(Pictured: Ian Irvine)
It may sound dull but the automation of settlements, applications and redemptions, using the CHESS infrastructure and with ASX oversight is about to offer fund managers a brand new distribution channel, particularly among SMSF investors. ASX confirmed last week that the first 65 participants aimed to be going live with AQUA II in the first quarter of 2014.
Marcus Christoe, ASX’s senior manager, funds and investment products, says the ASX managed funds service, commonly known as AQUA II, will widen the distribution opportunities for funds. The possible new clients include self-directed investors, financial planning clients and platforms which are also looking to gain access.
ASX has been working 65 firms across the spectrum of industry participants, which will be the first to get involved. They include a range of domestic and foreign managers, REs, brokers – both full service and discount – registries and administrators. Funds which have a short-form prospectus registered with ASIC are the first to be allowed access. ASIC recently issued a discussion paper on the proposal to waive the necessity for a client signature on the application form.
Ian Irvine, ASX head of customer development, says that for IFAs and brokers, AQUA II will provide them with a way to have a new discussion with investors around diversification, because of the expected array of offerings likely to come on board.
By acting through brokers, the investors by-pass the regulatory requirements on managers to conform to the various anti-money-laundering and terrorist laws because the brokers have also embedded those requirements in their processes.
“We are taking away a lot of the paper-based inefficiencies,” Christoe says. “We are leveraging off the processing efficiencies of a messaging system which is already there.”
In contrast to ETFs, which trade intra-day like other shares, the manage funds will be priced on a forward basis at the end of each day, as they are now.
Irvine says that technology has advanced in the past five years, since the first attempt to process managed funds, known as AQUA, was floated.