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June confirms record six months for equity fund inflows - Industry roundup: 5 July

June confirms record six months for equity fund inflows as investors focus on rate cuts

UK investors added £1.72bn to their equity fund holdings in June, according to the latest Fund Flow Index from Calastone. Including June, five of the fifteen best months on Calastone’s record have been in 2024 alone. Indeed, the June figures extended a remarkably strong few months of inflows.

In the first half of 2024, investors added £11.39bn to their holdings, the best six months for equity funds on Calastone’s ten-year record. In the first half of the year, North American and global funds absorbed £7.80bn and £7.58bn, respectively, though this was offset by a £3.75bn outflow from UK-focused funds. European and emerging market funds also did well, while income funds suffered outflows.

Global equity funds were June’s most popular category, scooping up a net £1.36bn, while European equities absorbed a net £714m. Elsewhere, emerging markets saw inflows return after two months of net selling – investors added £269m in June, almost entirely favouring global emerging market funds. The most significant change was in North America. After breaking several records already this year as investor cash poured into the sector at breakneck speed, inflows completely dried up in June. Investors withdrew £0.6m from North American equity funds during the month despite the ongoing strong performance of the US equity market.

Meanwhile, although the UK stock market dropped from its record highs in May, net outflows slowed during the month. Investors cashed in £522m of their UK-focused equity fund holdings, making it the least bad month in 2024. Outflows slowed during the month, too – the second half of June saw significantly less selling than the first half.

The ESG category cuts across regional classifications. ESG funds had recently enjoyed their best few months since 2021 after a protracted spell of divestment – investors added £5.10bn between January and May thanks to strong buying of US ESG funds, which are heavily weighted to the big technology names like Microsoft and Nvidia. In June, however, investors – tipped into net selling of ESG funds for the first time since December, withdrawing £179m of cash from the sector. The evaporation of interest in US ESG funds in June meant ongoing outflows from UK-focused ESG funds in particular made the most negative contribution and helped pull the overall figure into net selling.

Among other asset classes, an interest rate cut from the ECB and optimism that cuts would soon follow in the UK and US meant a sharp drop in bond yields during the month. This brought capital gains for bond investors and would have pleased those that locked into the high yields available between the end of April and the end of May. Nevertheless, investors withdrew capital from bond funds for the second month in a row, pulling £471m from their holdings in June, and taking the two-month total to £1.11bn.

Property funds continued to shed investor capital – a net £48m left the sector in June. Meanwhile, money-market funds are again attracting significant inflows, despite the probability of interest rate cuts on the horizon. Investors added £247m in June – April 2024 was the only month since January 2023 to see outflows.


Disclosure framework and capital standard for banks’ cryptoasset exposures approved

The Basel Committee says it has reviewed the comments received on its consultations related to a disclosure framework for banks’ cryptoasset exposures and a set of targeted amendments to its cryptoasset standard published in December 2022.

It approved a finalised disclosure framework, which includes a standardised set of public tables and templates covering banks’ cryptoasset exposures. These disclosures aim to enhance information availability and support market discipline. The framework will be published later this month, with an implementation date of 1 January 2026.

The Committee also approved a set of targeted revisions to the cryptoasset prudential standard. These revisions aim to promote a consistent understanding of the standard, particularly regarding the criteria for stablecoins to receive a preferential “Group 1b” regulatory treatment. The updated standard will be published later this month, with an implementation date of 1 January 2026.

Members also discussed the prudential implications of banks as potential issuers of tokenised deposits and stablecoins. Members noted that the scale and magnitude of financial stability risks from such products depend in part on their specific structures and jurisdictional laws and regulations. Based on current market developments, these risks are broadly captured by the Basel Framework. The Committee will continue to monitor this area and other developments in the cryptoasset markets.


United Arab Emirates targets “zero bureaucracy” in the financial sector

The Central Bank of the United Arab Emirates (CBUAE) has launched its “Zero Bureaucracy” initiative in the financial sector, aligning with the vision and objectives of the UAE Government's wider programme “Zero Government Bureaucracy”. The initiative aims to take a significant step in government procedures, simplifying people’s lives and reducing unnecessary burdens on businesses and individuals in terms of time, effort, and resources.

The CBUAE, in cooperation with the Prime Minister’s Office, organised a workshop to discuss the mechanisms for implementing the Zero Government Bureaucracy programme. The programme aims to eliminate at least 2,000 government procedures, minimise procedure times by at least 50%, and remove all unnecessary processes and requirements. During the workshop, participants discussed several initiatives and plans aimed at eliminating bureaucracy by simplifying and reducing procedures, expediting service delivery, and innovating new patterns of government procedures. The objective of these initiatives and procedures is to enhance operational efficiency and improve the quality of services provided to customers and partners in the financial sector.

Additionally, the CBUAE Youth Council and Happiness Committee are actively facilitating dialogue between the CBUAE’s employees and various departments in order to share their viable ideas and proposals with the internal committee overseeing the Zero Government Bureaucracy programme, in line with the vision and organisational values of the CBUAE.

The CBUAE also issued a notice to all licensed financial institutions encouraging their participation in the programme by taking and discussing steps in a workshop that will be organised by the CBUAE, with the objective of simplifying and expediting procedures related to services provided to customers and business sector in the financial industry.


Deltec Bank joins Visa’s B2B cross-border payment network

Deltec Bank & Trust Limited has announced that it has joined Visa B2B Connect, a multilateral payment solution designed to enable faster and frictionless cross-border payments for its corporate clients, built upon Visa’s extensive global network.

Through its implementation of the payment network, the bank’s corporate and institutional clients should be able to achieve faster, more secure, and more efficient cross-border payments with near real-time visibility into payment statuses and the necessary reconciliation and compliance data.

“As entrepreneurs and enterprises strive to expand their global footprints, they truly value partners that offer simple and highly secure cross border transactions, along with solutions that help to improve their operational efficiencies,” said Odetta Morton, CEO of Deltec Bank. “We are proud to partner with Visa in removing hurdles that have previously existed in the payment journey, while providing a seamless and secure payments process for today’s global enterprises.”


AutoRek and J.P. Morgan aim to enhance insurance firms’ premium processing

AutoRek, an insurtech that streamlines premium processing operations within insurance firms, has announced that it has joined forces with J.P. Morgan Payments to help insurance firms overcome data complexities and present new market opportunities.

The AutoRek solution aims to bring order and efficiency to financial data flows from banking sources, to help clients overcome the challenges associated with cash allocation, matching and credit control. The pair say this complements existing solutions of J.P. Morgan Payments. 

This collaboration aims to unlock new market opportunities for insurance firms, helping them to overcome data challenges and provide a more connected and streamlined infrastructure.

“By working together, we will unlock many opportunities for insurance firms to streamline the premium receivables process,” commented Piers Williams, AutoRek Global Insurance Lead. “This will help them to increase efficiency, accelerate cash flow, reduce write-offs and enhance controls.”


Broadridge acquires CompSci to help clients with SEC filings

Broadridge Financial Solutions has acquired CompSci Resources, a provider of cloud-based financial technology software for the preparation and processing of SEC filings for public companies and funds.

CompSci’s technology platform Transform will be integrated with Broadridge’s regulatory filings and disclosure capabilities to provide public companies and funds with a suite of collaborative, web-based solutions designed to simplify and enhance SEC regulatory disclosure preparation, XBRL tagging and EDGAR filing. 

The CompSci web-based regulatory disclosure and filing platform enhances Broadridge’s portfolio of end-to-end governance and communication capabilities, which includes solutions for shareholder meetings and proxy, corporate governance and shareholder engagement, and stock transfer agency. The platform automates the disclosure preparation process, features AI-assisted XBRL tagging, and enables seamless collaboration among geographically dispersed work teams. Further, the technology allows the process to move from Word and Excel documents to web-enabled and self-serve methods. It can be leveraged to manage filings independently using a self-service approach or can be used as a hybrid solution with support from Broadridge’s expert service teams.


Paxos approved to offer digital payment token services in Singapore

Blockchain and tokenisation infrastructure platform Paxos has received full approval from the Monetary Authority of Singapore (MAS) for its Singapore entity, Paxos Digital Singapore Pte. Ltd. to offer digital payment token services as a Major Payments Institution. The approval enables Paxos to issue stablecoins in line with MAS’ upcoming stablecoin framework. 

With the approval, Singapore becomes the third market, alongside the US and UAE, that Paxos and its related entities are authorised to issue stablecoins. The firm says this shows its commitment to expanding access to regulated, secure stablecoins worldwide. This also highlights how stablecoin issuance and operation under prudential regulatory oversight is possible. 

One important aspect that provides users confidence in a stablecoin is having a trusted institutional-grade partner. In this regard, Paxos revealed it has selected DBS Bank as its primary banking partner for cash management and the custody of stablecoin reserves. 

“Stablecoins issued in accordance with standards set by a regulator like MAS – known for its rigorous regulatory standards – represent a significant step towards democratising access to commerce and financial services,” noted Walter Hessert, Head of Strategy at Paxos.

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