Active Super and Vision Super are now entering the home stretch of a drawn-out merger process that will create a new $29 billion fund with 170,000 member accounts.
The NZ Superannuation Fund has made half-a-dozen fresh investments over the previous few months across an eclectic range of strategies including US timber, a quant trend-follower and a life science specialist.
New retail opportunity for custodians
Proposed changes to managed-discretionary account (MDA) regulation could open up an opportunity for a forward-thinking provider of custody services to enter the retail custody market.
“There is a great business opportunity for one of them [custodians] to step up,” chairman of MDA representative body, the Institute of Managed Account Providers (IMAP), Toby Potter, said.
This is because one of the main proposed changes to the Australian Securities and Investments Commission’s approach to MDAs, as outlined in the consultation paper released early March (cp200), would mean that the current incidental custody arrangements would no longer be allowed.
“To provide MDA services that involve custody and most do, the MDA operators used … incidental custody. They provided incidental custody but then they had an omnibus arrangement with the custody provider,” Potter says.
“ASIC is now saying they will not allow that contract.”
Scott Webster, managing director and head of platform solutions UBS, agrees there is an opportunity there.
“I think the opportunity is for the custodian who can intelligently invest and meet the increasing need for retail custody that the changes discussed in cp200 will create,” he said.
“I would agree some custodians will be better at it than others.”
UBS acts as a middleman, or middleware, via its technology platform, which Webster says can assist with the efficient interaction with retail custodians “by providing efficient connectivity and administrative assistance”.
“We are custodian agnostic. What we do is provide middleware to make it as easy as possible to enable our clients to deal with their preferred custody service provider,” Webster said.
Webster said they would continue to look at their activities in the same way if the cp200 changes were taken up.
“I’d be looking at it as we currently do, ie to interact with the custodian.”
Interested parties had until Friday 19 April to make submissions in response to the ASIC consultation paper that was released 8 March. The remainder of the year will be spent drafting class order(s)and an updated regulatory guide, which is scheduled to be released at the end of the year.
Potter points out that traditional providers of custody have been reluctant to enter the retail space.
“Since generally they are not keen on contracting as retail custodians that has meant there is a wonderful market opportunity there for some one who will or the MDA business is going to be in a bit of difficulty,” he said.
