Calastone and Barclays Deliver First Net Settlement Service to UK Funds Market

Global fund transaction network Calastone and Barclays have gone live with the UK funds market’s first-ever net settlement service, with two investment managers – Smith & Williamson and Capita Asset Services – selecting the solution for their automated settlement of funds.

Both parties have used Calastone’s managed net settlement service since 2011, which is now underpinned by Barclays, enabling settlement finality through its centralised market cash clearing facility.

Since Calastone and Barclays announced their intention to launch the first full market net settlement service solely designed for the funds industry, they have worked with key industry participants to finalise the design and delivery. Calastone’s trade matching solution has already matched 3m settlement instructions and the partnership with Barclays enhances the service providing earlier settlement and easier reconciliation on an intraday basis.

The Barclays account structure allows for the service to settle both client money and non-client money, future-proofing itself against any potential regulatory change.

Currently the majority of the funds industry is settled using gross units of trading. A net service introduces a significant reduction in levels of cashflow exposure and therefore reduces counterparty risk. Calastone’s intelligent messaging system allows for the automation of the cash reconciliation process.

“As Smith & Williamson were an early adopter of the net matching service we’re pleased that Calastone and Barclays have delivered the final piece of the solution,” said James Gordon, director at Smith & Williamson Investment Services. “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.”

Steve Newman, head of product development at Capita Asset Services added: “Signing up to the Calastone and Barclays fund settlement service will assist us in achieving reduced risk and improved efficiency. We now have a full straight-through processing (STP) solution from point of trade through to settlement. The benefits and the standardisation this service will give to the funds market are just a few of the reasons we chose their automated settlement solution.”


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