Australia's institutional investment administration sector will face a year of rapid changes, particularly with the addition of a new exchange and changes to Australia's superannuation and taxation policies, which will require an increased focus on custodial factors, according to the Australian Custodial Services Association (ACSA).
"The custody community will be working closely with institutional clients to reshape business models and increase efficiencies in response to these shifting priorities," said ACSA chair Paul Cutts.
Institutions are also facing other, sometimes competing factors, including a growing attention on after-tax returns, monitoring and management of risk and improved transparency, he said.
All of these factors test current operating models and the boundaries between internally managed and outsourced services. The association's clients will need to adapt to external change, creating a need for new and extended services, Cutts said.
The changing information requirements of clients is an area where custodians can add value, such as an increasing demand for environmental and social governance information, he said.
The past year saw total assets in custody within the industry grow to $1.85 trillion at December 2010, up nearly 8.5 per cent from the end of 2009, according to ACSA statistics.
In the past year, ACSA consulted with the Board of Taxation on the implementation of a new tax system for managed investment trusts and highlighted the significant level of engagement expected within the custodial industry arising from an additional securities exchange later this year, Cutts said.
ACSA's philosophy is to work with policymakers to share opinion, experience and ideas, while embracing change with the needs of end investors in mind, he said.
