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UK funds gets first net settlement service
25 October 2013
Aimed at reducing counterparty risk and increasing efficiency
The first net settlement service for the UK funds market has gone live.
Two firms have signed up to the service provided by Calastone and Barclays.
Smith & Williamson and Capita Asset Services are using the service to automate their funds settlement process.
Both parties have been using Calastone’s industry-first managed net settlement service since 2011, which is now underpinned by Barclays, enabling settlement finality through its centralised market cash clearing facility.
Barclays and Calastone have been working with industry participants to finalise the design and delivery of the service.
Most of the funds industry is settled across gross units of trading. According to the two firms, a net service allows “significant reduction” in levels of cashflow exposure and therefore reduces counterparty risk.
“This is an important step forward for the funds industry and going live on the service will allow us to finalise automating the full trade lifecycle,” said James Gordon, director at Smith & Williamson Investment Services.
Steve Newman, head of product development at Capita Asset Services, said the service will reduce risk and improve efficiency.