Australian admin and custody sector continues to grow.

The Australian custodial and administration sector continues to grow strongly driven by rising equity markets, with the latest industry statistics released by the Australian Custodial Services Association (ACSA) revealing total assets under custody for Australian investors grew by 8.3% to $2.32 trillion in the six months to 31 December 2013.

The research from ACSA, the peak industry body for Australia’s custody and asset administration sector, shows growth of both Australian assets under custody (up 8.4%) and non-Australian assets under custody (up 7.4%). Australian assets under custody for foreign investors (sub-custody) grew by 3.8%.

In total, custodians in Australia are the safe keepers for $1.67 trillion of Australian assets and $647 million non-Australian assets for Australian investors. Custodians also hold $959 million of Australian assets for foreign investors (sub-custody).

Mr David Braga, Chair of ACSA, said the latest statistics demonstrate the financial sector’s stability and expects the custody sector to continue growing strongly in 2014.

“The latest industry statistics show steady growth in the custody and administration community, reflecting the health of Australia’s growing wealth management, superannuation and investment sector,” Mr Braga said. “The data demonstrates stability of the broader sector, and the expectations from the custody industry are that we will see similar levels of steady growth throughout the coming year,” he said.

Published twice a year, the industry statistics give an insight into settlement transaction volumes and provide a league table of major custody, sub-custody and asset administrators in Australia, recording major mandate wins and losses.

Major players hold their positions

Local custodian NAB Asset Servicing remains the largest overall player in the custody market with $632 billion in total assets under custody for Australian investors (up 11.4% for the six months), followed by J.P. Morgan ($420 billion, up 6.4%), BNP Paribas ($305 billion, down 2.6%) and Citigroup ($255 billion, up 19.4%).

They are followed by State Street, Northern Trust, HSBC Bank, BNY Mellon, Bond Street, RBC Investor Services, Ausmaq and Netwealth, who collectively manage 30% of assets under custody.

Total local assets held under custody increased by 6.7% over the past six months with NAB Asset Servicing, J.P. Morgan and BNP Paribas the leading holders of Australian assets under custody.

J.P. Morgan remains the largest custodian of non-Australian assets for Australian investors ($151 billion, up 10.5%), followed by State Street ($101 billion, up 15.5%) and NAB Asset Servicing ($92 billion, up 6.9%).

With an increase of 7.4% over the six month period, HSBC Bank consolidates its position as dominant sub-custodian in Australia with $620 billion in sub-custody assets, a figure that represents 64% of all Australian sub-custody assets.

Assets held under administration (not held in custody but administered by custodians) grew 6.2%. NAB Asset Servicing remains the largest administrator in Australia with $425 billion in assets under administration, followed by BNP Paribas ($381 billion) and State Street ($237 billion).

Click here for a full copy of the statistics.

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Mr Braga will succeed incumbent ACSA Chair Pierre Jond of BNP Paribas, who is returning to France to take up a new role within the French bank.

“On behalf of ACSA I would like to thank Pierre Jond for his involvement in the association and for his strong leadership as Chair,” Mr Braga said.

“Over the past two years, Pierre has broadened the role of ACSA as a representative body for custodians and strengthened our position within the broader financial services sector.”

Mr Braga has been an active participant in ACSA and has been a member of the Association’s executive committee since 2011. For the past year he has been executive sponsor of the Association’s regulatory & compliance working group and its Stronger Super Taskforce, representing the views of the custody industry to the Australian Securities and Investment Commission (ASIC), Australian Prudential Regulatory Authority (APRA) and policymakers in relation to the vast array of legislative change impacting custodians and their clients. Prior to this, Mr Braga was executive sponsor of ACSA’s communication working group.

“I am delighted to be elected as Chair of ACSA and it is an honour to take on this role. I look forward to representing the interests of the custody and investment administration industries and furthering our common goal: to ensure that Australia has an efficient, world-renowned financial market,” Mr Braga said.

“Custodians play an important role across the financial sector providing a strong foundation for superannuation funds and asset managers. As the voice of the custodian, ACSA will continue to work with industry partners during this period of unprecedented change to provide clear guidelines on what standards custodians will be held to as we plan for the future.”

Christine Bartlett, Executive General Manager, Asset Servicing at National Australia Bank has been elected ACSA Deputy Chair. She takes over from Paul Khoury of State Street who has stepped down from the role following two years as Deputy Chair and five years as an ACSA Executive.

Australia has a sophisticated and competitive custodian market with latest ACSA research showing total assets under custody for Australian investors grew by 6.7% to $2.16 trillion to 30 June 2013.

ACSA is the peak representative body for custodians and features seven working groups – with over 100 representatives of member organisations – working with government, regulators and other industry participants on issues related to custody and outsourcing.

Changes in regulation and market practice continue to place demands on custodians to ensure they provide effective solutions for clients – typically large superannuation funds, investment managers, as well as overseas investors and brokers.

Recent activity has included consultation with APRA on the implementation of MySuper; close negotiation with ASIC on the implications of RG 133; and working with the ASX on solutions to clearing and settlement processes.

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The Australian Custodial Services Association (ACSA) has announced the winners of the 2011 ACSA Awards. Presented at the ACSA/ Conexus Investment Administration Conference dinner in Sydney on Tuesday night, the awards recognise outstanding contributors to the Australian custody and investment administration industry.

Nikki Bennett of HSBC, Dañelle Michael of Computershare Investor Services and Tony Stolarek of Ernst and Young were announced as winners of this important industry award, all demonstrating a high level of professionalism, knowledge and commitment to their respective contributions to ACSA’s working groups and in advancing developments within the custody and investment administration industry.

ACSA Chair Paul Cutts said that much of the hard work of our organisation is done within the working groups and the executive is greatly appreciative for the hard work and dedication of all participants. The ACSA Board was pleased with the peer recognition within the industry receiving a number of strong nominations. 

The ACSA awards recognise individuals who have made an outstanding contribution to the industry, members, clients and ACSA itself.

Nikki Bennett, Tax Manager with HSBC and a member of ACSA’s tax working group since the group formed in 2009 has exhibited the persistence, tenacity and technical understanding to achieve positive outcomes. Ms Bennett has provided input on submissions ranging from streamlined implementations for custodians to withholding tax issues with the ATO. Within the tax working group, she proactively takes responsibility for projects and communicates legislative changes to her peers.

Dañelle Michael, Senior Product Manager, Computershare, has been involved with the ACSA corporate actions working group for over two years. Initially, she was invited for her registry expertise when the ACSA meetings were predominantly custodians. Ms Michael saw the benefits of a forum between custodians and share registries and has actively broken down barriers between industry segments.

Tony Stolarek, Partner with Ernst & Young, provided key strategic inputs into submissions made by ACSA to the Assistant Treasurer and Treasury on the application of the Tax Agent Services Act. His ability to provide broader industry insights and reactions to tax reforms provided the knowledge base to build compelling cases in ACSA submissions.

In presenting the awards, Mr Cutts thanked the three winners on behalf of ACSA for their enormous contributions to the custody industry.

“Nikki, Dañelle and Tony have gone above and beyond what was required. They have committed their time and expertise as well as demonstrating great dedication to achieving positive change for their respective industry initiatives. The custody and fund administration sector is a backbone of the financial services industry and such outcomes are to the benefit of the whole industry and importantly end investors. Mr Cutts said.

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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.

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Mr Paul Cutts, the newly elected Chair of ACSA, said the awards pay tribute to key individuals who have been instrumental in driving industry reform and efficiency

“The custody industry continues to play an important role in supporting Australia’s investment infrastructure. While much of this contribution is behind the scenes, it is fundamental to the financial services industry with positive effects for all Australian investors – both institutional and ultimately individuals. The Awards recognise individuals in ACSA member firms who have stepped beyond their normal business role to make a contribution to our industry,” Mr Cutts said.

ACSA members provide services to institutional investors like investment managers, governments and major superannuation funds including safekeeping of assets, clearing and settlement of cash and securities, along with a range of portfolio administration services such as valuation, unit pricing, tax reporting and performance analytics

Some of the major items on ACSA’s agenda over the past year have included a review and practical implementation of taxation reforms including managed investment trust and taxation of financial arrangements legislation. The consequences of new tax agents legislation was also the subject of major ACSA working group involvement during the past year

“The Association is pleased that our Taxation Working Group, who come together on a voluntary basis, were able to work constructively with Government and regulators to ensure the implementation of this important legislation did not add unnecessary cost and complexity,” he said

The ACSA Awards are intended to:

• recognise individuals who have made an outstanding contribution to the industry, ACSA clients and the Association itself;
• encourage greater participation from individuals and firms in industry-based initiatives;
• better promote the role of the industry; and
• highlight the level of professionalism within the ACSA community.

Winners of the Award will be announced at the 14th annual Investment Administration Conference to be held in Sydney on 15 February, 2011

Last year’s winners were Denise Hartman, Learning and Development Manager, BNP Paribas, Andrew Gibson, Product Manager, Citi Global Transaction Services and Lisa Simmons, Partner, Blake Dawson – each of whom made important contributions in their fields of expertise to the custodial industry.

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“It is an honour to be elected as Chair of ACSA, especially at a time when members of the Association are being called on to support significant innovation across both local and international markets” Mr Cutts said.

Australia is a large, sophisticated and growing market for both managed and superannuation funds with increasingly complex investment programs. Changes in regulation and market practice continue to place demands on custodians to ensure they provide effective solutions for clients – typically large superannuation funds, investment managers and other institutional investors.

Mr Cutts will be joined by Pierre Jond, Managing Director of BNP Paribas Securities Services Australia & New Zealand as Deputy Chair and John Butler, Head of Client Management at HSBC Bank Australia as Treasurer.

Mr Cutts said: “Pierre, John and I are established members of the ACSA executive team, and are also supported by a board composed of experienced industry professionals.”

ACSA seeks to work closely with government, regulators and other industry participants on issues related to custody and outsourcing.  Recent engagement has included submissions and discussion on the licensing of financial services providers, taxation legislation and regulatory changes affecting short selling and securities lending.

“ACSA has a total of seven industry working groups who meet regularly to discuss changes in the custody and administration industry. ACSA believes the Government will accelerate the pace of reform and we hope to be able to contribute to this process, especially in areas of investment infrastructure,” said Mr Cutts.

ACSA believes that support to implement some significant aspects of the current reform agenda will be provided by its members in areas such as global custody, fund administration and related service dimensions.  Change will also need to be coordinated across market practice, and with other critical players, such as the ASX.

Mr Cutts acknowledged the contribution of the outgoing chairman, Bryan Gray of JP Morgan.  “ACSA has a track record of being responsive to its stakeholders and attuned to the needs of a competitive and adaptive Australian custody and administration landscape. Bryan was instrumental in ensuring the Association moved forward with the times.  His leadership, energy and experience will be missed,” he said.

“As we enter into a new phase for ACSA, I am looking forward to maintaining momentum and addressing the challenges of our ever-changing environment” Mr Cutts concluded.

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