In the first edition of this newsletter shared in August, my colleague Chris Remondi talked about his personal dedication to delivering “excellence without exception”. I’m proud to say that we have once again delivered on this commitment through 2023, with an impressive client retention rate and a number of strategic additions to our roster of client relationships. 

I have the privilege, in my new role, to work directly with clients every day and to be part of the team which helps them realize their ambitions and plans. My relocation to Boston this summer also provides me the opportunity to spend even more time with our clients globally.

The opportunity to build mutually beneficial, long-lasting relationships based on trust is what makes this industry so special, and we are committed to earning that trust every day.

Working together we are partnering on exciting new projects such as supporting 80 new ETF launches this year, converting mutual funds to ETFs, and assisting our global alternatives asset manager clients in launching Luxembourg and Irish private markets products. We are also expanding our alternatives servicing capabilities to support democratized products such as the newly launched UK Long Term Asset Fund (LTAF) and the enhanced European Long Term Investment Fund 2.0 (ELTIF). 

We believe in investing through every economic cycle and our private structure allows us to do exactly that. It’s this approach that fuels continued innovation, such as the recent deployment of our new InfuseDX™ user experience, a completely new way for our clients to view, customize, and package their data.

So, as we prepare for 2024, we do so with confidence and a steadfast dedication to our clients and our business. Our exceptional team is the key to this momentum. In this season of gratitude and celebration, I want to thank all our teams, our clients, and industry colleagues for their continued support, as we look forward to a new and exciting year ahead.

Orla Foley
Principal, Global Head of Relationship Management for Investor Services
orla.foley@bbh.com
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Blog: BBH on T+1

In our new blog, we provide quick takes on the T+1 Settlement transition and insights from our conversations with clients, industry groups, consultants, and peers.

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What's Trending in the Industry?

Policy makers have their work cut out with new and revised regulations ahead. The SEC has continued its relentless output of proposals and rulemaking, with increasingly dissenting industry voices on the speed and scale of proposals.

  1. Division among T+1 engagement: May 2024 is fast approaching. There is division among firms’ level of preparation, with some well underway and others just coming to grips with the scope of the changes required. BBH remains heavily engaged to ensure robust client assessments across the entire trading workflow globally.
  2. Open call for feedback on ELTIF 2.0: Industry has made it clear that flexibility across investor liquidity parameters will be key for the success of ELTIF 2.0, as ESMA and Industry look to strike a balance.
  3. Sustainable Finance Disclosure Regulation (SFDR) Revisited: SFDR has become one of the most significant European policy changes in recent years. With ESG policies continuously evolving, regulators believe a reworking of SFDR might be warranted.

Adrian Whelan
Global Head of Market Intelligence
adrian.whelan@bbh.com
Connect on LinkedIn

A Look at Capital Markets:

  1. In the Securities Lending space, the SEC has finalized rule 10c-1 to impose mandatory reporting of securities lending transactions of U.S. securities. It’s the first of kind in the U.S.
  2. According to S&P Global, global revenue from securities lending is up 3% from 2022 on the back of strong demand for American and Asian equities, as well as corporate bonds.
  3. Major themes coming out of the Risk Management Association (RMA) Securities Finance & Collateral Management Conference included the U.S. proposed rule to finalize Basel III, potential benefits from the use of emerging technology (DLT, tokenization, AI), the need to recruit and promote diverse talent, and renewed interest in central clearing to reduce regulatory capital.

Tom Poppey
Head of Product Strategy, Securities Lending
thomas.poppey@bbh.com
Connect on LinkedIn

What's New at BBH?

BBH is investing in four key areas as we move into 2024 and beyond, aligned to our clients’ goals. Below are some notable developments over the last quarter. For further detail on these and our other ongoing investments, contact your BBH Relationship Manager.

1. Talent & Expertise

  • At the end of September, we had made significant progress towards our hiring goals for 2023, with an increase in overall headcount of 7%.
  • We hired 21% more employees this year vs. same period last year; with a 57% increase in mid-management hires vs. the same period last year.
  • Our 2023 training programs continued over the quarter with our technical and managerial programs recording high attendance across our Relationship Excellence and Service Delivery divisions. 
  • As part of our DEI programs, we launched a new partnership with McKinsey Connected Leadership Development to advance racial equity by investing in future leaders.

2. Supporting Our Clients' Product Innovation & Distribution

  • Alternatives: An internal deployment of a new operator data management application has allowed us to streamline and accelerate production deliverables including NAV packages. Continued enhancements to Infuse® Alternatives are driving high client activity in deal initiation, online reporting, and workflow management.
  • ETFs: Our teams continued to work on an initiative to automate the primary market ETF order placement process by developing FIX messaging capabilities within the APEX portal, which will allow Authorized Participants (AP’s) to deliver ETF orders to BBH via an automated, secure medium.
  • Transfer Agency: We added a new feature to Infuse® TA in Q3 to allow users to review information about related parties on an investor account, as well as displaying related KYC documents gathered. We continued to prepare for the rollout of new functionality allowing authorized persons/MLROs to approve new accounts (those with high-risk touch points) on Infuse® TA, replacing current email communication. Users will also be able to review KYC documents on Infuse® TA while assessing the account, helping them to make an informed decision.
  • Global Tax: We enhanced our tax withholding and information reporting capabilities to allow our financial institution clients to delegate withholding and reporting required by new U.S. tax rules, 1446(f), to BBH as Custodian. This enables our clients to hold PTP assets with BBH, leverage BBH’s withholding and reporting capabilities, provides transparency on all withholding lifecycles associated with 1446(f). We also published a list of known in-scope securities on Infuse® to assist clients in determining if a future sale could be subjected to a 10% withholding tax.
  • Fund Order & Custody: A bulk instruction and document upload functionality was deployed in our Fund WorldView® application in Q3 which allows clients to submit multiple investment account opening instructions at the same time and upload required documentation. Clients are now also able to sign up for email notifications related to the status of investment account openings as well as to provide comments and memos related to their instructions.

3. Building Resilient Operations For Our Clients and BBH

  • Continued Expansion of Artificial Intelligence and Machine Learning Capabilities: We continued to partner with all core product areas to deploy AI and ML across our core infrastructure. We integrated SmartCAP into our account opening process to allow account opening forms to be consumed and data extracted automatically, reducing manual intervention and data entry, to result in improved accuracy and reduce custody account opening times.
  • Custody: The DTCC Alert ‘future effective date’ functionality is now an available option in the BBH GC Direct client onboarding process. Clients can link their accounts to GC Direct in advance to efficiently manage their SSIs in Alert. This enhancement allows clients to review and confirm the available data from BBH prior to the effective date, rather than reviewing all their SSI data the day of conversion to GC Direct (important for T+1). We also updated the custody security master file to enable multiple SEDOL records in the same market with the same ISIN if the SEDOLs’ currencies differ, to increase STP on inbound trade instructions and better align custody and accounting position records.
  • Fund Services: With focus on cash settlements and bank loan processing, we continue to invest in automation within our Fund Accounting Platform, BBH STAR, to scale with business growth. We have also upgraded our Portfolio Compliance platform to the latest application version in a SaaS environment. This move improves the application performance and ensures batch scalability aligned with business growth.
  • Transfer Agency: Updates made to our Investor Onboarding and Reassessments platform (IOBR) including automation of distribution of account details post account opening, to enable faster time to market for investors.
  • T+1 Readiness: We continued to support our clients T+1 readiness through presenting simulation reports on their data trends to highlight potential risks in a shorter settlement cycle. The focus in Q3 has been on helping clients analyze current U.S. settled activity to indicate likely downstream liquidity impacts in their workflows.

4. Data Servicing and Optimization

  • InfuseDXTM: In Q3 we completed the first phase of deployment of our new data tool: Infuse DX™. Accessed via BBH Infuse®, this new data-centric user experience is a completely new way for clients to view, customize, and package their data, to enable faster and more informed decision making. Rolled out to all custody clients, more data sets will be added in the coming months. View our launch video.
  • Infuse®: New tile cloning and filtering features enable Infuse® users to personalize their dashboard by replicating tiles and then applying filters to display user defined aggregate metrics.
  • Infomediary®: We’ve continued to invest in and enhance our InfoSuite tools including continued progress on InfoAction® upgrades to improve the user experience, introduce actionable insights and customizable views, and enhance performance. The upgrades are set to be deployed to clients in Q1 2024.
  • T+1: We continue to work with clients to assess where Infomediary®, Data Services, and Business Transformation tools can help streamline operating models and adapt to the compressed settlement cycles associated with the upcoming move to T+1.

BBH Announcements

Some Recent Thought Leadership

More insights are available in our Insights Library.

  • Artificial intelligence connected to a network of icons: problem solving, decision making and productivity concept

    Talent and Tech: Creating the Differentiator of the Future

    As emerging technology levels the competitive playing field, the right blend of AI and human intelligence will help firms achieve effective innovation.
  • ""

    How T+1 Impacts the Global ETF Ecosystem

    A deep dive into the downstream impacts of T+1 on the ETF ecosystem and how participants should be preparing to support primary market activity.
  • World map with all states and their flags

    Shifts Across the Global Tax Landscape

    As the global tax landscape continues to evolve, let’s take a closer look at the major changes and developments impacting our industry.
  • ""

    Blog: BBH on T+1

    We break down the latest updates on the T+1 Settlement transition and provide insights from our conversations with clients, industry groups, consultants, and peers.
  • City of London office buildings at dawn

    U.K. Offshore Fund Regime News is a Big Positive for UCITS Funds

    In the immediate aftermath of Brexit, the continued access of UCITS funds to U.K. retail investors became a primary concern. While temporary measures were employed, the FCA said it would soon consult industry on a permanent solution.

Where You Can Find Us

Some key conferences over the next quarter:

Out and About

Our teams have been busy! Here they are at BBH Luxembourg's Annual Client Event, the ISITC Fall Forum in Baltimore, BBH Insights Exchange: Japan Investment Market In Focus Seminar, London, Sibos in Toronto, TradeTech FX Europe, and the RMA Securities Finance & Collateral Management Conference in Florida.

Brown Brothers Harriman & Co. (“BBH”) may be used to reference the company as a whole and/or its various subsidiaries generally. This material and any products or services may be issued or provided in multiple jurisdictions by duly authorized and regulated subsidiaries. This material is for general information and reference purposes only. This material may not be reproduced, copied or transmitted, or any of the content disclosed to third parties, without the permission of BBH. All trademarks and service marks included are the property of BBH or their respective owners. © Brown Brothers Harriman & Co. 2023. All rights reserved. IS-09482-2023-11-23

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