We interview Paolo Bucci, who presents Euroclear: the evolution of MFEX by Euroclear
2 NOV, 2023
MFEX by Euroclear, a global digital fund distribution platform acquired in 2021 by the Euroclear Group, is about to embark on an exciting journey of rebranding and integration with its parent company. In this process, it will emerge as Euroclear, an open architecture market infrastructure with the capability to accommodate a variety of vertically specialized entities.
Starting today, Euroclear already offers investors a wide range of products, including mutual funds, ETFs, FIA, private capital, all delivered through an efficient single solution that serves as a bulwark for investors. In this interview, Paolo Bucci, Country Head Italy of Euroclear, shares insights and perspectives on the ongoing transformation and how this synergy enriches the investment ecosystem.
What motivated the decision to initiate a rebranding and integration process with the parent company?
The acquisition of MFEX Group, a global digital fund distribution platform, by the Euroclear Group, a market infrastructure with over 3.1 trillion in Assets Under Administration today, was carefully planned and executed with conviction in 2021, as the complementarity between the two entities would produce significant added value through income synergies and expansion of customer service offerings.
The central role historically held by Euroclear and continuing in the global financial ecosystem, following the completion of the MFEX Group acquisition, logically initiated a rebranding process that allowed us to present ourselves as a cohesive entity, an open architecture that encompasses everything related to investment in financial instruments and post-trading services: from equities, to bonds, mutual funds, alternative funds, ETFs, and the private market.
What specific changes can we expect to see in MFEX as it further integrates with Euroclear?
It's not about substantial changes but offering a multitude of services through a single access point. Euroclear caters to institutional clients through a One-Stop "Fund" – Shop Solution platform, which we like to refer to as a fund supermarket. The services offered can be purchased individually, choosing different investment strategies (not just funds but also ETFs and Private Market, for example) or the type of domicile, all through a single access channel.
Could you describe Euroclear's vision as an open architecture market infrastructure?
We believe it is essential to emphasize this aspect because it is the core of Euroclear's vision. The underlying idea of our strategy was to integrate the fund trading part within the group, with the intention to generate and manage everything related to investment in financial instruments and post-trading services through an open architecture. More than 2,500 distributors and 3,000 product houses, a transparent and independent structure that does not penalize any of the parties involved, allowing the end customer to have access to the broadest and most comprehensive offering possible.
What advantages will this new configuration offer to investors and specialized entities compared to the previous structure?
The advantages are easily identifiable: not only greater functionality in accessing services but also a reduction in costs. Today, it is advisable for scalability and cost efficiency to have fewer providers to interface with, integrating services or focusing on a provider that can offer the most services together.
What will the investor's experience be when using the Euroclear platform?
Euroclear platforms offer End-To-End technology fully developed for the institutional investor market. For this type of investor, the benefits of trading funds through Euroclear can be summarized as safety, efficiency, proximity to the customer, access to a digital database, and an AML/KYC solution powered by over 1200 funds data points. Regulated by the CSDR directive and boasting an AA rating, we can provide our clients with the highest level of security at every stage of the transaction.
What role will mutual funds, ETFs, and other product categories play in Euroclear's comprehensive offering?
In addition to services related to the world of funds, Euroclear provides access to the widest range of multi-asset products in a large ecosystem of participants: 250,000 funds in 52 jurisdictions, including mutual funds, hedge funds, ETFs, and private markets, providing direct access to 3,000 product houses and a vast network of 2,000 distributors worldwide. Euroclear's offering stands out as a fully integrated one-stop-shop solution within a market infrastructure.
How will Euroclear ensure efficiency in offering products, given the diversity of options they plan to include?
To maintain a high level of professionalism in the service offered to investors, the Euroclear Group's strategy in recent years has been to acquire expertise in the market, internalizing new offerings through the capabilities of third parties and then incorporating them into the group. By doing so, significant internal strengthening was achieved without compromising the value of the diverse product offerings. This approach has allowed Euroclear to leverage the skills of experts in various services that are now available through the Euroclear platform.
This was the case with MFEX, which had a broad fund distribution network complementary to Euroclear's post-trade experience in the investment fund sector, as well as other companies like Goji, a cutting-edge fintech specializing in private market services that enriched the Euroclear Group's capabilities in the private equity space.
What will be Euroclear's approach to providing ethical and sustainable investment products to investors?
To offer ethical and sustainable products, it is essential to access ESG assessment and reporting services that help identify the greenest and most responsible instruments. To provide this opportunity to its clients, among the key sustainability initiatives, Euroclear has partnered with Greenomy, a digital ESG reporting solutions platform that allows institutional investors, asset managers, private banks, and wealth managers to access ESG reporting services for all the funds available on the platform, in compliance with the European ESG Template, all through a single portal.
How will Euroclear address regulations and compliance requirements in this new context?
To support and enable a sustainable market, Euroclear has initiated an internal journey to limit environmental impact, provide a fair and inclusive workplace, and conduct business ethically and responsibly. To achieve this, the company worked over the past year to strengthen its governance structure, engage with key stakeholders to identify sustainability KPIs, and collaborate with external partners to ensure it is well-positioned to address a rapidly evolving future. To track all milestones reached and upcoming objectives, the company has produced a Sustainability Report.
