High returns help, but what’s more important is trust, accountability, and making sure that the remuneration structures aren’t “really cheeky”.
Capturing structural growth potential is not easy, but in uncertain markets, it’s essential, according to Ninety One. Investors are eager to explore the opportunities in artificial intelligence, and exposure to higher quality companies can successfully position them for an AI-driven future.
Europe adds to regulatory issues
As if we didn’t have enough regulatory issues of our own to contend with, the goings on in Europe – not just Brexit – are providing Australia’s big super funds and their managers with more and more grief. DTCC, at least, is trying to help out.
In Australia last week to speak with clients and others, DTCC’s Val Wotton and Oliver Williams were focusing on the upcoming Securities Financing Transactions Regulation (SFTR), due to take effect next year. It will impact any Australian or New Zealand fund or manager which interacts in some form with a European entity, which is most big institutional investors and their service providers.
DTCC (the industry-owned global Depository Trust & Clearing Corporation) has produced a white paper on SFTR which looks at the vital role for trade repositories. The new European regulation is designed to standardise validation and reporting of the vast amounts of data collected and consumed by investment houses.
Wotton, a managing director, product development and strategy for derivatives and collateral management, believes that most Australian firms are well prepared for Brexit, given it has been dragging on for so long – the original vote being in 2016 – but perhaps not as prepared as they should be for the impact of SFTR. “They’re all signed up for our repository and therefore they should be prepared for Brexit,” he says.
“SFTR will have an impact on the way business is done. It will definitely change some of the landscape… Things are not going to slow down after MiFID. This is an ongoing cycle post the GFC.”
Oliver Williams, an executive director and regional head of DTCC’s GTR business in Asia, says that repos (repurchase agreements, which along with loaned securities needs to be reported daily under SFTR), are not just about using “lazy” collateral, say a stock which is just “sitting there”. They are increasingly being used as a cross-border funding tool.
“A lot of our funding in and out of Asia comes through repo products,” he says. “It’s a big part of the market.”
The main message for Australian super funds, he says, is that more regulation is on the way and they need to be made aware of it so they can prepare.
– G.B.
