Emx, the industry owned electronic messaging platform, could cost some investment houses up to £400,...
Emx, the industry owned electronic messaging platform, could cost some investment houses up to £400,000 to properly connect to the system, writes Mohamed Ali Bernat.
While the system is to be made free to intermediaries in January, in a bid to boost its traffic levels, its incompatibility with the administration system of some product providers is increasing the overall cost of using Emx.
The client data portion of Rufus, the system used by some 20% of the UK's investment houses, including Chase Fleming, Invesco, Merrill Lynch and Scottish Widows, is not directly compatible with Emx as a straight-through service. This means that information being transmitted is not being integrated into provider's systems and must be re-keyed, increasing the potential for errors. This only impacts on transactions and not on valuations which pass through the system.
In order conduct straight through purchases, fund managers need to buy interfacing software or pay for third party administration. The Bank of New York (BoNY), which developed Rufus, also provides interfacing software, called Global Transaction Server, and Gordon Lindsay, executive vice president at BoNY, said this software allows Rufus to interact with Emx but it must be bought separately. Lindsay is set to become a director at Emx. There are alternative interfaces available. The cost of the connecting software is estimated at £400,000.
Traffic on Emx was last reported as 3,000 transactions in total from launch to mid-September, and one company reported it had only completed around four transactions since the launch.
Due to the low take up of the system, Emxco has had to ask for additional funding from Autif members. In addition to the extra costs these groups are having to front up to connect to the system, Emxco is also looking to raise £6m in a rights issue for additional operating capital. It is looking for Autif members to invest around £300,000 each.
Companies which take up their options on the rights issue will get a 20% discount on shares, although members must signal their intent to take up the option by 24 November.
In January 2000 members were asked to contribute an extra £75,000 each to get the system off the ground for its launch date.
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