The new arrivals will be phased in between the end of September and the end of the year. The investment fund shares handled by these banks will be transferred onto the new platform which provides DVP (delivery versus
payment) settlement services based on synchronous exchange of cash and securities between fund distributors and transfer agents.
The eleven firms join Schroder Investment Management (Luxembourg) and Pictet & Cie (Europe) who were the first pilots to use CFF when it was launched last March. CFF is open to all Luxembourg Transfer Agents as well as Transfer Agents from other markets dealing in Luxembourg domiciled funds.
According to a study by Deloitte, a consultancy, the cross border investment funds industry could save 30 percent of processing costs and gain over â¬ 250 million by streamlining trading, settlement and custody of cross border mutual funds distribution.
Clearstream designed CFF as an answer to growing market demand in Europe and in Luxembourg, Europeâs largest market for international investment funds with over â¬ 2000 billion in assets under management. The industry has grown 80% over the past three years but its post trade area is still characterized by high fragmentation, little standardization and thus operational risk. Several significant market participants âdistributors, promoters, transfer agents and trade associations- in Europe and in Luxembourg have been consulted by Clearstream and have contributed to the design of the CFF concept.
CFF offers for all participating firms (transfer agents, fund distributors and fund promoters) one single set of settlement and payment instructions for all eligible funds which accelerates and simplifies operational processes as well as reduces risks. CFF provides post trade services only, with an architecture open to the various order execution processes and is fully integrated with Clearstreamâs existing ICSD custody and settlement services. This enables customers to benefit from the new CFF service while keeping the advantages of the full integration of their holdings in investment fund shares with those in other asset classes. CFF is offered for investment funds domiciled in Luxembourg but its business model and operating model could be applied to other funds domiciles such as Ireland or the UK. CFF does not change the direct relationship between distributors and transfer agents and it does not provide direct access for retail customers or independent financial advisors (IFA).