[ S U R V E Y
|
H E D G E
F U N D
A D M I N I S T R AT I O N]
HSBC Securities Services
H
good balance between the centre and the periphery. “Central
SBC has enjoyed a sizeable presence in hedge fund admin-
as well as disseminated/functional client service,” is what one
istration since it acquired Bank of Bermuda in 2003. The
client likes about the HSBC client service model. “The central
hedge fund industry has changed substantially since then, and
relationship manager is very strong at providing a sense of part-
HSBC has re-shaped its exposure to it in pursuit of sustainable
Weighted
Weighted
average
average
scores scores
nership with regular on-site and hosted meetings.”
profitable growth. In common with its parent,
HSBC
Securities
2016 2016
5.4 5.4
2016 2016 2017 2017 2018 2018
Services has pursued of late that mandate by investing heavily
2017 2017 5.89 5.89
5.4 5.4 5.89 5.89 5.73 5.73
PROFILE OF RESPONDENTS
in an upgrade of the digital technologies that underpin
its fund
2018 2018 5.73 5.73
administration business, including the core fund accounting
and investor services platforms. The first service
area
in
which
Respondent
Respondent
profile
profile
By size
By location
the benefits become visible tends to be reporting.
So HSBC
Large fund
Large
fund will
22% 22%
managers
managers
be disappointed by its score for reporting to managers,
though
M edium-
detailed examination suggests that the problem
is Medium-
one of raised
22% 22%
22% 22%
sized fund
fund
26% 26%
expectations, which HSBC has lifted considerably sized
in recent
Americas
Large
managers
managers
43% 43%
years.
Europe and
Small fund
Small fund
Medium
52% 52%
The bank boasts not just of its library of Application
Pro- 52% 52%
managers
managers
Middle East
Small
26% 26%
gramming Interfaces (APIs) – software tools Americas
that Americas
are crucial to 22% 22%
Asia
35% 35%
mobile reporting in particular – but applying Europe
robotic
Europe
and process
and
35% 35%
Middle Middle
East
East
automation, artificial intelligence (AI) and machine
learning
Asia Big
Asia Data tools. 43% 43%
(ML), distributed ledger technology (DLT) and
Unsurprisingly, managers are as a result looking for more and
Weighted
Weighted
average
average
scores scores
by service
by service
area area
richer and more accessible data from HSBC. Certainly, the latest
Weighted
average scores
Weighted
Weighted
+/- the
+/-
global
the global
digital techniques have the potential to cut data
processing
Service
Service
area area costs
average average
score average
score average
by eliminating duplication, intermediation and reconciliation,
2016
2017
2018
and by automating query handling. They can accelerate the pro-
5.89
5.73
Client service
Client service 5.63 5.63 5.40
-6.60% -6.60%
cessing of subscriptions and redemptions, speed up the produc-
tion of valuations, and increase transparency On-boarding
into On-boarding
transactions 5.3 5.3 -7.30% -7.30%
Fund
Fund
and portfolios. But in this survey, HSBC has in
most
areas yet 6.03 6.03 -2.90% -2.90%
accounting
accounting
to collect its reward for endeavours of this kind. An exception
Investor
Investor
5.78 5.78 Weighted
-4.60% -4.60%
average scores by service area
is regulatory reporting. This is not surprising. services
As a services
global bank,
HSBC is ideally placed to help managers comply
with
evolving
Reporting
Reporting
to
to
Service area
Weighted
+/- the global
investors
regulatory demands in multiple markets, and investors
the bank
duly 5.69 5.69 -5.50% -5.50%
average score
average
Reporting
to of other
to
collects its highest score for exactly that. The Reporting
scoring
service
5.63
-6.5%
5.5 5.5 Client
-6.20%
-6.20%
managers “Over-
forms of reporting is respectable rather than managers
outstanding.
On-boarding
5.30
-7.2%
Reporting
Reporting
to
to of
all, reporting to investors is fine,” is the downbeat
summary
6.21 6.21 3.30% 3.30%
regulators
regulators
Fund accounting
6.03
-2.8%
one respondent. Another summarises the performance of the
Reporting
Reporting
to
to
bank in reporting to auditors by confirming there
are
“no
issues
Investor
services
5.78
-4.6%
the tax the tax
5.99 5.99 0.30% 0.30%
between HSBC and our auditors.” Nevertheless,
clients
are
authorities
authorities
Reporting to investors
5.69
-5.5%
aware the bank is investing to transform and Reporting
enhance
Reporting
to its report-
to
5.76 5.76 Reporting
-5.40% -5.40%
to
managers
5.50
-6.1%
auditors
auditors
ing capabilities. “HSBC have a strong foundation
of
reporting
AML
KYC, AML to
and are undertaking a large-scale technology KYC,
programme
Reporting to regulators
6.21
3.1%
and
address delivery shortcomings,” writes one of and
them.
The high 6.01 6.01 Reporting
-0.70% -0.70%
to
the
tax
authorities
5.99
0.3%
sanctions
sanctions
scoring of depositary services suggests clients screening
also screening
grasp the
Reporting to auditors
5.76
-5.4%
wider strategy of the bank, which sees a major
opportunity
Depositary
Depositary in
6.09 6.09 KYC,
1.70%
1.70%
AML
and
sanctions
screening
6.01
-0.4%
alternative UCITS funds in Asia as well as Europe.
services
services
Like the alternative investment funds (AIFs) regulated under
Depositary services
6.09
1.6%
the Alternative Investment Fund Managers Directive (AIFMD),
Corporate secretarial services
5.84
-0.3%
managers of UCITS must appoint a depositary bank to safeguard
Middle office services
5.68
-3.1%
the interests of investors. Another opportunity HSBC is attack-
Banking
services
5.31
-12.6%
ing is exchange-traded funds (ETFs), where it hopes to capital-
ise on the current trend away from active to passive investing.
Operations
5.40
-11.8%
The advantage its global network offers, especially to managers
Cyber-security
5.95
-0.6%
of emerging market funds, is obvious – and the detailed scoring
Price
5.24
-9.9%
suggests clients already attach a value to the consistency of the
service across locations. The bank also seems to be striking a
Total
5.73
-4.4%
62
Global Custodian
The Hedge Fund Annual 2018