Euroclear and EMXCo Go Live with Cash Settlement for UK Funds

EMXCo and Euroclear UK & Ireland have completed the first phase in their joint efforts to deliver integrated order routing and straight-through processing (STP) settlement for transactions in UK, Irish, Guernsey, Jersey and Isle of Man domiciled funds. The Funds Liaison Group, comprising 15 senior executives from across the fund industry, unanimously endorses the approach after completing market consultation on the solution’s blueprint. Euroclear says that its Cash Settlement for Funds will reduce processing costs and alleviate administrative burdens as it combines a major force in fund order routing – the EMX Message System – with Euroclear UK & Ireland’s settlement and safekeeping infrastructure that is already used for UK equities and fixed-income transactions. In this phase, orders placed through the EMX Message System are routed to Euroclear UK & Ireland, which settles the cash movement of the transaction. In 2009, Euroclear intends to launch a second phase that, along with automated settlement of the cash aspect, will also reflect funds unit movements in notional client accounts. The actual legal record will still be maintained and updated by the fund manager outside the system. A change in UK law is also proposed that would eliminate the need for paper-based procedures in transferring title in UK-authorised funds by third-party administrators.


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