21 Dec 2011, Custody Risk, Risk magazine
HSBC Securities Services has enhanced its frontline capabilities, greatly improving the number of enquiries resolved on the day. It has also enhanced its service reviews, technical training and client visits, as well as extended its Crest equity instruction deadline to T+2 at 6:30pm. It also added a Smartstream trade life-cycle management reconciliation tool that provides end-to-end automated securities reconciliation and management facilities. It enhanced the speed and quality of service in corporate event processing and migrated onto the ‘Q-track’ enquiry process used by its sub-custody business, which improves the quality of its management information.
In the Channel Islands, HSBC Securities Services in Guernsey has been growing its capabilities. It added several significant funds to its portfolio of funds under administration, including a €520 million hedge fund platform, a strategic global growth fund and a distressed debt fund worth €1.1 billion that includes over-the-counter (OTC) derivatives pricing capabilities for large, small and complex funds. One client praised its “flexible approach to ensuring we can maximise the potential of our funds and continually develop the product offerings we can provide to clients”.
The business introduced a net asset valuation (NAV) module for its investment accounting platform supporting traditional funds. The NAV module has increased the ability to service complex fund pricing, more transparent reporting and audit trails. The module automates the calculation and posting of complex performance fees, fund-level tax calculations and share-class hedging. For alternative funds, a new swaps module has been implemented that enhances the accounting and valuation function for swap transactions including interest rate swaps, equity swaps, contract for difference, total return swaps and credit default swaps.
HSBC Securities Services also enhanced its collateral management offering to support intra-day and end-of-day reporting including net exposure agreement, collateral balances, substitution of collateral and margin call activity. HSBC’s OTC modelling improved verification and transparency via the Calypso Technology platform.
A global web portal and web reporting tool have added to its users’ experience, providing them access to contract notes, statements, NAVs, market value and a host of other critical information. Access to this portal can be extended to third parties such as shareholders, custodians, pensions institutions, consultants and trustees.
In Germany, custodian HSBC Trinkaus & Burkhardt has secured major new client wins, launched major technological and operational innovations and cemented its reputation as a safe custody business. It invested in a host of new products that were released throughout the year. These included continuous linked settlements for foreign exchange transactions, a securities lending desk with links to third parties, infrastructure for loan investment funds and an extension of its proxy voting services via a direct link to technology vendor Broadridge Financial Solutions.
Despite an erratic macro-economic environment, Düsseldorf-headquartered HSBC Trinkaus & Burkhardt saw its assets under custody grow at a healthy pace. One existing insurer client extended its assets under custody by €2.4 billion, taking the total to more than €8.5 billion. Another financial services provider was signed up with €1.1 billion assets under custody and an insurer entrusted assets with the bank worth more than €2 billion. Clients were impressed with its straight-through processing, high staff retention rate, consolidated investment reporting and high levels of expertise. One client stated: “To put it in a nutshell, first-class service!”
In Germany, assets under custody increased by 4% to the end of August to €254 billion, while in the UK and Ireland, assets under custody increased by 6% to €930 billion. In the UK, the bank won significant mandates from a central bank (for custody, accounting, performance and client monitoring) with €11.2 billion; from a sovereign wealth fund (custody, accounting and securities lending) controlling €7.5 billion; and from an investment trust (custody) with approximately €448 million of assets. The clients cited HSBC’s quality of products, ability to provide bespoke service solutions, its focus on developing long-term sustainable relationships and its strong risk management framework. HSBC’s comprehensive global office network and reach also played a major role.
It has been another successful year for HSBC at the Custody Risk European Awards 2011 and, after impressing the judges, it is certain the teams in these respective areas of the business and across the bank will not be resting on their laurels. Although market conditions are challenging and will remain so, possibly for several years, clients across all three of these important investment destinations will be comforted by the knowledge that the bank has a secure credit rating and a strong balance sheet, including a strong core Tier 1 capital ratio and worldwide assets under custody of more than €4 trillion as of the end of June 2011.