AMINEWS FLASH
November 2010
 
     
 
Your Alternative Investment Fund Online
Through Euroclear or DTCC
 
Not long ago, good performance and a two-year track record were enough to market a fund successfully. Now, however, after the financial crisis and the Madoff affair, investors are performing strong due diligence before investing and looking for independent administrators and high quality auditors, and so on. In addition, more and more investors require that the funds in which they invest be held by a custodian that they can trust and be available online.
 
 
Institutions such as Euroclear, Deutsche Börse, Clearstream and many others, had established trading and custody platforms for funds long before the crisis. These platforms were designed mostly for long-only funds, but are increasingly being used by funds with a market neutral strategy.
 
Introduction
Most alternative investment funds are structured as privately placed funds. These funds are not traded on a stock exchange. Anyone who wants to invest in these funds needs to subscribe for newly issued shares. The subscription process typically involves a substantial amount of paperwork.
 
Many institutional investors are not ready to deal directly with transfer agents. They want a single point of access to the fund market and safe custody for their investments.
 
 
 
Fund Trading and Custody Platform
All major banks and brokerage firms allow their clients to purchase securities online. Once a purchase order is made, it is sent automatically to the relevant stock exchange and the resulting transactions are processed “straight through”, without any human intervention.

Most investors are looking for a similar procedure when investing in long-only or alternative funds.

Euroclear’s FundSettle, Clearstream’s Vestima, Allfunds Bank, DTCC, and many others allow investors to buy and sell shares in privately placed funds online, in the same way as is the case with publicly traded securities. The difference is that the transaction is carried out not via the exchange but directly with the fund.

Amicorp Fund Services is an approved Transfer Agent for FundSettle and has an online interface with FundSettle. This will allow investors to buy/sell shares of funds serviced by Amicorp Fund Services online; track the performance of their investment online and have Euroclear as custodian for their shares.

Amicorp Fund Services can arrange contact with other fund platforms and make sure your fund is available to your investors through their favourite platforms.
 
Steps
If the investor places a subscription order online on FundSettle, FundSettle forwards the order instantly to Amicorp via their online interface. The subscription amount is transferred to the fund’s bank account and debited from account of the investor at Euroclear Bank.

As soon as Amicorp, as transfer agent of the fund, receives the online subscription order, it will verify that the subscription amount has been received in the fund’s bank account.

Once the Net Asset Value of the fund is final, which can be the next day, the same straight through process is applied in the reverse order. Amicorp will confirm the number of newly issued shares online to FundSettle, who will instantly show the number of shares in the portfolio overview of the investor.
 
 
Benefits
  1. The investor can make investments online.
  2. No paper document needs to be sent to the fund.
  3. The turn-around time of subscriptions and redemptions is minimal.
  4. The investor can monitor the performance of investments online.
  5. The service is without additional cost to the fund.
  6. Many institutional investors invest only in assets that are available electronically.
  7. More and more investors invest only in assets that are in deposit on their fund platform.
The significance of these benefits for the funds is obviously that they will increase investor demand for your fund.
 
Contact
Amicorp Fund Services will be pleased to advise you further on how to make your fund eligible on a fund settlement platform. For more information please call:
 
Rob Ellis
Amicorp Curacao
Eric Kata
Amicorp Luxembourg
Thom Beute
Amicorp Switzerland
Kin Lai
Amicorp Hong Kong
 
 
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