Calastone, an independent cross-border transaction network for the mutual funds industry, has launched a managed net settlement service for mutual fund transactions, facilitated by Barclays Corporate. The solution reduces the administrative burden for participants by way of interoperability and a reduction in manual processes.
Funds which take advantage of this new service will no longer have to settle on a many-to-many bilateral basis, but the far more efficient net basis. By moving to net settlement, the funds industry will have the opportunity to cut significant costs from their operating models as well as reduce liquidity and counterparty risk, compared with paying gross subscriptions and receiving gross redemptions to multiple parties. The new service therefore helps a mutual fund to settle their trades at the lowest risk and at the best price, in line with MIFID Article 21.
Ian Taylor, chief executive officer (CEO) of Calastone, said: “This net settlement solution significantly enhances the options available to the industry. It makes life easier and provides a cost effective choice. The fact that a bank with a strong investment grade credit rating, from all the major rating agencies, is facilitating the service brings sought-after strength in volatile times.”
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