Deutsche Bank launches asset segregation platform
Deutsche Bank’s global prime finance division has launched a hybrid custody version of prime brokerage, named DB Integrated Prime Custody.
Several large European clients have signed up for the new platform and hundreds of millions of euro value in securities have already been segregated.
Although the initial launch focus is on European-based clients, the US-based business already has a strong pipeline of large clients who have expressed interest in moving assets to the platform in early 2010.
The enhanced platform allows funds to hold unencumbered assets that were typically held within their prime brokerage in a separate custody account held at BNY Mellon. The new offering will also enable unencumbered assets to be held within Deutsche Bank’s separate custody division. Furthermore, Deutsche Bank is committed to an open architecture approach should clients have a preference for a particular custodian.
A key feature of the model is minimal change to existing operational, documentation and control processes. The operational burden is assumed by Deutsche Bank subject to daily oversight and control by the fund manager. Extensive investment has been made in the enhanced platform, associated technology and consolidated reporting portal.
Deutsche Bank has taken detailed advice from a wide variety of industry experts including major law firms such as Clifford Chance and German firm Hengeler Mueller, investors, managers, consultants and PricewaterhouseCoopers, the administrators of Lehman Brothers International (Europe). Furthermore, Deutsche Bank has worked with the PwC risk assurance group on a SAS70 Certification which includes an independent assessment of Deutsche Bank internal processes and controls.
Anthony Byrne, Deutsche Bank co-head of European prime finance and global head of securities lending, says: “We are proud to be taking a leading stance in such a rapidly changing space. Investors and industry consultants are particularly pleased that managers are not being forced to deal with an affiliated special purpose custody vehicle or an internal custody division. The almost identical look and feel of the integrated operations and reporting functionality has also been very well received.”
Art Certosimo (pictured), senior executive vice president and head of alternative investment services and broker dealer services at BNY Mellon, says: “We are delighted to be working closely with Deutsche Bank on this impressive new platform. This model is clearly a major step forward in the evolution of the prime brokerage industry and BNY Mellon are very pleased to have contributed to its development. Managers and advisers have been particularly struck by the simplicity and operational elegance of the structure as well as the strong protection it affords.”
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