The future of supervisory reporting by investment funds - Luxembourg is home to some 14,000 of them - is embedded into a firm’s technology infrastructure.
One example of this development is taking shape in Luxembourg, where a local data firm that was acquired by a London-based fund data specialist last year is building a one-stop solution that lets fund managers track the distribution of their funds in multiple countries and report to the relevant supervisors by pressing a single button.
“It’s going to be 2024 when we can see something that is modern, a full integration, from data quality to underlying documents to registration statuses, all in the user interface,” said Maxime Aerts (photo), head of asset management product strategy at FE fundinfo, a London-based provider of investment fund data and technology.
A year after FE fundinfo acquired data firm Fundsquare from the Luxembourg Stock Exchange, it gradually becomes clear how the combination intends to deliver synergies. Buying Fundsquare was a considerable investment for the London-based counterparty. The stock exchange this year reported a 170 million euro one-time gain from that transaction.
Reaching full potential
Fundsquare, which generated a profit of 4.7 mln euro last year on sales of 22 million, needed to be part of a bigger group to reach its full potential, said Julie Becker, the CEO of LuxSE, when she sold the firm last year. With 950 employees and annual sales of about 60 million euro, FE fundinfo had the resources and network to make sure Fundsquare could expand outside Luxembourg.
In an interview with Investment Officer, Aerts, a longtime Fundsquare director, made clear that it’s all about servicing the needs of investment funds in the digital era. “We intend to position a suite of services to help our asset manager clients to facilitate the distribution of a product and facilitate the communication all relevant counterparties, from regulators to commercial partners.”
This was part of the rationale behind the purchase of Fundsquare, Aerts explained. “The position and network of relationships that FE fundinfo has in the triangle asset manager-regulator-distributor is something that we want to leverage. The expertise of Fundsquare in the FE fundinfo group - communication with the regulator - is something that we want to replicate elsewhere, again to facilitate the life of our clients. You, as asset manager, have a product in this country, in that country… you can use our system as a single gateway to deal with everything.”
API interface
Aerts explained that Fundsquare leverages its existing knowledge and experience of connecting clients’ systems with those of the Luxembourg supervisor CSSF via an API, an application programming interface widely used in IT applications to link systems. Other European supervisors are also opening up to the use of APIs for reporting purposes.
“We have changed the way of communicating with the CSSF,” Aerts said, referring to investment funds. “Before, we were just a channel. Now we have adapted our solutions to connect to the CSSF with their newly designed API. That is great, because it’s new technology flowing into the market.”
“Today, the possibility exists to connect with most regulators in Europe, but it is not integrated into a gateway as such,” he added. “That’s part of what we would like to do. So we have a gateway component, and we combine this with the process that we have at group level, to come up with a solution. So that we bring to both sides a high level process and a solution to cover everything.”
Once such solutions are in place, clients no longer have to worry about how to connect their systems with the supervisors. “We can help them sort out information to help them produce what is required to be disclosed to regulators,” Aerts said.
Fundsquare, as part of FE fundinfo, wants to cover all required regulatory communications that funds need to address. “Thanks to the evolution of the methods used by CSSF, we have additional opportunities for the clients to have one single gateway to ensure full compliance. The clients don’t have to worry. We are going to take care of that.”
Related articles on Investment Officer Luxembourg:
- LuxSE books €170 mln gain on Fundsquare sale
- FE fundinfo buys Euronext’s French data firm Funds360
- FE fundinfo buys Adjuto, boosting French, Swiss base