TISA Exchange Ltd (TeX)

TISA Exchange Contract Club Overview

The Tax Incentivised Savings Association (TISA), in collaboration with representatives of the financial services industry and assisted by Pinsent Masons LLP, has established TISA Exchange Limited (TeX), an industry ‘contract club’ that facilitates the electronic transfer and re-registration of assets.

The electronic transfer process is facilitated by the use of:

• a standard legal contract that manages the risks and liabilities associated with electronic asset transfer and re-registration. The standard legal contract has been produced and agreed by a Legal Working Group made up of representatives (legal and operational) from fund managers, service providers and platforms. This group took into account feedback provided by other interested parties, such as technology providers; and
• an industry-agreed Service Level Agreement (SLA). The SLA is the product of a cross-industry initiative to agree the standards and service levels for the electronic re-registration of assets.

One of the key objectives of the club is to support quick and compliant platform to platform re-registration using ISO 20022 messages, driven by the FSA’s requirement that all platforms must offer in specie re-registration by January 2013.

However, this is not the only objective of the club, and the business process and message set cover the transfer of any tax wrapper, as well as instructions relating to the transfer of cash: the contract club is relevant whatever is being transferred.

Further information on the contract club and the background to the project can be found at www.tisaexchange.co.uk

The “Contract Club”

Conceptually, the contract club is a way that asset managers and platforms can carry out electronic portfolio transfers without having to put in place numerous individual agreements between them.

Legally, the club is a not-for-profit organisation named TISA Exchange Limited (TeX). It has been set up as a company limited by guarantee (and not by shares). This means that club participants will be “members” of - rather than shareholders in – TeX. The Articles of Association provide that any assets of TeX on liquidation will be shared between those firms who are members on the date of dissolution of TeX.

We have used a corporate structure for the club because it provides a tried and tested governance framework, allowing club participants to be represented at membership and board level. The structure enables each member to participate in the management of the contract club (through its membership of TeX and/or through the directors nominated by its membership category) and ensure that the contract club is not run solely by, and for the benefit of, one section of the industry or larger players.

Also, using a corporate structure for the club allows the creation of a series of bilateral relationships:

• between TeX and each member; and
• between one member and each other member. This avoids the need to put in place hundreds of individual bilateral agreements between members, whilst allowing a member to take action directly against another member without TeX acting as middleman.

Finally, by using a company limited by guarantee, the members’ exposure to any liabilities of TeX is limited to £1.