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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The Australian Custodial Services Association (ACSA) says the role of the custodian has broadened and is fundamental to supporting the continued growth in the superannuation, wealth management and investment sectors.

In his opening address at the 17th Annual Investment Administration Conference 2014 held in Sydney yesterday, ACSA Chair David Braga said the custodian’s role in facilitating Australia’s financial landscape was more important than ever as the sector continued to grow, fuelled by compulsory superannuation.

“Custody and investment administration is crucial to the overall health and wellbeing of the superannuation, wealth management and investment sector and is one of the fastest growing areas of Australia’s financial services community,” Mr Braga said.

While custodians remain the safekeepers of over $2 trillion of assets owned by Australian investors and almost $1 trillion of Australian assets for non-Australian investors, Mr Braga commented this was just a slice of the wide range of services provided today.

The role of custodians and investment administrators has grown over the past decade to include a range of middle-office services, including maintaining accounting records, tax reporting, compliance, performance monitoring, unit registry services and fund reporting.

ACSA, as the peak body representing the interests of the custodial and asset administration industry in Australia, used the annual Investment Administration Conference to unveil a revamped mission aimed at highlighting the importance for custodians to be heard in discussions across the financial sector.

“ACSA’s mission is to promote efficiency and international best practice through a united voice for the custody and investment administration industry in Australia,” Mr Braga said.

“Our core objectives remain largely unchanged and we will operate in the same way we have in the past. Custodians have a unique voice that needs to be heard in the debate across the financial sector. We are not proactively pushing policy direction, however we do have the best knowledge of the practical reality of running the large complex fund structures required to support Australians’ savings and investment aspirations.”

Mr Braga said 2013 was a busy year for ACSA members, highlighted by the Stronger Super Task Force and its ongoing work with APRA to ensure smooth implementation of MySuper reporting requirements.

Looking ahead to 2014, the ACSA Chair outlined several key initiatives the association will focus on, including:

Implementation of Stronger Super and RG133 reforms

• Launch of a new working group with a focus on the New Zealand custody and investment administration market
• Ongoing work with the ASX towards market automation, particularly for corporate actions
• Engagement with the ATO on a raft of taxation changes, including the Managed Investment Trust reform and electronic filing
• Continuing to work closely with regulatory bodies and other industry associations
• The theme for this year’s conference, produced by Conexus Financial in partnership with ACSA, is Efficiency in a Regulated World.

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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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