The peak body for Australia’s growing custodial and investment administration sector ACSA says the industry will face some unique challenges as it continues to meet the needs of institutional clients in what is shaping up to be a year of significant transition.
Opening the annual ACSA conference in Sydney today, themed Investment Opportunities in a Rebalancing World, ACSA Chair Paul Cutts said Australian institutions while enjoying improved investment conditions continued to face a significant change agenda.
“Institutions and indeed economies around the world are rebalancing as markets seek new equilibrium. Regulatory change, especially in Australia’s superannuation and tax policies, is an additional source of challenge, as will be the likely entry this year of at least one new securities exchange to the local market. ACSA expects that the custody community will be working closely with institutional clients to reshape business models and increase efficiencies in response to these shifting priorities,” he said.
At the same time, institutions are facing other, sometimes competing factors, including growing attention to after tax returns, monitoring and management of risk and improved transparency.
“All these factors are testing the suitability of existing operating models and sometimes the boundaries between internally managed and outsourced services. While we expect to see improved efficiency through the industry’s ongoing commitment to standards and automation in key areas of investment infrastructure, at the same time the needs of our clients to differentiate and to adapt to external change imply demands for new and extended services,” said Mr Cutts.
“The constantly changing information requirements of clients are an area where custodians can add value. For instance, environmental and social governance information is becoming a more prevalent theme. Clients are constantly looking for more detailed, accurate and timely information to aid their decision making process,” he said.
ACSA also released today an update on key industry statistics. The past year witnessed further growth in the industry with total assets in custody now $1.85 trillion as at December 2010, up nearly 8.5 percent from the end of 2009.
In highlighting achievements of the Association in the last year, Mr Cutts referred to the proactive work undertaken by ACSA in 2010 to consult with the Board of Taxation on the implementation of a new tax system for managed investment trusts. He also mentioned the significant level of engagement expected within the custody industry arising from the entry of an additional securities exchange later this year.
In explaining ACSA’s approach as an industry body, Mr Cutts observed “ACSA will maintain a firm core philosophy of, on one hand, working enthusiastically with policy makers to share opinion, experience and ideas; and on the other, to pragmatically embrace change with a clear line of sight to the needs of end investors.”
“Although the Australian custody industry is highly competitive, it is a testament to the professionalism of ACSA members that we can work together as an Association on the raft of common issues that matter to members and benefit our clients,” Mr Cutts concluded.