The European Fund and Asset Management Association (EFAMA) published, in cooperation with SWIFT, a new report on the evolution of automation and standardisation rates of fund orders received by transfer agents (TAs) in the cross-border fund centres of Luxemburg and Ireland in 2010. The results of this ongoing research show that the total automation rate of orders topped 75% in Q4 2010 – while the adoption rate for ISO messaging increased by a further three per cent compared to the same period in 2009.

The following figures highlight the main results of the report:

• The report covers 31 TAs in Ireland and Luxemburg, representing more than 80% of the total incoming third-party investment funds order volumes in both markets. There was a 22% increase in the volume of processed orders in 2010, from 19.2 million orders in 2009 to 23.5 million.
• The total automation rate of orders reached 75.4% in Q4 2010, compared to 73.6% in Q4 2009. The ISO messaging standards adoption rate increased from 33.7% in Q4 2009 to 36.5% in Q4 2010, to the detriment of proprietary file transfers and manual orders.
• Overall, 5.9 million orders were processed manually in 2010, and 17.6 million orders were processed through automated order processing systems.
• Whereas the automation rate is higher in Ireland than in Luxemburg (75.7% versus 71.4% in Q4 2010), the reverse is true for the ISO messaging standard adoption rate (49.1% in Luxemburg compared to 8.7% in Ireland).
• The automation rate of orders originating from the Asia-Pacific region continued to be relatively low in Q4 2010: 44.2% in Luxemburg and 40.6% in Ireland (based on contributions representing 69% and 80% of the order volumes in Luxemburg and Ireland, respectively).

Peter De Proft, EFAMA Director General, notes: "Achieving an automation rate of 80% for cross-border fund orders in the not too distant future appears realistic in light of recent trends. This perspective, together with the expected benefits from UCITS IV, indicates that the competitiveness of UCITS is set to strengthen in the coming years, to the benefit of the industry and its clients".

Marco Attilio, Head of Funds at SWIFT, comments: "It is very encouraging to see continued progress towards standardisation and automation. It is also important to note that although numbers of manual orders fell as a percentage of the whole, they grew in absolute terms. This means firms’ operations are still being put under great strain – strengthening the business case to standardise and automate further".

Full report