Bankers probe for more efficient custody & clearing platforms

Find out what HSBC’s Ian Banks and Standard Chartered’s Giles Elliot have to say about the challenge of having a system that embeds sufficient functionality in multi market implementations.

ABF: What is your outlook for your custody and clearing platforms this year? What issues are there in terms of implementation and catering to handle multi countries?

HSBC: Ian Banks, Head of HSBC Securities Services, Asia
The financial industry is seeing unprecedented change. We see the regulatory environment evolving, with an increased focus on investor protection and the overall accountability of service providers.

Clients’ needs are changing as a result of the new regulatory frameworks, as well as cost pressure coming to some extent from the increased market volatility and economic uncertainty. Both clients and custodians have been forced to evaluate their existing product and market portfolio, reviewing the commercial feasibility and if required starting the process of exiting low margin products and non-performing locations. As a second step, we are now seeing a much deeper review of the actual underlying operational structure.

Offshoring or outsourcing "post execution" processes, by for example a broker dealer, to allow a focus on one’s core competencies is becoming the trend. The engagement clients want to have with their custodian is moving away from being just a "processing agent" and towards becoming a partner or consultant wider expertise and deeper ties. Custodians will have to continuously invest in their systems and platforms to generate operational efficiency and scalability, integrate product and service delivery components and traverse the value chain from an end to end securities services perspective. This investment will also have to increasingly cater to the specific requirements of different sectors from a client perspective. Building more efficient linkages between global custody and sub custody, integration of global custody with markets and prime broker solutions will drive the investment spend and the evolution of technology architecture for securities services providers.

Most markets have their own challenges at the moment and these local changes ultimately impact the way we do business within the region and how we do business across multiple markets. Multi market implementations are being impacted and driven by local requirements, regulation and ongoing changes. The operational platforms will have to cater much more for all the different local requirements, again posing challenges to keep the overall infrastructure and technology platform streamlined, scalable and operationally cost efficient.

Standard Chartered: Giles Elliott, Global Head of Product Management, Investors & Intermediaries
In 2011 we implemented a new state of the art corporate actions platform across our Asian markets and in 2012 we will start to roll out our new settlements and reporting system. As we cover 30 markets across Asia, Africa and the Middle East, the challenge of having a system that embeds sufficient functionality to cover different market rules and market infrastructure is very real and we have built incredible knowledge and experience of how to address this over the past 10 years. On top of this, volumes can flex between markets and it is essential to have platforms that make shifting workload between local centres and central hubs as seamless as possible.