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individual investors have not been completely deterred. On the contrary, many may well be considering a shift in their own investment allocation into alternatives. “Equities are phenomenally volatile and a large number of investors are seeking a longer term yield, including the kind of returns which are offered through alternative investments such as a closed-ended structure, as well as investments in private equity or real estate,” says Harland. “We are seeing a great deal of activity and there is a feeling that investing in the current climate could prove the next few years to be vintage.” Turning up the heat In the United States, a new administration and a more powerful Democratic congressional majority point to an even greater emphasis on transparency and regulatory oversight. Meanwhile, the universal crackdown on short selling is evidence that governments everywhere are just as willing to tighten the screws. “In September alone there were at least 15 regulatory changes dictated from the Securities and Exchange Commission (SEC), the Federal Reserve Board (FRB), the Commodity Futures Trading Commission (CFTC) and from the Financial Accounting Standards Board (FASB),”notes State Street’s Greene. Many of these changes require adaptation and implementation within weeks of their announcement, he adds. “Changes in regulation will drive up the cost of compliance, requiring continued investment in order to keep pace.” This once again points to the value of outsourcing in order to achieve the goal of lowering costs while implementing new standards, says Greene. Mourant’s Harland agrees that the recent economic turbulence has led to increased pressure for the regulation of certain financial markets. “A key requirement of the administrator is to maintain granular data of the fund or funds which it administers, which is managed by informed client-relationship teams with a broad knowledge of financial reporting standards as well as regulatory and investor requirements. We believe this enables us to respond to the changing reporting requirements of investors, clients and regulators.” For instance, in the United Kingdom the guidelines for transparency outlined in last year’s Walker Report serve as an example of how the reporting environment is changing. “We have seen a number of clients, from start-ups to blue chip firms, acknowledging and taking steps towards adopting the Walker guidelines,”says Harland.“Our teams are well placed to provide clients with guidance on how to implement the various aspects of the report.” Given the current regulatory environment, BBH’s Páircéir is hopeful that forthcoming policy procedures are moderate and can be easily leveraged. “Daily NAV production and underlying delivery of portfolio information to investors, transparency of information to stakeholders in investment vehicles, and directors’ oversight and responsibility all lead to an already significant volume of reporting. We support the current level of necessary oversight measures, but see no real need for an increase in this burden.” F T S E G L O B A L M A R K E T S • J A N U A R Y / F E B R U A R Y 2 0 0 9 Peter Cherecwich, head of global product and strategy for Northern Trust’s asset servicing business, thinks that administrators with custodial ties have a competitive advantage in this type of environment. “Custodians have the flexibility to shift clients in and out of strategies with much greater ease, he says, adding:“If your entire infrastructure is only geared towards alternative classes, you may not be able to adapt as quickly.” Photograph kindly supplied by Northern Trust, December 2008. Seán Páircéir, managing director, Brown Brothers Harriman (BBH), in Dublin.“BBH will continue to invest to support the sophisticated business needs of our clients as part of our core strategy. We are committed to enhancing our competencies with innovative technology solutions like virtual pooling which meet and anticipate our clients’ development.” Photograph kindly supplied by Brown Brothers Harriman, December 2008. 55
ASIAN INVESTOR SERVICES: CUSTODY SOLDIERS ON 56 ASIAN CUSTODY: HELPING CLIENTS ADJUST For now, all the major global custodians such as HSBC, Standard Chartered, BNY Mellon, BNP Paribas, Société Générale Securities Services and Northern Trust, are staying the course.The short-term forecasts may be gloomy but they are all banking on the bigger picture which places the Asia Pacific region as one of the longterm drivers of worldwide growth. One reason is that economists expect that emerging markets in the Asian region will be more resilient than their Western counterparts and will recover much faster.This is because the de-leveraging purge will not be as great in general in emerging markets. Photograph © Dawn Hudson/Dreamstime.com, supplied December 2008. The financial crisis has provided a challenging time for Asian asset service providers. Institutional investors are more concerned now about counterparty risk and certain asset classes as well as the fund managers they are using. As a result, there has not been that much new business and providers are helping clients adjust to market conditions. Lynn Strongin Dodds reports. UNTIL RECENTLY, THERE was a view that Asia would remain on the periphery of the financial crisis rocking Western economies. As time went on, those expectations proved unfounded. Global custodians, though, have not lost heart and are prepared to wait it out based on the region’s long-term growth prospects. The larger, better capitalised firms are also hoping to be the beneficiaries of a flight to quality to providers who have strong balance sheets and high investment grade ratings. J A N U A R Y / F E B R U A R Y 2 0 0 9 • F T S E G L O B A L M A R K E T S
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Page 9 and 10: CORPORATE PROFILE: MANPOWER BUILDS
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Page 15 and 16: CORPORATE PROFILE: AIG 66 a handsom
Page 17 and 18: GOLD: SET FOR A REBOUND? 68 GOLD GE
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Page 21 and 22: COVERED BONDS: THE US OUTLOOK 72 Be
Page 23 and 24: 74 Talking Point THE OUTLOOK FOR EU
Page 25 and 26: COVERED BONDS - VIRTUAL ROUNDTABLE
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Page 31 and 32: ETCs GAIN AS COMMODITIES REMAIN POP
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Page 35 and 36: EUROPEAN TRADING STATISTICS 86 THE
Page 37 and 38: EXCHANGE TRADED FUNDS: LISTING & DI
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Page 41 and 42: MARKET DATA BY FTSE RESEARCH 92 Glo
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Page 45 and 46: CALENDAR 96 Index Reviews Jan - Apr
Page 47: MAYBE I SHOULD TALK TO THE LEADER I

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