Custodians oversee heightened domestic equity trades

Australia's total assets under custody sits at $3.6 trillion and local custodians are aiding the settlement of up to 80,000 transactions per day for institutional investors.

Latest statistics from the Australian Custodial Services Association (ACSA) show increasing trends in domestic equity transactions continued during the six months to 30 June 2018.

ACSA said more than 9.7 million trades were settled during the period, or about 80,000 transactions per settlement day. It illustrates the support the custody industry provides to the trading activities of institutional investors, ACSA said.

The mix of total assets in international markets has increased from about 28% to 34% since June 2014, the association said. Total assets under custody for Australian investors grew 4% in the six months to June 30.

"The amount of overseas client investment into Australia (assets held in sub-custody) also grew by 4.4% during the first half of 2018 to $1.54 trillion - representing continued attractiveness of Australia as an investment destination for foreign institutional asset owners," ACSA said.

It translates to average annual growth in Australian assets of 9%, versus international asset growth of 15% over the past four years.

SPECIAL FEATURE: Breaking the custody mould

"Investing offshore brings opportunity, but also the added complexity of multiple legal jurisdictions and tax regimes, the need for support with multi-currency trading, valuation across currencies and implementation of hedging strategies," ACSA said.

ACSA chief executive Robert Brown said: "The custody industry continues to mature with over a third of all client assets invested internationally, a trend we expect to continue."

"ACSA also remains focussed on matters closer to home, working with regulators and the broader industry to implement reforms aimed at growing our funds management sector and streamlining operations.  An additional focus is the replacement of the ASX equities settlement platform CHESS.

"The replacement of CHESS is a significant initiative by the ASX, and fundamentally important to the industry.  ACSA is engaged on all aspects of the transition, with a sharp focus on functionality, improved efficiency, features of the underlying technology, systemic impact on the industry operating model and of course end client benefits."

Read more: AustraliaCustodyASXACSA - Australian Custodial Services AssociationRobert Brown
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