Even though Luxembourg regulated funds require a Luxembourg based depositary, many support functions – such as fund administration, transfer agency, domiciliation and banking solutions – are often handled by duly regulated third-party Luxembourg providers (and in certain cases, by multiple such providers). But depending on your needs, that might not be the most efficient or cost-effective approach.
If your depositary and custody bank partner can accommodate those additional responsibilities within a collaborative-team solution, then bundling services from Luxembourg-regulated entities within the same group of companies presents a much more efficient alternative than engaging multiple disconnected firms.
Here are four reasons why you should, whenever possible, opt for having all your Luxembourg fund servicing handled by a single, multi-functional team working on the same systems under the same organization.
The primary benefit of bundling services is cost efficiency. This results both from economies of scale and from your ability to negotiate fees with a single provider versus numerous stakeholders.
From a provider’s perspective, it’s easier for them (which means more cost efficient for you) to perform their duties when they already have all critical onboarding, static and dynamic data in house. They’re able to seamlessly source information from within their own organization rather than having to create and maintain channels by which to communicate with third-party service providers.
Alan Doyle, head of product for U.S. Bank investment Services, explains it like this: “Essentially, as your integrated partner, we will gather critical onboarding data or will otherwise interface with you once. Then, we can re-purpose the same data and leverage established internal operational workflows. Obviously, there are cost savings as a consequence of this, which are, in turn, passed along to the client.”
Using a single provider significantly reduces the amount of work clients put in to managing the partnership.
Consider how much easier it is to engage with just one point of contact versus navigating multiple relationships with multiple stakeholders at different service providers in different time zones. At U.S. Bank, we can provide a principal service team in your time zone supported by staff of specialists in the jurisdiction where your product is domiciled. That way, it’s easier to schedule conference calls, manage projects, handle client onboarding and navigate other administrative tasks with a single integrated contact team instead of many.
In the words of Luigi Blasi, branch manager of U.S. Bank Luxembourg, “Everything about bundling services is less cumbersome for the client. If I have a question, I’m able to go to my FA or TA colleague and get what I need, because we’re sitting meters away from each other here in Luxembourg. And this is a much less client-intrusive way of accessing the information I need to perform my duties.”
Different service providers have different fund accounting and transfer agency systems, so using multiple providers often means receiving output in a variety of formats. It often takes a fair amount of effort to normalize data from different formats and channels, then standardize and reformat it all per regulatory (or other) reporting parameters.
Even on the most basic level, differences in something as minor as currency codes, for example, can require an enormous amount time and energy to make uniform. Then as you may have guessed, the cost of normalizing and reformatting them gets passed along to the client. By contrast, a single provider will naturally process all the daily values in the same format – eliminating the need for costly data normalization efforts.
“At U.S. Bank, all our teams are working within the same accounting systems – whether they’re accessing them from Luxembourg, Ireland, the United States or elsewhere – so the output data is identical,” said Alan. “And beyond that, we are further integrated to regulatory, risk and financial reporting vendors such that they can deliver additional operational efficiencies.”
Only a small portion of business hours for U.S.-based clients overlaps with the Central European Time workday, which can create significant lags in response time. But by working with a single provider with a global footprint, the impacts of this issue can be reduced.
“At U.S. Bank, for example, we’ve built a framework where we’re able to handle necessary responsibilities in Luxembourg,” said Luigi. “But then we’re also able to outsource other operational tasks to service teams in the U.S. with due oversight conducted in Luxembourg. This gives U.S.-based clients the ability to interact with service teams in the same local time zone.”
Bundling services presents an excellent way for you to expand your current operating model – as well as your pre-existing service team in your time zone – into new jurisdictions with minimal impact to your existing processes. It demands fewer relationships than multi-provider options without compromising your service. It’s almost always more cost effective, and it offers a variety of other efficiencies as well. So if you have a Luxembourg-based fund or you’re considering one, this is definitely an approach worth exploring before you consider other options.
For more information on our Luxembourg fund servicing solutions, visit usbank.com/lu.
U.S. Bank Global Fund Services is a wholly owned subsidiary of U.S. Bank, N. A.
U.S. Bank Global Fund Services (Ireland) Limited is registered in Ireland, Company Number 413707. Registered Office at 24 - 26 City Quay, Dublin 2, Ireland. Directors: Eimear Cowhey, Ken Somerville, Brett Meili (USA), James Hutterer (USA), Hosni Shadid (USA). U.S. Bank Global Fund Services (Ireland) Limited is regulated by the Central Bank of Ireland.
U.S. Bank Global Fund Services (Guernsey) Limited is licensed under the Protection of Investors (Bailiwick of Guernsey) Law, 2020, as amended, by the Guernsey Financial Services Commission to conduct controlled investment business in the Bailiwick of Guernsey.
U.S. Bank Global Fund Services (Luxembourg) S.a.r.l. is registered in Luxembourg with RCS number B238278 and Registered Office: Floor 3, K2 Ballade, 4, rue Albert Borschette, L-1246 Luxembourg . U.S. Bank Global Fund Services (Luxembourg) S.a.r.l. is authorised and regulated by the Commission de Surveillance du Secteur Financier.
Elavon Financial Services DAC Luxembourg Branch (trading as U.S. Bank Depositary Services Luxembourg) is registered in Luxembourg with RCS number B244276 and Registered Office: Floor 3, K2 Ballade, 4, rue Albert Borschette, L-1246 Luxembourg, regulated and authorised by the Central Bank of Ireland (CBI) as well as by the Commission de Surveillance du Secteur Financier (CSSF). Details about the extent of our authorisation and regulation by the CBI and the CSSF are available from us on request.
Elavon Financial Services DAC, trading as U.S. Bank Depositary Services, is regulated by the Central Bank of Ireland and is registered in Ireland with the Companies Registration Office Reg. No. 418442. The registered office is Block F1, Cherrywood Business Park, Loughlinstown, Dublin 18, Ireland D18 W2X7.
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