Swiss service providers take AMCs to the next level

Securitisation specialist Gentwo, independent Swiss provider of investment solutions and technologies for structured products CAT Financial Products and trust bank for asset managers Aquila, have entered into a collaboration agreement to launch a new AMC platform for Swiss asset managers. This would combine a next-generation issuance setup with comprehensive asset management services and interface management.

The new independent platform is aimed at serving the next generation AMCs as it will enable Swiss asset managers to launch next generation Swiss-compliant AMC with Swiss ISIN code on their own, and then make unlimited use of sophisticated portfolio management services.

Individual investment products can be used on the platform as well as complete, bespoke issuance vehicles for the independent development of a complete product range or the qualitative development of an existing AMC offering.

“The outlook on the new opportunities is a further incentive for us,” said Giuliano Glocker, CEO of CAT Financial Products, adding that this is the second collaboration with Gentwo following the launch of the first global platform for issuing actively managed certificates with Interactive Brokers (IB) - one of the worldwide biggest online brokers as custodian and trading agent. “A much broader customer base can now benefit from our range of services. Our clients and asset managers in Switzerland are now able to launch tailored AMCs without traditional issuer risks benefiting from a Swiss custodian bank. [This provides a] unique setup that separates the issuer risk from the custody risk and allows the issuance of multi-asset-portfolio strategies within tailored Swiss structured products providing daily liquidity and reporting as well as full transparency and a CH-ISIN code."

"It is not only that the setup creates better and more flexible structured products, it enables any financial intermediary to manage a dedicated issuer," said Philippe Naegeli (pictured), CEO of Gentwo. "Each custodian and broker can run a dedicated structured products issuance platform and create his own unique offering."

Complementary package

By coming together the three Swiss companies are setting a new standard in the AMC market with a forward-looking fintech/banking partnership which leverages and interlinks their respective specialisations, to deliver a “purely purpose-driven” service aimed at providing “significant added value” for Swiss asset managers and their clients.

Under the partnership agreement, Gentwo provides unrestricted access to its platform with a next-generation issuance setup; CATFP provides an interface to the market and its participants as well as access to its reporting technology; while Aquila will acts as the custodian and clearing bank.

According to Naegeli, pursuing future-oriented innovation strategies alone is becoming rarer today whilst modular composite expertise deployed for a specific purpose is “proving to be much more promising”.

“Our new platform speaks for the functioning of a modern market concept, he said. “By developing innovation strategies together, financial services providers (including banks) can easily and simply increase the relevance of their existing or new business model without much extra effort. This is the only way to generate growth for the market as a whole.”

Portfolio management

The scope of the new platform, however, goes beyond the launch of investment products, according to Markus Angst, managing director at Aquila Custodian Bank . As a custody and clearing bank, Aquila provides unlimited banking services including process transparency, risk control, and specialist knowledge.

AMC have become a popular instrument for asset managers seeking to implement their portfolio strategies and ideas with particular flexibility and effectiveness as they benefit from the off-balance-sheet issuance setup, and can be made simpler and more timely as a discretionary portfolio strategy.

AMCs don’t carry issuer risk and are not subject to many of the typical restrictions that occur with most traditional issuers of structured products, which means that “genuine issuer management can now be effectively achieved”.

Several other structured products can be integrated in a single AMC which can be managed simultaneously and mixed with other assets or instruments such as stocks, bonds or funds. All managed accounts with identically managed asset allocation can even be managed through a single AMC which enables asset managers to reduce their operating expenses and also from the outset avoid tracking errors within their investment strategy.

"More and more of our clients will become platform providers themselves and this will provide exponential growth potential to the global structured products sector," said Naegeli. "This is only the first step. It’s no secret anymore that, ultimately, every financial intermediary will become a creator of his own solutions."

AMCs are driving increased activity in Switzerland with "large demand from asset and wealth managers in the last years" which has resulted in the industry moving to "come up with various new services and functions", according to Glocker.

"Our setup perfectly fits the needs of tailored AMCs for qualified investors in Switzerland," said Glocker.