Deutsche Boerse's withdrawal from regtech raises concerns
24 September 2020 London
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The significant contraction of the regulatory reporting service provider pool this year is expected to increase pricing and force clients to consolidate under a single provider to compensate, says Cappitech.
The warning follows news that Deutsche Boerse is set to become the second services provider to withdraw from the regtech market by selling its Regulatory Reporting Hub's suite to MarketAxess Trax.
The German exchange follows CME Group which began winding down its NEX Abide regulatory reporting business earlier this year.
“This has reduced the number of market players, with the inevitable effect of reduced competition in the short to medium term,” said Cappitech, which is itself a regulatory reporting service provider.
“It’s not unlikely that pricing for trade reporting will continue to increase as a result of this reduced competition,” the firm notes in a statement reacting to the MarketAxess/Deutsche Boerse deal."
As a result, Cappitech explained, firms may need to consolidate their trade reporting to single service providers to access the benefit of consistency and volumes and keep costs low.
“Using regtech vendors to improve and automate the process to reduce the total cost of ownership may be an appealing option,” Cappitech added.
Commenting on the transition of the Deutsche Boerse’s customers to MarketAxess, Cappitech speculated that the move will be “relatively smooth, particularly as they did not offer client customisation”.
Cappitech further suggests that other end-point players can now use this as an opportunity to increase their offering by providing services they don’t currently have, such as transaction reporting for the second Markets in Financial Instruments Directive transaction reporting.
The warning follows news that Deutsche Boerse is set to become the second services provider to withdraw from the regtech market by selling its Regulatory Reporting Hub's suite to MarketAxess Trax.
The German exchange follows CME Group which began winding down its NEX Abide regulatory reporting business earlier this year.
“This has reduced the number of market players, with the inevitable effect of reduced competition in the short to medium term,” said Cappitech, which is itself a regulatory reporting service provider.
“It’s not unlikely that pricing for trade reporting will continue to increase as a result of this reduced competition,” the firm notes in a statement reacting to the MarketAxess/Deutsche Boerse deal."
As a result, Cappitech explained, firms may need to consolidate their trade reporting to single service providers to access the benefit of consistency and volumes and keep costs low.
“Using regtech vendors to improve and automate the process to reduce the total cost of ownership may be an appealing option,” Cappitech added.
Commenting on the transition of the Deutsche Boerse’s customers to MarketAxess, Cappitech speculated that the move will be “relatively smooth, particularly as they did not offer client customisation”.
Cappitech further suggests that other end-point players can now use this as an opportunity to increase their offering by providing services they don’t currently have, such as transaction reporting for the second Markets in Financial Instruments Directive transaction reporting.
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