The intelligent core system is one of VIAC’s special features and is partly responsible for the extremely attractive fees. In the weekly rebalancing, all trading orders of all customers are first combined and, as far as possible, settled internally. In technical jargon, one speaks of “pooling” and “netting”. The resulting cost advantages are then passed on to customers in the form of low fees.
The following example explains the mechanism and the advantages of pooling and netting:
Max, Erika and Lisa all have their Pillar 3a at VIAC. Automatic monitoring or rebalancing now results in the following orders: Max and Erika are to reduce their position for Swiss equities by CHF 30 and CHF 20 respectively, while Lisa is to increase their position for Swiss equities by CHF 100. At this point, pooling means that all orders are aggregated in each direction (purchase or sale). A sale order of CHF 50 (30 from Max and 20 from Erika) and a purchase order of CHF 100 (100 from Lisa) are thus created. Netting now means that sales and purchase orders are settled internally first. In this example, Max and Erika would thus transfer their Swiss equities positions of CHF 30 and CHF 20 respectively directly to Lisa. Lisa has already received CHF 50 for her Swiss equities position without a trading order. Only the remaining amount (Lisa needs another CHF 50 in Swiss equities) is now sent externally as a trading order.
Pooling and netting means that both trading directions (purchase and sale) are aggregated and offset and only the difference is effectively traded. This results in two major cost advantages for VIAC customers:
- Pooling and netting reduce trading orders, as only one buy or sell order is carried out for each position. VIAC passes on the resulting savings in transaction costs to its customers in the form of a low administration fee.
- In addition to transaction costs, trading orders cause further costs in the form of bid/ask spreads, stamp taxes or foreign currency surcharges in the case of currency exchange. These costs depend directly on the amount traded. Let’s assume they are 1% in the above example. Without netting, the sales order of CHF 50 costs CHF 0.5 (Max and Erika pay CHF 0.3 and 0.2 respectively). The purchase order over 100 CHF costs 1 CHF (Lisa pays 1 CHF). Total costs are therefore 1.5 CHF. As a result of netting, only the difference is effectively traded (CHF 50), which means that only CHF 0.5 is incurred. Netting thus reduces trading costs by two thirds from 1.5 to 0.5 CHF. In other words, in the above example, the individual customer no longer pays 1% but only 0.33% of the traded CHF amount (max. pays 0.1 CHF instead of 0.3 etc.). VIAC fully passes on this cost advantage to the customer. Costs arising from these bid/ask spreads, stamp duty or foreign currency surcharges can be completely eliminated with identical purchase and sales volumes. This means that VIAC customers benefit from the intelligent system on several levels.