germany.

Can you give us an example of what a client gains from having a single service provider for both conventional securities and exchange traded derivatives?

Patrick: I can give you several. Providing statements that consolidate all the client’s assets is a perfect illustration. Transactions are handled entirely by CACEIS and accounting flows between the different "worlds" – derivatives, securities and cash – are automated, always consistent and reliable. By taking responsibility for monitoring positions, calculating guarantees and margin calls, related securities and cash settlement, and in some cases valuation, CACEIS lets managers focus on their investments and minimise their administrative costs.

Marco: The benefits in terms of reconciliation are considerable for the client, who does not have to take sole responsibility for consolidating its positions while managing registration time lags from one service provider to the next. These "spurious fails" are a bugbear for middle offices.

What markets are your clients active on?

Marco: Most of CACEIS’s clients trades are on Eurex, but some of them also trade in Paris on the MONEP (for which CACEIS is a Global Clearing Member), in London on the Liffe, and on the North American (CBOT, CME, OCC) and Asian markets. Eurex is a very important market for German clients. With the extension of our service offer to German clients, very soon we want to complete our service offer in Germany. We often see clients and prospects showing interest in these services in RFPs. Of course, we intend to deliver as much services from one source to our clients as possible - that is more convenient for them.

What do clients need to do to acquire this service?

Patrick: Their Business Development Mana-ger at CACEIS and the dedicated team of Exchange Traded Derivatives (ETD) specialists provide them with detailed explanations before launching this service in order to clarify the liabilities of each party in a Service Level Agreement. The instructions processing and reporting conditions are drawn up. Moreover we sign a contract with the client and implement a give-up agreement with the client’s chosen brokers. Our ETD service relies on a transparent legal framework. Clients benefit from quick entry to comprehensive and highly scalable ETD operational capabilities covering the front-to-end trade life cycle ■ 

Boussard & Gavaudan selects CACEIS in Ireland to act as trustee/custodian
Boussard & Gavaudan Asset Management, a French Asset Manager, has appointed CACEIS in Ireland to act as trustee/custodian to their new Irish Non-UCITS Qualified Investor Fund (QIF). Boussard & Gavaudan currently has approximately €1.2bn in total assets under management and is redomiciling their main investment vehicle, SARK Fund Limited (approximately €1bn in assets), from the Cayman Islands to Ireland.
CACEIS in Ireland was selected due to its knowledge and expertise with Irish regulated hedge funds from a fiduciary perspective ■ 

Tikehau Investment Management (TIM) appoints CACEIS for its FCTs "TE FARE" and "TSS2"
Tikehau Investment Management (TIM) is an independent Asset Management Company, created in December 2006 and a specialist on the European credit markets. As of today TIM manages over €420m of private and institutional money, through funds or managed accounts. The FCT (Fonds Commun de Titrisation) is the result of new French regulations modernising the legal framework applicable to the Fonds Commun de Créance ("FCC"), notably with a view to widening their purpose to include the securitisation of insurance risks alongside credit risks. By managing FCTs, TIM shows its capacity to work on cutting-edge mandates. CACEIS is appointed as custodian and trustee in France because of  our expertise and service adaptability
for new products ■ 

As the European Commission launches a prudential supervisory framework for clearing houses (CCPs) and OTC derivatives regulations, Pierre-Dominique Renard, Director of Customer, Market & Infrastructure at LCH.Clearnet SA, gives us his views on clearing for OTC derivatives.

Traditionally, CCPs have cleared standardised, liquid, fungible instruments that have available prices, but OTC derivatives, which are by nature personalised through bilateral contracts, are more complex. What are the operating conditions in place at LCH.Clearnet SA for clearing OTC derivatives and what is in the pipeline?
"Having OTC derivatives cleared by CCPs justifies the implementation of operating conditions tailored to the complexity of these instruments in order to provide solid guarantee mechanisms and in this way forestall the risks assumed by the clearing house in substituting itself for its members. In this regard, LCH.Clearnet SA operates very strict admission requirements  and control rules for its members. This sets it apart from other clearing houses. In particular, these requirements include criteria relating to status, rating, minimum required capital, skills and necessary resources. Furthermore, LCH.Clearnet SA has implemented a risk management framework with several levels including a mutual guarantee funddedicated to CDS. It is a key point in terms of ensuring good risk coverage and thus fulfilling the primary objective of a clearing house, namely to protect the market from the default of a member in order to control systemic risk. Finally, in the event of a participant default, the members are committed to participating actively in the liquidation process.
Concerning the instruments themselves, LCH.Clearnet SA uses transparent criteria to determine their eligibility. Its risks committee selects them according to factors such as transparency of pricing, liquidity, market and issuer risk, and the potential to withstand a default. Since March 2010, LCH.Clearnet SA has been clearing CDSs on European indices that meet these criteria and are sufficiently standardised. Development priorities are closely considered with existing and future clients. They will be introduced, in particular, via the implementation of matching and real-time netting, by increasing the scope to single name CDS, and by including buy-side trades into the guarantee."

What regulatory decisions will encourage OTC derivatives traders to entrust their contracts to CCPs?
"The strongest incentive will come from the European supervisory authorities which will require traders to trade certain OTC derivatives via CCPs. However, this decision must not lead us to accept instruments with inadequately assessed risks. To avoid such a situation, it would be suitable to determine, in conjunction with the authorities, a very fine identification of eligible products, providing a detailed description, including the elementary terms of the contracts. The zero-weighting of committed capital for eligible operations should also be a strong incentive for traders and their end-clients to conduct their transactions via a clearing house."

LCH.Clearnet SA particularly proved the robustness of its model at the time of the Lehman Brothers collapse, in terms of effectiveness, risk-coverage techniques and transparency. What is your position on the status, governance and risk management principles of CCPs for OTC derivatives?
"Thanks to its banking status, LCH.Clearnet SA benefits from access to central bank money and the money markets which is decisive in the event of default or crisis, so it can negotiate intraday or overnight refinancing directly with the central bank. Although the regulators do not impose banking status on CCPs, we would like to see them subject to closely prudential ratios. In terms of governance, the majority of CCPs belong to a vertical silo organisation, in which the majority shareholder is that of the trading platform for the cleared instruments. Consequently, decisions are taken with the principal objective of a return on investment. LCH.Clearnet SA, on the other hand,  uses a horizontal model with a board of directors composed mainly of user members who are very involved in strategic decisions and risk management." This active participation allows them to better align the company’s strategic decisons with their needs.

The OTC derivatives market has a global dimension. What would you recommend in terms of interoperability between CCPs?
"LCH.Clearnet SA is well aware of the difficulties of interoperability between CCPs as it is the only clearing house to have created links between, for example, LCH Clearnet Limited and SIX x-clear for equity trades dealt on the LSE and between LCH.Clearnet SA and CC&G (the Italian CCP) for Italian debt. Establishing these links for regulated markets involved significant investments, especially in terms of risk management and legal framework, bearing in mind that those are considered  "mature markets". In the case of OTC derivatives, adding credit risks to market risks created such complexity that the regulators soon admitted this was not a priority in the short term. On the other hand, as the choice of CCP is a matching criterion, LCH.Clearnet SA offers contract portability to traders wishing to change CCP."

How can buy-side clients gradually benefit from clearing for their OTC derivatives trades?
"Buy-side clients do not fulfil the necessary criteria for direct membership of CCPs and they rarely collateralise OTC derivatives trades. Their transactions may be identified as gross amounts or in omnibus accounts via their Individual Clearing Member (ICM) or General Clearing Member (GCM). For buy-side clients, this means bearing the counterparty risk vis-à -vis their ICM or GCM if their positions are held in an omnibus account as their transactions will be included in a global portfolio that the CCP would try to liquidate to best effect in the event of default. These clients are likely to contribute a volume of activity that currently bypasses CCPs."

Will clearing OTC derivatives lead to consolidation among CCPs?
"In Europe, LCH.Clearnet SA has a bank status, giving it access to central bank money - this would be a critical advantage if the authorities were to choose a single European CCP for OTC derivatives. Its economic and governance model, which gives considerable power to users, also represents a key benefit provided that it is opened up to cross-border members. We will undoubtedly see a move to consolidation in varying proportions for CCPs in Europe, depending on the assets concerned. For cash equity, T2S will act as a catalyst for European harmonisation and that is likely to lead to a concentration of CCPs. For listed derivatives, several clearing houses will probably continue to coexist, each of them for the trades dealt on their parent market." ■ 

Safeguarding client assets is the main role of a global custodian. Monitoring CACEIS’s sub-custodian network is key to ensuring high-quality service across all the markets in which clients invest.

CACEIS relies on a sub-custodian network in some 90 countries, covering all regions of the world and offering its clients fast access to international financial markets. It selects the best sub-custodian bank in each market, in complete independence, setting it apart from other global custodians which are tied to their own group network. CACEIS places primary importance on managing its network; dedicated teams monitor the sub-custodians on a daily basis. A quarterly committee meeting, chaired by a member of the executive committee, brings together the network heads, the risk and the compliance departments. This committee mediates the selection, the follow-up and the control of sub-custodians.

SELECTION OF SUB-CUSTODIANS
CACEIS uses a rigorous process to periodically select its sub-custodians, either when a client invests in a country which is not yet covered, or during the regular reviews of services offered by the competitors of its subcustodians. To this end, the committee entrusts a Group Network team with the task of carrying out a request for proposal. This team sends a detailed questionnaire to the local banks chosen on the basis of their operational capacity, their competitiveness, their reputation (surveys in specialist magazines) and their financial strength (according to rating agencies). After approval by the various internal departments (risk, compliance, operations), of a document which describes the potential country and operational risks, the committee selects a service provider meeting strict criteria (service quality/price ratio, rating, market share, possible opportunities for synergies, etc.).

ENTERING INTO RELATIONSHIP
CACEIS establishes a custody contract to protect client assets and a Service Level Agreement (SLA) with the sub-custodian. The SLA details the responsibilities of each of the participants as well as the operational and audit procedures to be implemented.
Once the relationship is active, the network teams monitor and update the files of the sub-custodians: approval, financial rating, specialised ratings, change in share ownership, strategy, etc.
On the strength of these documents, CACEIS’s risk department allocates an internal rating to each of the sub-custodians (profits, solvency ratios, debt, etc.).

MONITORING
CACEIS’s network teams in each country regularly analyse the quality of the services provided by:
▷ Surveying the satisfaction of clients and operational departments.
▷ Meeting regularly the sub-custodians to perform a service review: ensuring the correct application of the Service Level Agreement and that the level of services provided is in line with our clients’ requirements.
▷ Using due diligence visits to strengthen this procedure. The committee approves the schedule put forward by our Network teams depending on changes in country risk profiles (recent visits with our Spanish, Portuguese and Greek sub-custodians), the type of assets held (recent visits with our Hungarian, Polish, Czech, Slovak sub-custodians) and on its frequency (at least once every three years). These visits are accompanied by a questionnaire which is sent in advance to the sub-custodian.
▷ Sending questionnaires annually to each sub-custodian regarding how they have monitored their operational processing, compliance control, risk management, governance changes, safeguard of the assets, etc.


The selection and management of its sub-custodians allow CACEIS to provide its clients with efficient processing and reporting of transactions carried out on all markets for all asset classes. The Group is backed by a structure which allows its clients to benefit from these services in complete security and with greater proximity to market information. This model, along with tight risk control, also ensures them the proper protection of their assets ■ 

CACEIS is Top Rated in 2010 Global Custodian magazine’s surveys

Agent Bank in Major Markets - France
▷ Cross border - non-affiliated clients
▷ Domestic clients
▷ Leading clients

Agent Bank in Major Markets - Germany
▷ Cross border - non-affiliated clients

Mutual Fund Administration – Europe
▷ Equity; Fixed Income; Fund of Funds; other funds
▷ Assets under administration from $100 million to $5bn

Hedge Fund Administration
▷ Single strategy; Multi-Strategy; Fund of Funds
▷ Assets under administration from $100 million to $1bn Private Equity - Europe
▷ Assets under administration from $100 million to between $1bn and $5bn

We thank all our clients who participated in these surveys. Their feedback helps us continuously improve the overall quality of our services and ensures that we remain at the cutting-edge of market developments ■ 

Despite its many advantages, 24 months after its launch, the concept of the Fund Processing Passport (FPP) is still far from being an operational reality within the investment fund industry. Two recent initiatives have just relaunched this model, created by EFAMA in 2007-2008 to standardise information required for order processing.

Facilitating the cross-border distribution of UCITS and third-party funds means providing distributors and investors with easy access to information concerning these funds and, in particular, technical information on subscription and redemption procedures. With the rapid growth in cross-border distribution of third-party funds posing difficulties in terms of referencing information, EFAMA created a European standard in 2007, updated in 2008, namely the FPP.

As a reminder, the FPP is a standardised reference document comprising 105 pre-defined fields which aim to provide the different operators within the fund industry with the necessary operational information to correctly initiate and process third-party fund orders. This information includes the details of the local fund order desk in a given country, the cut-off time for order transmission, accepted currencies, required forms, etc. Two years after the launch of the FPP, even though it is widely recognised that such a standard is useful (information communicated electronically, less time spent collecting information, reduced operational risks, faster order processing), one has to admit that in practice its development in Europe has been less successful than expected.

TWO RECENT INITIATIVES TO RELAUNCH THE FPP

Nevertheless, it should be pointed out that two initiatives have recently relaunched the concept of the FPP.

▷ On 28 June, EFAMA announced the launch of a pan-European web portal, providing a central access point for all existing FPPs in order to facilitate their use. The end objective is to make the use of the FPP more widespread among all professional players involved in the fund processing procedure, in particular distributors, fund platforms, asset management companies and their service providers.

▷ In addition, in France, the final report of the asset management stakeholders’ committee entitled "Implementation into French law of the UCITS IV Directive: Situation and Outlook for Asset Management", published by the AMF on 26 July 2010, suggests that it should be compulsory to provide an FPP for all French UCITS seeking to be distributed internationally - the first step towards the creation of a product reference system over the long term.

Furthermore, the committee encourages asset management companies to use the web portal set up by the AFG in order to make their completed FPPs available to distributors.

A firm believer in the FPP’s usefulness for improving and standardising the information required for order processing in an increasingly open environment, CACEIS has supported this initiative since the beginning and has actively participated in working groups in France and Luxembourg. Furthermore, since 2008, within the framework of its support services offer for fund distributors, CACEIS in Paris has offered its services to asset management companies for the collection and management of FPP data concerning their UCITS, although the validation and publication of this data remain their responsibility ■ 

NATHALIE COLLOT, Product Manager

Having completed our first full year of operation, we report back on CACEIS Hong Kong’s progress, take a look at the services offered and give some information on the subsidiary’s future development plans.

CACEIS in Hong Kong launched its business activities on 9/9/2009, a date with much significance in Chinese culture, as the number "9" signifies something that is "longlasting" (), as the two words are pronounced the same.
CACEIS in Hong Kong has an experienced team, all having worked several years in the fund industry. With a General Manager and staff members, of which some are native Chinese, CACEIS offers support in a wide range of languages including Cantonese, Mandarin, English, French, Dutch and Italian to cater to the servicing needs of local and international asset managers.

A WIDER SCOPE OF SERVICES
Two principal services are carried out in CACEIS’s Hong Kong office: fund distribution support and pricing.
The location acts as our operational hub for Asia, supporting fund distribution in eight Asian countries: Hong Kong, Macau, South Korea, Malaysia, Taiwan, Singapore, Thailand and mainland China. Funds distributed in these countries are generally domiciled either in Luxembourg, France, Bermuda or Hong Kong itself.
The fund distribution support services performed by CACEIS in Hong Kong since September 2009 are similar to those performed by an official transfer agent. However, by combining our local presence and experienced culturally-aware staff with direct access to central TA systems and applications, we can significantly reduce a client’s time-to-market whilst delivering the high-quality services pan-Asian distributors and investors expect.
Currently, nearly 200 local distributors transmit their orders to CACEIS in Hong Kong on behalf of more than 2000 investors, which represents a monthly average of some 2500 transactions.
As part of the pricing service, which has been operational since December last year, CACEIS in Hong Kong verifies more than 38,000 prices each day which are then used by CACEIS’s fund accounting departments in Luxembourg, the Netherlands, Belgium, Ireland and Switzerland. Carrying out these controls in Hong Kong’s time zone enables European fund accountants to calculate and publish NAVs much earlier in the day than would previously have been possible. A real competitive advantage for our asset manager clients.

UPCOMING DEVELOPMENTS
With the successful establishment of a branch on the Asian continent, CACEIS has confirmed its aim to serve its global asset manager clients through a network of local entities to ensure a full understanding of local market practices and close relationship with the distribution community, the investors and the local authorities. CACEIS Hong Kong’s experienced staff and flexible IT platform allow a wide range of services to be offered, from supporting pan-Asian distribution to sub-TAs or local TAs to pricing services.
Furthermore, with our presence across Europe, North America, and now Hong Kong, CACEIS is ideally positioned to help Asset Managers review their product offer and distribution strategy within the context of ongoing regulatory change ■ 

CACEIS Hong Kong Ltd has recently moved from the Nexxus Building in Central to Two Pacific Place in Queensway, an office building it shares with Crédit Agricole CIB, Hong Kong. Another entity of the Crédit Agricole Group, Amundi Asset Management is located in the adjacent building, One Pacific Place. The office shares its operational processing platform with its parent entity in Luxembourg, however, by sharing facilities with Crédit Agricole CIB in Hong Kong, it benefits from local IT support services as well as the comprehensive business continuity measures for infrastructure and administrative aspects.

ETIENNE CARMON, Head of Products, Luxembourg

The UCITS IV directive was approved by the European Parliament on 13 January 2009 to come into effect in July 2011. To ensure that our clients are in a perfect position to benefit from the changes this update to the UCITS III directive introduces, CACEIS has established a cross-entity working group, tasked with establishing and implementing our UCITS IV strategy.

The UCITS directives are credited with jump-starting the European funds market, effectively creating a standard set of management rules and a certificate of compliance which allowed member states to freely export passported UCITS funds to any other EU market. Leading on from the undisputed commercial success of the UCITS I and III directives, which incidentally surpassed expectations by creating an appetite for the brand as far outside the European Union as Latin America and Asia, is the eagerly awaited UCITS IV directive. This incoming directive looks set to completely transform the framework for development and marketing of investment funds across the EU, and will have consequences as far and wide as UCITS funds are distributed.
As many of our clients are keen to take advantage of the cross-border distribution opportunities presented in the EU and other markets further afield UCITS support services are identified as a key area of strategic product development for CACEIS. In this respect, we have established a working group, consisting of staff from across our network in order to manage our UCITS strategy, a smooth transition and enable clients to benefit from the directives opportunities at the first instance.The working group has built on our comprehensive UCITS III servicing offer to enhance the package and adapt it to the new UCITS IV provisions. It will be available to clients throughout our network, as a premium additional service. Developed with flexibility in mind, clients can select only the units they require. Currently, CACEIS is in talks with several of our major clients, defining their needs in terms of UCITS IV support and designing individually tailored services that perfectly match their business objectives in terms of development.
The working group also undertakes a wide programme of training sessions for CACEIS staff, introducing best practices and spreading essential know-how on the UCITS IV directive as well as on the Group’s related servicing package. Furthermore, a sales brochure will be shortly available to clients and prospects, setting out the opportunities, challenges and related service offers by client type, in a clear and concise manner.
With a proven track record of assisting clients in realising their UCITS-related distribution goals, and a combined advisory approach, CACEIS has a real competitive business advantage which helps drive our clients forward ■ 

CHRISTIAN LAITAT, Product Manager

Clarification is needed of certain points regarding the holding of investment funds units/shares. The example of Luxalpha speaks for itself in this respect. Are the shareholders/unitholders absolutely assured of being able to exercise their rights when the liquidators apparently do not want to recognise them? Indeed, the liquidators persist in corresponding with the custodians, whom they seem to treat as shareholders/unitholders.

There are still no clear rules regarding the method of transfer and entry in the shareholders/unitholders’ register. In any case, rules differ from country to country and the link between the investor and the issuing UCI can be complex.

In France, shares/units of French funds are:

▷ Mainly issued in bearer form. In this case, having a central securities depository (CSD) enables the shareholder/unitholder to be traced via their custodian, who is never treated as a "shareholder/unitholder" (we may notice that foreign investor orders are centralised with a bank affiliated to the local CSD).

▷ More rarely issued in pure or administered "registered" form, in which case the shareholder/unitholder is known to the issuer and therefore can be convened to general meetings.

In Luxembourg, registered shares/units are the most common practice. There is no specific, formal system of administered registration equivalent to that under French law. When the shareholder/unitholder does not directly register their name with the issuer, they send their orders via their custodian, which registers itself as such with the issuer.

It is also frequently the case that the fund provides for the intervention of a "nominee". The nominee is generally registered in its own name only. It may exercise all the rights of the shareholder/unitholder vis-à -vis the issuer. However the ownership of the shares/units is not transferred to it by the client who, with regard to their nominee, retains all the prerogatives of share/unit ownership.

Luxembourg law* also provides that the shareholder/unitholder may exercise their rights with the issuer upon production of a certificate produced by the Luxembourg depositary, certifying the number of securities registered in their name.
However, this prerogative is only formally recognised in favour of Luxembourg banks. There again, these provisions seem insufficient with regard to cross-border distribution of funds.

COMPLEX LINKS
Management companies, or other intermediaries, may be registered "globally" in a register, grouping together in a single account opened with the issuer the ownership of several funds, the segregation of which is the responsibility of the custodian. This is a convenience whereby the true owner is not shown in the register, enabling transfers with no effect on the register. In this case failing clear and coherent regulations, the intermediary will tend to only transmit the name of the custodian; thus, the register of shareholders/unitholders might not show the names of the ultimate holders, who are, nonetheless, the actual owners.
These practices can result in the real shareholder/unitholder not being recognised in the register and the intermediary being considered by the issuing as the ultimate shareholder/unitholder.

NECESSARY DEVELOPMENTS
These examples demonstrate the necessity of developing legislation and ensuring consistency of practice.In France, with regard to the holding of foreign funds, this means recognising that article L 211-41 and article 323-2 of the AMF General Regulation (stipulating the conversion into French securities of securities issued in conformity with foreign law) cannot apply and that financial securities in an issuer’s register are governed by the issuer’s law.

Regarding foreigners holding French funds, the concept of a registered intermediary, which applies to securities listed on a regulated market and held by foreigners, should be extended to funds’ shares or units.

For the moment, we should promote the emergence of clear, benchmark market practices. Too much current legislation remains vague or silent about the methods of register keeping and its probative value. In this respect, at least the harmonisation of registration methods and the use of standard subscription forms would contribute to greater transaction security ■ 

*article 8 of the law of 1 August 2001 concerning the circulation of securities and other fungible instruments

2011: the year of legislation initiatives to harmonise the European depositary regulation?  
After drafted the AIFM directive, still under discussion, the European Commission announced, for 2011, a legislative proposal to amend the provisions of the UCITS directive in order to harmonise further depositary’s legal obligations as well as their regime of liability. CACEIS, 1st depositary of European funds, encourages these initiatives and hopes they succeed at the earliest. Present in major European financial centres of the European fund industry, and recognised as an active contributor to the debate, CACEIS fully takes its share in the current process. Define a secure environment in a European context, balanced in terms of rights and obligations of all actors of the fund industry value chain is a both realistic and essential objective to consolidate the success of the European model of funds. 2011 could be a decisive step forward in this area ■ 

à‰RIC DEROBERT, Group Head of Public Affairs

CACEIS provides asset managers, broker-dealers, banks and sovereign funds with full securities lending and repo services from dealing to operational processing on the main international markets. It is this experience, expertise and know-how gained through supporting various clients over the years that we share in this brochure, continuing our series of academic guides (Cross-border distribution of UCITS, A thorough un­derstanding of private equity).

The past three years have been challenging for the securities lending and repo markets on a global scale, as the industry experienced unprecedented events in financial markets world­wide: A credit crunch, impaired liquidity in cash collateral vehicles, the bankruptcy of a major global investment bank, increasing scrutiny from regulators and politicians, the introduction of temporary short-selling bans, and more recently sovereign risk concerns. The financial turmoil further enhanced the importance of the repo markets and secured funding.
Since clients are eager to capture the opportunities the securities lending and repo markets can bring to the table, but they need guidance so that they can do so in an environment that they are comfortable with, this publication aims to act as a reference handbook. You will find a comprehensive overview of the securities financing market (main instruments and standard agreements used, history, securities lending and repo market size and features), a description of the various market participants and their motivations, as well as of the main arrangements set up. The guide also discusses a number of significant challenges for the market players: Regulation and taxation, operational efficiency and trans­parency, collateral management, risk versus return. Finally it highlights the importance of appointing a proven specialist to conduct this business. We trust this publication, which also gives detailed information on CACEIS’s securities lending and repo services and contacts, will reply to the numerous questions you may have ■ 

On September 23th, 2010, Pierre Cimino, Managing Director of CACEIS Bank Luxembourg and Fastnet Luxembourg, received the ESR (socially-responsible company) award from Eric Hieronimus Chairman of INDR (Luxembourg’s national institute for sustainable development and corporate social responsibility). The ESR award recognizes for the first time fifteen Luxembourg companies that had successfully met INDR’s labelling criteria. CACEIS in Luxembourg is among the happy few and the only financial institution to fulfil the assessment process. The ESR award acknowledges CACEIS’s contribution to sustainable development ■ 

27-30 September The Eurofi Financial Forum 2010
Brussels
"AIFM implementation and adaptation of UCITS depositary rules"
François Marion, Chief Executive Officer, CACEIS
"EU securities infrastructures in a global context"
Eric Derobert, Group Head of Public Affairs, CACEIS

12-13 October 9th annual meeting - Custodians and Depositaries 2010
Paris
"Outsourcing: Which due diligence and control have to be implemented?"
David Clement, Compliance Manager, CACEIS

8-9 November Fund Distribution Operations & International Transfer Agency Summit (ITAS Asia 2010)
Hong Kong
"How to create local services hub"
Etienne Carmon, Head of Products, CACEIS Bank Luxembourg

22-23 November Wertpapierforum für Deutschland, Osterreich und Schweiz
Vienna
"Challenges & Opportunities of IT-Harmonisation in the Asset Servicing"
Marco Wilms, Head of Business Development, CACEIS, Germany

8-9 December EDHEC-Risk Institutional Days 2010
Monaco
"Regulation and Non-Financial Risks in the European Fund Industry: Should We Manage Non-Financial Risks or Insure Them?"
Jean-Marc Eyssautier, Chief Risk and Compliance Officer, Member of the Executive Committee, CACEIS ■ 

July 2010 Investor Services Journal
"European Custody - Germany"
Christoph Wetzel, Managing Director,
CACEIS Bank Deutschland GmbH

July 2010 Financial Services Research
"T2S for investment funds settlement"
Yveline Herfeld, Head of Transfer Agency,
CACEIS, Luxembourg

July 8th 2010 Agefi Hebdo
"CACEIS industrialises its client reporting"
Franck Delbes, Head of Fund Accounting, CACEIS, France

August 2010 Luxembourg Fund Review  
"Oversight of OTC derivatives : a quest for stronger practices for depositaries."
Christophe Cormet, Senior Legal Advisor; Ana Vasquez, Head of Fund Structuring, Luxembourg

August 2010 Funds Europe
"Asset servicing roundtable - Leading from the back"
Eric Derobert, Group Head of Public Affairs, CACEIS

September 2010 Funds Europe
"Decoupling the Irish funds industry"
Paddy Walsh, Business Development Director, CACEIS, Ireland

September 2010 Funds Europe
"The pressure of safekeeping"
José-Benjamin Longrée, Deputy CEO, CACEIS

September 30th 2010 Agefi Hebdo
"The automatisation of securities lending processing is speeding up"
Gilles Normand, Director of Treasury & Forex, CACEIS; Guy Knepper, Head of Securities Lending, CACEIS; Nathalie Collot, Product Manager, CACEIS ■ 

The Fonds communs de placement à  risques (FCPR), French venture capital funds, are Undertakings for Collective Investment in Transferable Securities (UCITS) featuring specific operational rules. These vehicles’ main purpose is to invest directly or indirectly in the capital of non-listed companies in need of funds. This guide is intended to provide clarification about the specificities of venture capital funds, such as fractional release of capital, the allocation of shares representing a portion of assets, investments in venture capital, overdrafts and guarantees on these investments. For a better understanding, this study report is illustrated with practical cases and accounting schemes ■ 

This document complements CACEIS’s reference guide entitled "A Thorough Understanding of Private Equity", also available for download on our website www.caceis.com

Regulation watch team, CACEIS: Marie-Andrée BONNET, Eliane JACQUET, Joà«lle PREHOST