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Australian investment managers may need to review reporting processes
Investment managers based in Australia may need to evaluate their current reporting systems ahead of wide-reaching US-based reform, according to DST Global Solutions global head of asset servicing Geoff Harries.
Harries said that with such a large client base across a number of countries, DST Global needs to cut fairly broad when it comes to market regulation.
In regards to the taxation issues related to the Foreign Account Taxation Compliance Act (FATCA), he said it is important for Australian investment managers to have a clear understanding of United States fund structures.
Although FATCA is a US-based statute, he said the regulatory effects could have global implications.
"Within DST systems' product portfolios there will be a larger impact on the street side of the equation which is more the unit registry transfer agency," Harries said.
He said the impact of the legislation will have an effect on DST's Hi Trust and Blue Door offerings.
"It (FATCA) is definitely something that we continue to track as the regulation shapes up - in terms of looking at the implementation timeline, it will move through 2013 all the way though to 2017," he said.
According to Harries, Australian investment managers may need to eventually add an extra level of reporting capabilities over their current processing capabilities.
He said the amount that needs to be invested to upgrade current systems will depend on the volume of exposure that investors have to the underlying position of an investment.
"There will be a tipping point where there needs to be a systematic solution as opposed to a manual processing intervention," he said.
In relation to 'Dodd-Frank Wall Street Reform and Consumer Protection Act' and its aim to make the derivatives market more transparent, Harries said there would need to be a review of derivatives operations, specifically in the area of implementing central clearing and dealing with intra-day margin calculations.
While he conceded that outsourcing middle office functionalities "runs on pretty thin margins", Harries said that outsourcers need to offer better services in relation to unit processing and areas of corporate actioning processing in order to reduce operational risk and to make sure the operational controls are robust and secure.
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