Peter De Proft Director General 5th FIAFIN CONGRESS 17 May 2011, Brazil The FPP: The Idea and Evolutions Peter De Proft Director General

OUTLINE: FPP’s Origins: FPSG recommendations What is the Fund Processing Passport? FPP Versions 1.0, 2.0 and 3.0 Benefits of the FPPs Creation of the FPP Portal FPP Portal Today Monitoring progress

I. FPP’s Origin: FPSG’s recommendations As a result of the growing cross-border business and the open architecture, the inefficiencies in fund processing were seen as a problem Moving towards more efficient and less risky arrangements for fund processing became an objective for EFAMA and the European investment industry That is why EFAMA created the Fund Processing Standardization Group (FPSG) in 2003 to identify inefficiencies in cross-border fund processing and develop recommendations for removing them EFAMA invited expert practitioners from a wide range of stakeholders to join the FPSG

I. FPP’s Origin: FPSG’s recommendations The FPSG published recommendations in 2005, 2008 and March 2011. Their main goal is to : Reduce operational costs and risks Open the door to straight-through-processing Improve customer service Promote interoperability and competition between service providers

I. FPP’s Origins: FPSG’s recommendations Examples of recommendations Communications between industry players should be electronic and use ISO standard identifiers The ISO 20022 should be the standard for electronic communications Transfers of title of fund units should be processed electronically The information required to calculate and pay commissions should be provided in a standardized way and timely fashion Corporate actions should follow a standardized process and timeline, and Fund managers should publish Fund Processing Passports

II. What is the Fund Processing Passport? The FPP is a short, single, fully harmonized document containing all the key “operational” information that fund promoters should provide on their investments funds, at class level, in order to facilitate their trading. The information covered includes: ISIN code Contract Details Subscriptions/Redemptions Rules Settlement details Cut off times ….etc The FPP contains 105 fields of relevant “operational” information, including a list of 77 “Core Data” items, with 49 mandatory items and 28 optional items. There is also possibility to attach local annexes to deal with local specific information.

III. FPP Versions 1.0, 2.0 and 3.0 Version 1.0 was published in June 2007, together with a brochure. Version 2.0 was published in May 2008. The agreed changes of substance were minimal, confirming the robustness of the first version. Version 3.0 was published in April 2010.

IV. Benefits of the FPPs The FPP: For Fund Distributors The FPP: Minimizes redundancy checks delays in processing transactions errors in executing the orders Provides all the information needed to: avoid unnecessary steps generate fewer errors reduce cost For Fund Managers The FPP: Delivers higher quality service by making easier to place a fund order, thereby satisfying customer needs Speeds up the treatment of fund orders Promotes the accessibility of standardized information Reduces the need for call centres to address clients’ question

V. Creation of the FPP Portal In 2008, the Board of Directors of EFAMA decided to create a FPP Portal to promote the distribution of FPPs on a global basis. What was EFAMA’s motivation for creating their Portal? To facilitate access to all existing FPPs from a single location To raise the visibility, use and coverage of FPPs To promote the completion of an effective single market for investment funds To strengthen the competitiveness of the industry in terms of cost and quality The Portal was opened on 28 June 2010. “The opening of the FPP Portal is a fundamental step taken by EFAMA in its continued effort to strengthen industry standards to the benefit of investors. Fund managers, and specifically cross-border fund groups, should be pro-active in supporting this initiative, hence contributing to simplify fund-order processing and responding notably to the European Parliament’s call to push processing costs down.”   Jean-Baptiste de Franssu EFAMA President

V. Creation of the FPP Portal EFAMA hosts the FFP Portal on its website: www.efama.org

V. Creation of the FPP Portal The Portal provides direct access to the FPP “Golden Copies”, i.e. the latest and most updated version of the FPP, by connecting the Portal users to the FPP providers (fund managers and FPP Primary Providers). Thanks to its search engine, the Portal helps FPP users to find specific FPP. In this context, the Portal serves as a “window” for promoting FPP on a global basis.

V. Creation of the FPP Portal The development of the Portal was undertaken in close cooperation with the so-called “FPP Primary Providers” (Finesti, FundConnect, KNEIP, OeKB and WM Datenservice), i.e. the services providers which have developed a new business line to help fund managers produce and update FPPs, and distribute them to the marketplace The warm welcome of the project is reflected in the following quote from the leading expert in asset management in the European Parliament, Wolf Klinz (MEP):  “I congratulate the industry for the creation of the FPP Portal and I hope this initiative will create a momentum for the adoption of the FPP as the European standard to make fund processing simpler and more automated.”   Dr. Wolf Klinz Member of the European Parliament

VI. FPP Portal Today The number of FPPs published already in the Portal is above 6,000. 76 Asset Management Companies that have already adopted the FPP Standard. There are mainly companies that are very active in the cross-border business. Links are being created between the Portal and EFAMA’s member associations in order to highlight the FPPs available for the funds distributed in a specific country. EFAMA remains active in the promotion of the FPP, encouraging fund managers to produce FPPs for their funds fund distributors to request FPPs from fund managers

VII. Monitoring progress EFAMA together with SWIFT has started to publish report on automation and standardization of cross-border funds orders

VII. Monitoring progress Total automation rate of orders received by a group of 31 transfer agents in Luxembourg and Ireland reached 75.4% during Q4 2010 In total, 23.5 millions orders were processed by these TAs (representing around 80% of total order volume) and 17.9 millions were processed automatically

VII. Monitoring progress Total automation rate of orders received by a group of 13 TAs based in Luxembourg during Q4 2010 reached almost the level for order givers based in Europe and Latin America (77-78%) The ISO standard is more generalized in Europe (62%) than in Latin America (34%) and Asia (14%). This is an area where it would be useful to make more progress in the coming years!

THANK YOU FOR YOUR ATTENTION For information & feedback, please do not hesitate to contact us at info@efama.org or via the website of the EFAMA FPP Portal