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Equiniti new pooled custody/back office service
19 June 2013
Offering for wealth managers and stockbrokers in response to market demand
Equiniti Wealth Solution
Equiniti is set to launch a new technology platform to provide a centralised pooling of custody and business processes as well as a customer interface. Equiniti Wealth Solution, the new first of its kind platform, is designed to improve client relationships and reduce the cost of processing for wealth managers and stockbrokers.
The platform named has been developed in response to growing regulation and the requirement for a commoditised back office which is not prohibitively expensive. Equiniti is currently working with potential users and also calling on new users to help design a universal platform suitable for the whole industry.
The wealth and broking space is facing unprecedented pressures which current back office solutions are simply not addressing, commented Mark Taylor, managing director, Equiniti Investment Services. He added that Equiniti Wealth Solution provides an opportunity to outsource a number of non-core functions and allows brokers to focus on managing clients’ assets, which is where their value lies.
“As one of the UK’s leading registrars with 20m holdings and processing significant volumes of transactions, we are already fulfilling this role within the retail environment and have systems and processes which deliver cost reductions. Our existing processes provide outsourced custody, settlement for stocks, funds and fixed interest securities and we are working with brokers to use this to develop a universal solution that uses the existing technology and satisfies their requirements,” he said.
The new service also provides an investor interface which utilises the resources of recent purchase peterevans, an independent provider of front to back office solutions. The Equiniti Wealth Solution will recognise the cost imperatives for wealth managers and retail brokers; allow retention of in-house systems for portfolio management and executing orders with the market; simple CREST interface, enquiry facilities for brokers and their clients; process corporate actions and provide a high level of MI and reporting.
Broker benefits include lower costs due to delivery efficiencies; as custody reconciliations and circularisations will be carried out by Equiniti, the associated compliance costs, typically significant, will be reduced; and wealth managers and brokers will benefit financially from economies of scale as brokers increasingly take up the outsourcing offer.
Client relationships will be improved because wealth mangers and brokers can concentrate on their core business of managing and advising clients, and executing transactions; wealth managers and brokers will gain access to the kind of custodial support which was previously cost-prohibitive via an institutional custodian. It also alleviates concern about a broking entity holding client assets.
Also business operations improvements as the outsourcing offer will provide an opportunity for larger brokers with multiple systems to simplify their operations, while through using a standard CREST Sponsored Membership interface, brokers will automatically conform to industry standards.
Lower regulatory burden is also anticipated as the outsourcing offer will deflect the impact on brokers of upcoming regulatory changes, with Equiniti taking responsibility for reporting and associated processes. In relation to the EU Securities Law Directive which will almost certainly cover equities within a few years; the implications being that brokers will have to provide corporate information to clients, as well as record and act upon client preferences on voting.