‘Amazonisation’ of post-trade is necessary
21 May 2019 London
Image: Shutterstock
The ‘Amazonisation’ of post-trade is necessary for innovation and must be built on uniform regulations, according to a new Deutsche Bank paper.
Deutsche Bank indicated that without an Amazonian-style platform–that has a standardised interface, standardised rules as well as laws and practices–it is very likely that the status quo of post-trade will remain.
The paper suggested that an ideal platform in post-trade would include a “boundary-less product suite, efficient distribution, a user-friendly app, payment and delivery standard settlement instructions and a chatbot for customer queries”.
Deutsche Bank suggested that traditional products such as asset servicing, trading, foreign currency exchange, clearing, settlement, cash management and safe-keeping could sit side-by-side and could be accessed via an app or an application programming interface.
It indicated that further possibilities for an ‘Amazonisation’ of post-trade are presented in the context of the data revolution–namely in transparency, risk measurement and management, behaviour and efficiency benchmarking.
It said that these services could “allow clients to plug and play solutions such as data analytics, liquidity, collateral management, inventory management and asset optimisation including lending and borrowing”.
Deutsche Bank highlighted that post-trade has already achieved progress through T2S and the ongoing Eurosystem harmonisation agenda, as well as through changes in regulation since the financial crisis.
However, Deutsche Bank cited that challenges of cost remain for post-trade institutions while more political integration and technological innovation is still needed.
Deutsche Bank further noted that embracing competition and new roles are imperative and the European post-trade agenda, in particular, should “cater for more competition, not less, in
all shapes and forms”.
Deutsche Bank predicted that in the future, through this possible new infrastructure, custodians would evolve, and would also “become guardians of data and their modular products, performing a variant to their existing role”.
It concluded: “Technology has always been at the core of the securities services
industry. It has been used to achieve standardisation, harmonisation, regulatory compliance, operational efficiency, and develop cost-effective solutions for clients. However, the time for the industry to focus on old-fashioned discipline and operational efficiency is now.”
“If the foundations are not in place and the barriers and threats not removed, the result will be a new version of the same. The largest challenges remain.”
Deutsche Bank indicated that without an Amazonian-style platform–that has a standardised interface, standardised rules as well as laws and practices–it is very likely that the status quo of post-trade will remain.
The paper suggested that an ideal platform in post-trade would include a “boundary-less product suite, efficient distribution, a user-friendly app, payment and delivery standard settlement instructions and a chatbot for customer queries”.
Deutsche Bank suggested that traditional products such as asset servicing, trading, foreign currency exchange, clearing, settlement, cash management and safe-keeping could sit side-by-side and could be accessed via an app or an application programming interface.
It indicated that further possibilities for an ‘Amazonisation’ of post-trade are presented in the context of the data revolution–namely in transparency, risk measurement and management, behaviour and efficiency benchmarking.
It said that these services could “allow clients to plug and play solutions such as data analytics, liquidity, collateral management, inventory management and asset optimisation including lending and borrowing”.
Deutsche Bank highlighted that post-trade has already achieved progress through T2S and the ongoing Eurosystem harmonisation agenda, as well as through changes in regulation since the financial crisis.
However, Deutsche Bank cited that challenges of cost remain for post-trade institutions while more political integration and technological innovation is still needed.
Deutsche Bank further noted that embracing competition and new roles are imperative and the European post-trade agenda, in particular, should “cater for more competition, not less, in
all shapes and forms”.
Deutsche Bank predicted that in the future, through this possible new infrastructure, custodians would evolve, and would also “become guardians of data and their modular products, performing a variant to their existing role”.
It concluded: “Technology has always been at the core of the securities services
industry. It has been used to achieve standardisation, harmonisation, regulatory compliance, operational efficiency, and develop cost-effective solutions for clients. However, the time for the industry to focus on old-fashioned discipline and operational efficiency is now.”
“If the foundations are not in place and the barriers and threats not removed, the result will be a new version of the same. The largest challenges remain.”
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