HSBC Securities Services

Welcome to the Q2 global business update from HSBC Securities Services (HSS). This update includes regulatory updates, product enhancements, exclusive China news from HSBC, industry news, people moves and awards and surveys.

Hong Kong – Professional Investor Rules

The Securities and Futures Commission (SFC) has announced that it will proceed with its proposals to refine the requirements for evidencing whether a person qualifies as a high-net-worth professional investor under the Securities and Futures (Professional Investor) Rules. Taking a principles-based approach, the SFC's proposals will allow firms to use appropriate methods to prove that an investor qualifies as a high-net-worth professional investor. To enable firms that wish to continue with existing practices, the current methods for proving that will be preserved.

Ireland – Changes to regulatory reporting requirements for Irish Investment firms

In March the Central Bank of Ireland consulted firms on improving regulatory reporting. The proposals seek to improve the overall supervisory process by enhancing the efficiency of regulatory reporting and promoting more timely analysis of regulatory returns. This will enable the regulator to identify supervisory concerns earlier. The consultation addressed three main areas – reporting of financial statements, amendments to the existing return and the introduction of new structured returns which look at liquidity, asset concentration, error and breach reporting, CRD Pillar 2 ICAAP requirements, CRD Pillar 3 disclosures and Investor Compensation Company Ltd (ICCL) related information. Feedback indicates that the final rules will differ little from the consultation. Implementation deadlines were 30 June 2011 for phase one with 31 December 2011 for phase two.

Malta – Companies Act 2010

The Companies Act (SICAV Incorporate Cell Companies) Regulations 2010 recently came into force in Malta. The regulations provide for the establishment of incorporated cell structures within the funds industry, extending the Maltese legislation already in place for insurance vehicles. The new rules permit the establishment of multi-fund collective investment schemes with segregated sub funds. The new structure allows for the registration of incorporated cell structures with different patrimonies under the umbrella of one Incorporated Cell Company (ICC), creating a separate legal personality for each cell company. For more information, please click here: 559.pdf

Qatar – Introduction of bond trading

The Qatar Stock Exchange has announced that it will introduce bond and sukuk trading by September 2011. The final date is yet to be confirmed but the Exchange has already adopted a new regulatory framework to accommodate the new products and has launched an investor education campaign to encourage bond investment.

Thailand – Asia Funds Passportability

The Thai regulator is currently working with its counterparts in Indonesia, Malaysia and Singapore on harmonising the regulations for funds to allow passportability across the ASEAN countries. The proposed scheme will be initially available for ETFs only. The first target is to enable cross-border products to sell to non-retail investors within the first half of 2012, and plain products to sell to all types of investors within the second half.

United Kingdom – Tax Transparent Fund

On 13 June, HM Treasury (HMT) formally laid before Parliament draft regulations for the implementation of UCITS IV. At the same time the Government announced further details relating to the creation of a new Tax Transparent Fund. HMT is in the process of consulting the industry on its views and has agreed that a separate set of legislative measures should be produced outside of the Finance Bill to ensure the proper establishment of the new fund's structure. The consultation will focus on developing appropriate regulations to permit cross border pooling of assets and master feeder structures without any negative tax implications for the industry and investors alike. HMT is actively encouraging interested parties to engage with them at this early stage by contacting them at It is intended that the draft regulations will be published in late 2011 and be in force from summer 2012.

Significant investment in our Middle East Fund Administration service proposition

HSBC Bank Middle East Limited continues to invest significantly in the Middle East securities services business with the provision of a much enhanced and scalable fund administration service platform offering same day and flexible net asset valuation (NAV) reporting, with an additional range of value add functional services for our clients. The release of the fund administration service platform follows the development of the global custody proposition to the market over the last two years.

HSBC Fund Administration client benefits:

  • Robust valuation reporting operating model with flexibility to accommodate same day reporting seven days per week and full range of valuation points provided by a core global service operation
  • Full range of asset vehicles catered for including: collective investment schemes, pension funds, investment trusts, life funds and institutional funds
  • Rich functional accounting, valuation and reporting package featuring accounting posting rules for a variety of asset classes with diagnostic controls and detailed supplementary reporting with each net asset valuations with provision of 'real time' updates of transactions and balances
  • Full range of automated service functions including: trade, cash processing, derivative management; asset servicing, reconciliation, instrument management and pricing integrated with accounting and valuation, tax reporting and statutory reporting
  • Reputed vendors provide daily transfers of prices, exchange rates, capital events and assets
  • Ability to leverage range of services, including: compliance monitoring, performance measurement, web portal data mining and flexible reporting writing in a secure infrastructure
  • Provision of HSBC operational scale and range of services: custody, treasury, transfer agency services and banking

Our progressive investment in the securities services business in the Middle East is designed to provide a best in class offering across the complete product range with the benefits of accuracy, agility, responsiveness and scale, as expected from the clients we serve.

Significant investment in our Asian Fund Administration service proposition

HSS is launching an enhanced fund administration infrastructure in Asia which is the result of a major IT investment project. The infrastructure consists of a new three tiered operating model and a new fund administration platform. The new infrastructure is being deployed across Asia in markets such as Hong Kong, India, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

The new operating model involves our global and regional processing hubs and the support of a local client facing team. It will enable greater standardisation of processes and a consistent look and feel for regional clients, with appropriate levels of customisation to manage local market requirements. The new fund administration platform integrates various best-in-class vendor solutions into a seamless model designed for greater flexibility, robustness and higher levels of automation.

Benefits for clients include support for a wider range of products, structures, asset classes and strategies, the flexibility to meet changing product and regulatory requirements, improved risk management and fully customised reporting.

Major milestones achieved in for transfer agency services

HSS has successfully migrated all transfer agency processing operations onto a single platform.

Ian Stephenson, Global Head of Product, Fund Services said: "This is an important step in our drive to provide clients with one consistent approach for all transfer agency processing operations, which involves keeping a register of funds and receiving subscriptions and redemptions."

As part of the migration, there were 53 HSBC Bermuda funds accounting for 9,294 unit holder accounts moved onto our strategic Global Transfer Agency Platform (GTAP). Ian went onto explain, "The transformation programme was set up because processing across the globe was originally handled through multiple systems, locations and operating models, including manual processes, making this an inconsistent experience for clients."

This latest achievement contributes towards the goal of consolidating the systems used across the HSBC Group, and increasing the capability and capacity of systems to better support all regions and reduce risk.

The migration also included:

  • The introduction of a money market capability that will enable transfer agency to support client servicing and new business growth in other global jurisdictions
  • The rollout of an imaging and workflow tool across Luxembourg, Guernsey, New York and Bermuda. This was completed in June 2010

Ian concluded by commenting, "The completion of this important project is part of our drive to provide our clients with one consistent approach for all transfer agency operations globally."

HSBC's new trade processing platform

A further significant step forward was achieved as part of the consolidation of HSBC Securities Services' middle office trade processing onto our global trade processing infrastructure. This latest achievement saw the migration of our European trade matching clients onto our global infrastructure. This was achieved in a seamless fashion with no adverse impact to our clients.

Our derivative servicing capabilities continue to be enhanced as a further upgrade to our global derivatives platform was successfully achieved. This upgrade continued to broaden our instrument coverage capabilities whilst further enhancing our automated interface with one of the key OTC market infrastructure solutions.

Our progressive move towards automating some of the more challenging reconciliation activities has taken a significant step forwards with the migration of our hedge fund position reconciliations onto our global reconciliations platform. This is a particularly satisfying achievement given the large number of prime brokers/counterparties from whom we now process statements electronically and for the fact that this reconciliation process includes a wide range of complex derivative instruments.

Delivery versus Payment (DvP) model launched in UAE

Georges Cattan, Head of HSBC Securities Services, UAE hosted a roadshow at the Radisson Edwardian in London on 1 June where the guest speaker, H.E. Essa Kazim, Executive Chairman of the Dubai Financial Market (DFM), presented the newly introduced DvP (Delivery versus Payment) model in the UAE. The DVP model was introduced on 29 May with the aim of meeting MSCI requirements for the UAE to be upgraded to Emerging Market status. This demonstrates our strong relationship with local regulators and exchanges and our capability to influence market changes.


Egypt's Ministry of Finance has announced the government's decision to cancel its initial proposal to apply a 10 per cent tax on cash dividends.

Middle East

Following Qatar and the UAE (Dubai Financial Market and Abu Dhabi Securities Exchange), Nasdaq Dubai has announced that they have launched the new Delivery versus Payment (DvP) model in May 2011 with the Bahrain Borse to follow suit in Q1 2012 respectively.

Organisation for Economic Co-operation and Development (OECD) update

The OECD considered the feedback from the public consultation document relating to "Improving procedures for tax relief for cross-border investors" and agreed areas for amendment to the package. These include: 1) modifying the model mutual agreements for Collective Investment Vehicles (CIVs) to provide for annual determinations of ownership of CIVs, 2) clarifying the content and purpose of annual reporting and year end summaries, 3) considering less onerous compliance procedures for smaller institutions, 4) data protection issues and application of limitation of benefit and anti-abuse provisions. Further work in this area will occur during 2011 along with amendments to the design of the self investors declarations. In the meantime, HSS has participated in proof of concept testing for exchange of information under the proposed regime between financial institutions and governments.

  • Mike Martin has been appointed Global Head, Client Management Group. Mike will be responsible for the development and management of an enhanced sector focused sales and client coverage model for the HSS client base. Mike joined HSBC in 1998 and has held a number of roles, most recently as Global Head of Fund Services. He will report to Drew Douglas and Cian Burke, Co-Heads of HSS
  • Arjun Bambawale has been appointed Regional Head of Europe. Arjun will be responsible for the management and oversight of all HSS businesses within the European region. Arjun will report globally to Drew Douglas, Co-Head of HSS
  • Scott Epstein has been appointed Regional Head of the Americas. Scott will be responsible for the management and oversight of all HSS businesses within the Americas region. Scott will report globally to Drew Douglas, Co-Head of HSS, and locally to Didier Descamps and Andre Brandao, Regional Co-Heads, Global Markets, Americas
  • Paul Stillabower has been appointed Global Head, Sales and Relationship Management, Non-Bank Financial Institutions, reporting to Mike Martin
  • Tim Faselt has been appointed Global Head, Sales and Relationship Management, Banks and Broker Dealers reporting to Mike Martin. Tim continues in his regional role as Regional Head of Sub-Custody and Clearing, Americas
  • Malcolm Pobjoy has been appointed as the Head of the Client Management Group, Americas reporting to Mike Martin with an additional reporting line to Scott Epstein
  • Dan Massey has been appointed as the Head of the Client Management Group, Asia-Pacific, reporting to Mike Martin with an additional reporting line to Ian Banks, Head of HSS Asia and Treasury

Regional COO appointments:

  • Paulomi Shah joins HSS from Global Markets, where she was last COO of Americas, to become regional COO, Americas based in New York
  • Carl Andrews who joined HSS from RBS last year, becomes regional COO, Europe, based in London
  • Irfan Hasham takes on additional responsibility as regional COO, MENA, based in Dubai

Paulomi, Carl and Irfan will also report to the Regional Business Heads, Scott Epstein, Arjun Bambawale, and Arindam Das respectively.

Global support function leader appointments:

  • John Duffy moves from Global Chief Administrative Officer, Custody, to lead the HSS Management Office, covering our PMO, transformation programme, governance, shared services oversight, management committee support, business training and employee engagement. He will be based in London
  • Mark Weller becomes Global Head of Finance and Management Information based in London
  • Richard Milner, currently Head of Global Custody in Europe, will take over the leadership of our Centres of Excellence (CoE) with effect from 1 September, following Cecilia Paddington's return to the UK in June. Richard will be based in Kuala Lumpur, Malaysia and will also report to Andy Mayer, Head of the Global Banking and Markets, CoE

Global Finance Magazine

HSS has been named the Best Sub-Custodian Bank in the Middle East by Global Finance Magazine in its 2011 survey of sub-custody service providers. The Middle East is the only region where HSS has secured the regional recognition and award of Best Sub-Custodian Bank 2011. We are delighted to have won this award in eight of the nine countries surveyed.

ICFA Americas Service Provider Awards 2011

ICFA Americas Service Provider Awards 2011

HSS won 'Best Fund Administrator Latin America' in the ICFA Amercas Service Provider Awards 2011. The result was announced at an awards ceremony in New York on 26 May.

The Asset Islamic Awards

The Asset Islamic Awards HSS is delighted to announce that HSBC Amanah Securities Services has been named Islamic Custodian of the Year by The Asset at the Triple A Islamic Finance Awards 2011. The awards recognise and honour leading players in the Islamic finance market. It is the second consecutive year that HSBC has won the award. The first came in 2010 at a time when we were developing and preparing for the launch of our Shariah compliant securities services proposition. Since then, HSBC Amanah Securities Services has launched in 16 markets around the world.

Find out more about HSBC Amanah Securities Services.