DST further invests in automating fund accounting and tax processing capabilities for asset-backed and mortgage-backed securities in HiPortfolio®
Rhys Octigan
DST Global Solutions, a market-leading provider of DST Global Solutions for the investment management industry, says the latest data on total assets under custody for Australian investors highlight the need for asset managers and asset servicers to have scalable technology solutions in place that efficiently manage this huge and growing asset pool.
Data released this month show that total assets under custody for Australian investment firms rose 8.3% between June 30, 2013, and December 31, 2013, to $2.3 trillion. Of that total, $1.7 trillion were Australian assets (up 8.4% over the period) and $647 billion were international assets (up 7.4%).
Rhys Octigan, head of business development, Australia & New Zealand for DST Global Solutions, said, “As investor assets under custody climb higher, driven by rising asset values and superannuation inflows, custodians and investment administrators need to have the right technology solutions in place to process this huge pool of assets with speed, accuracy and reliability. True scalability cannot be achieved by simply throwing man hours at a problem, and consequently, technology that enables straight-through-processing of even the most complex asset classes is now seen as an essential component in winning new mandates and onboarding new clients.”
Processing over 70% of investment transactions in the Australian market, HiPortfolio, DST’s investment accounting and asset servicing solution, has over 18,000 man days of R&D invested annually to help investment management firms automate end-to-end processes, increase efficiency and reduce operational risk. The drivers are two-fold: to ensure investment accounting and administration technology supports new products and services from asset servicers; and to optimise investment operations.
The huge pool of assets in Australia create capacity challenges, so investors are diversifying by turning to more complex financial products and alternative investments to drive returns and, as a result, investment accounting and administration technology needs to adapt to be at the forefront of this shift. For example, as part of a five-year recommitment, DST recently helped one of Australia’s largest custodian banks to develop automated fund accounting and tax processing capabilities within HiPortfolio for asset-backed securities (ABS) and mortgage-backed securities (MBS), the first custodian in the market to launch this new service to institutional investors.
The new capabilities in HiPortfolio support a variety of domestic and international ABS and MBS, as well as compounding-interest and inflation-linked swaps, while complying with Australia’s complex tax requirements including Tax on Financial Arrangements (TOFA) calculations. This helps significantly improve reporting abilities by the custodian to its clients and provides more transparency to better evaluate investment decisions.
“The demand for more sophisticated technology to meet regulatory and client requirements means it’s time for asset servicers to assess where upgrading or expanding their use of their IT system can achieve efficiencies to boost productivity and gain a competitive advantage to win new mandates and clients,” Mr Octigan said.