Asset Servicing Roundtable: When Saudi Opens Up

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At the Asset Servicing Roundtable hosted by Funds Global Mena, foreign inflows, investor quotas and Saudi Arabia’s T+0 settlement system were discussed.

Mario Tryfonides (managing director, Apex Fund Services Dubai) was on the panel.

The following is a selection of items raised and comments

Funds Global: The biggest event to happen to the Gulf capital markets in years is expected in the first half of 2015, the opening of the Saudi stock market to direct foreign institutional investment. What does this mean for the region?

Mario Tryfonides, Apex Fund Services: I’ve been in the region since 2009 and, from the day I arrived, everyone’s been talking about when Saudi will open up its market. It’s fantastic that we’ve finally got a timeline for it. The potential is there but there are many things that need to be defined and structured before we can assess the impact on the region as a whole.

Funds Global: What are the challenges service providers face as part of the opening up and how will they be overcome?

Tryfonides: From a fund administration perspective, the important thing is to see what’s going to happen and how. Our process includes performing reconciliations so what will happen to p-notes and swaps? We need to see how the systems are working and how information will flow between the investment managers, brokers and custodians. In general, I have a lot of questions that need answers.

Funds Global: Looking at the GCC more broadly, what are the main regulatory issues that you hope to see resolved?

Tryfonides: We also need to clarify the role of the fund administrator. There are still a lot of managers in the region who cut their own NAV [net asset value]. If you’re going to attract more institutional money into the region, one of the boxes that needs to be ticked is whether an independent administrator has been appointed by a fund. By making this mandatory, it will aid our continued efforts for best practice and potentially attract more money into the region and into regionally managed funds

Funds Global: How can relationships with institutional clients be more profitable?

Tryfonides: At Apex, we’ve spent a lot of money upgrading our software and systems, we have established a middle office outsourcing team, and hired experienced teams and staff across all our product lines for the simple fact that there is now a lot more awareness of risk management by businesses here. Even if we look at the private equity investment that’s happening regionally, you need specialist software to be able to provide enhanced reporting and performance analytics to investors and managers. It is about providing a good service and, we want to give a complete package to all our clients whatever asset class they are in.

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