There are a number of reasons that we find Ireland so attractive. Firstly, the Irish funds industry is flourishing. Statistics from the European Fund and Asset Management Association (EFAMA) reveal that Ireland attracted almost half of all new UCITS monies during the first nine months of 2012; the highest total amount for any domicile.
Gerald Hassell, chairman and CEO of BNY Mellon
Whilst data for the last quarter of the year is yet to be published, it is fair to say that Ireland was arguably the destination of choice for asset managers launching new UCITS products in 2012. A solid indication of confidence in Ireland’s funds industry and another strong year for the country’s reputation in an international funds arena; a year which also saw the funds industry reach two significant milestones - one trillion euros in domiciled assets and two trillion euros in total funds under administration. We believe the growth of the funds industry is an important component of Ireland’s hopes for economic recovery - therefore this is very pleasing news.
Secondly, the international financial services market, in which Ireland participates, has grown and matured to the point where Ireland, due in no small part to its increased competitiveness, is now one of the world’s leading financial services centres - with a highly developed and sophisticated marketplace and a talented, well-educated workforce to match. Today we employ around 1,800 people in Cork, Wexford and Dublin, delivering a broad range of investment services to what is predominantly an international client base.
Whilst Ireland is justified to enter the New Year in a more confident frame of mind, 2013 does bring some cautious headwinds, most notably around regulation.
As Taoiseach Enda Kenny very rightly observed in September last year in an address to the Irish Funds Industry Association at its annual conference, the expected regulatory change coming to the fore in 2013 poses both opportunities and challenges for Ireland.
New regulations, welcome as they are, arrive alongside new market requirements focused on a host of issues ranging from capital rules, liquidity and collateral eligibility requirements, to risk and transparency challenges. As a result, financial institutions, institutional investors, asset managers and broker-dealers find themselves operating day-to-day in a far more complex business and regulatory environment.
The regulatory changes around Solvency II, the Alternative Investment Fund Managers Directive (AIFMD), but also UCITS rules changes, are well founded in their desire to provide greater protection and transparency for investors. However, it all comes at a cost. As does FATCA, which, although US regulation, will have a profound impact on the Irish funds industry when it comes into play in 2014.
New regulations, welcome as they are, arrive alongside new market requirements focused on a host of issues ranging from capital rules, liquidity and collateral eligibility requirements, to risk and transparency challenges. As a result, financial institutions, institutional investors, asset managers and broker-dealers find themselves operating day-to-day in a far more complex business and regulatory environment.
As Ireland takes centre stage within the European political and financial landscape having taken over on 1st January 2013 the Presidency of the Council of the European Union, it is well placed to help shape and mould a European financial market place that will be fitter and healthier in the future; this will benefit Ireland, and indeed the whole European Union. This is the seventh time that Ireland will hold the Presidency and given the key role they will play in developing important proposals such as Banking Union, this experience will serve Europe well. Matthew Elderfield, the Central Bank of Ireland’s Deputy Governor (Financial Regulation) is also Alternate Chairman of the European Banking Authority and can add a valuable perspective during the Presidency.
Being expert and at the forefront of such a changing market place represents opportunity for a skilled workforce in Ireland. New regulations, such as Dodd-Frank and the European Market Infrastructure Regulation, better known as EMIR - coming as they do again at a time of evolving market dynamics and a heightened focus around risk management - require institutional investors to take a long hard look at how better to utilize and manage their collateral.
We can expect an ever greater demand in the marketplace for collateral - and specifically high quality collateral. Some current estimates suggest that more than two trillion dollars in additional collateral will be required by market participants globally. As a result, we are seeing accelerating demand for solutions around the segregation, optimization, financing and transformation of collateral as institutions look for answers to a broad range of questions that span not only collateral management, but also activities such as securities lending, liquidity management and derivatives servicing.
BNY Mellon is distinctively positioned to help clients in the current economic environment as one of the largest servicers and managers of financial assets globally. We are the world's largest global custodian and operate one of the industry's largest securities lending programs, with three trillion dollars in lendable assets. In addition, the company operates a proprietary global collateral management technology platform designed to efficiently handle all asset types denominated in any currency. The platform processes a wide array of transaction types, including derivatives, tri-party repurchase agreements, portfolio swaps, and collateralized loans, as well as a wide variety of margin management activities.
We believe we have a compelling opportunity to build on our industry leading position in this space given the clear and growing client requirements for secure, efficient and reliable collateral services and our operations in Ireland could play a key role in delivering these solutions.
In closing, like us, many of our largest global clients have significant operations of their own in Ireland, and we service them from Ireland. We want to build on the accumulated knowledge of our investment services capabilities here and use the unique skills, acumen and all round ability of our team to help drive our organisation forward. We know that the capability within our team in Ireland will lead to a better future for our firm and the same can be true for the country as a whole. Our firm, together with our team in Ireland look forward to playing a role in Ireland’s road to recovery.