Blue Sky Asset Management, a structured investment specialist, is offering clarification and reassurance to investors and advisers following the Financial Services Authority’s move to f
Blue Sky Asset Management, a structured investment specialist, is offering clarification and reassurance to investors and advisers following the Financial Services Authority’s move to force Keydata Investment Services into administration.
Blue Sky says it does not believe the insolvency and administration of Keydata will lead to any loss for investors – a view already intimated by administrators PricewaterhouseCoopers. Blue Sky expects a very swift resolution to be sought by PwC with regard to the ongoing account management services provided by Keydata.
While all Blue Sky plans are administered through Keydata, client assets are held through Keydata Product Nominees, a non-trading and separate corporate entity.
Blue Sky’s understanding is that Keydata Product Nominees cannot become insolvent, as it has no liabilities, staff costs, cash flow or trading activity. It is not dependent on the continued solvency of Keydata Investment Services, as these companies are separate in every respect.
Client assets held within the nominee company are completely ring-fenced from Keydata Investment Services and are not at risk from its solvency.
Blue Sky says the risk to capital for investors is not with Keydata, but from the solvency of the counterparties providing the assets – the major investment banks that provide the financial securities which deliver the features of any plan.
Chris Taylor, chief executive at Blue Sky Asset Management, says: ‘In response to the news that Keydata Investment Services Limited has been placed in administration, following an application to the Royal Courts of Justice, by the FSA, on the grounds that KIS is insolvent, we have provided a swift input to advisers, and investors, in the absence of further details being made available by either KIS or the appointed administrators, PwC. We have been surprised at the lack of detail and pro-active input provided by either company so far.
‘The bottom line is that based on our working knowledge of the account management process involved in structured investments we do not believe client’s investments are at risk in the current situation – as it is the solvency of the counterparties that provide the assets that back structured investment plans that is the critical factor.
‘Clearly there is now a question as to how existing KIS plans will be administered, if the parent company is insolvent but speculation about risks to investors’ cash is ill-informed. We would expect an extremely swift clarification of the facts, and the resolution of the ongoing account management issues, to be achievable and sought by all parties.’
