Celent predicts remodelling of post-trade landscape
22 October 2015 Boston
Image: Shutterstock
Regulatory upheaval and new market initiatives are set to “fundamentally alter” the post-trade industry in Europe, according to a Celent report, commissioned by Nasdaq.
The report identified trends and challenged affecting central counterparties (CCPs) and central securities depositories (CSDs) globally, and predicted significant changes in the near future.
According to the report, post-crisis initiatives focusing on managing systemic risk have affected post-trade industry players, while more recent European authority initiatives such as Target2Securities (T2S), the central securities depository regulation and interoperability are likely to lead to more competition in the space.
However, the report also predicted that other markets around the world will also introduce more competition by allowing more international players to enter domestic markets.
Arin Ray, an analyst at Celent and co-author of the report, said: "At times there is a lack of clarity and co-ordination among regulators in different jurisdictions."
"This results in a lack of synchronisation and standardisation of some of the key regulations, making the task of responding to these changes more difficult."
CSDs are starting to develop new services and offerings, the report said, particularly in Europe, where failing to do so in the T2S environment could put them at risk.
At the same time, CCPs are evolving to support new asset classes and starting to enter new markets – particularly launching collateral management and optimisation services, the report suggested. This will drive more investment in to technology, but also an increase in the adoption of third-party products.
Co-author Anshuman Jaswal, also a Celent analyst, added: "The relevance of third party systems is rising as they allow CCPs and CSDs to meet their IT requirements more quickly and cheaply – particularly for tier-two and -three players who lack the wherewithal to build in-house capabilities."
Lars Ottersgård, executive vice president of market technology at Nasdaq, said: "In some cases, post-trade entities play a different and perhaps more important role in the global financial ecosystem - and with this comes great responsibility.”
“In this new world, everyone needs to be far more efficient with their use of capital, and CCPs and CSDs will be critical in helping the wider system achieve this. This is why increased competition is welcome and, indeed, vital, as it is driving the required innovation and investment in technology."
The report was based on analysis of 12 key markets throughout Europe, Asia and South America, and featured contributions from 17 industry participants.
The report identified trends and challenged affecting central counterparties (CCPs) and central securities depositories (CSDs) globally, and predicted significant changes in the near future.
According to the report, post-crisis initiatives focusing on managing systemic risk have affected post-trade industry players, while more recent European authority initiatives such as Target2Securities (T2S), the central securities depository regulation and interoperability are likely to lead to more competition in the space.
However, the report also predicted that other markets around the world will also introduce more competition by allowing more international players to enter domestic markets.
Arin Ray, an analyst at Celent and co-author of the report, said: "At times there is a lack of clarity and co-ordination among regulators in different jurisdictions."
"This results in a lack of synchronisation and standardisation of some of the key regulations, making the task of responding to these changes more difficult."
CSDs are starting to develop new services and offerings, the report said, particularly in Europe, where failing to do so in the T2S environment could put them at risk.
At the same time, CCPs are evolving to support new asset classes and starting to enter new markets – particularly launching collateral management and optimisation services, the report suggested. This will drive more investment in to technology, but also an increase in the adoption of third-party products.
Co-author Anshuman Jaswal, also a Celent analyst, added: "The relevance of third party systems is rising as they allow CCPs and CSDs to meet their IT requirements more quickly and cheaply – particularly for tier-two and -three players who lack the wherewithal to build in-house capabilities."
Lars Ottersgård, executive vice president of market technology at Nasdaq, said: "In some cases, post-trade entities play a different and perhaps more important role in the global financial ecosystem - and with this comes great responsibility.”
“In this new world, everyone needs to be far more efficient with their use of capital, and CCPs and CSDs will be critical in helping the wider system achieve this. This is why increased competition is welcome and, indeed, vital, as it is driving the required innovation and investment in technology."
The report was based on analysis of 12 key markets throughout Europe, Asia and South America, and featured contributions from 17 industry participants.
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