Challenging times for the post-trade industry: improving efficiency and achieving stability amidst growing complexity
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22 October 2015Arin Ray
The challenges facing the CCPs and CSDs are manifold. Not only are they having to adapt to the downstream effects of changes in the trading environment, they are also presented with unique challenges impacting their business and operating models. Celent just published a research study titled “Challenging Times for the Post-Trade Industry: Improving Efficiency and Achieving Stability Amidst Growing Complexity” analyzing the global, regional, and local developments impacting the CCPs and CSDs. The changing regulatory environment is the dominant force impacting post-trade industry players. Several key regulations such as Dodd-Frank, Basel III, CRD IV, MiFID II, EMIR, CSD Regulations, and AIFMD are having impact on the way CCPs and CSDs perform. At times there is a lack of clarity and co-ordination among regulators in different jurisdictions; this results in lack of synchronization and standardization of some of the key regulations, creating confusion and making the job of responding to the changes difficult for industry participants. In addition to regulatory changes, market structure related changes (such as T2S in Europe and shortening of settlement cycle across the world) are having significant impact on post-trade players. Though not traditionally very competitive, the post-trade industry is likely to become more competitive. Europe is leading the way in this regard, with CCP interoperability already in place and T2S and CSDR likely to do the same among the CSDs. Learning from the European example, other markets are considering introduction of competition in their CCP space by allowing international players in domestic markets. Post-trade players have been laggards compared to other parts of the capital market value chain when it comes to adoption of technology. Driven by regulatory and market forces, as well as emerging concerns around cybersecurity, they are now undergoing major reviews and upgrades in their technology and operations. We identified 12 key markets across the globe for this analysis including the US, UK, Germany, Czech Republic, Japan, Australia, Hong Kong, China, India, Brazil, Mexico, and Chile. This research is part of Celent’s ongoing coverage of the post-trade industry and was commissioned by Nasdaq , while Celent kept full editorial control. To complement Celent’s post-trade knowledge base from our existing and ongoing research, this research greatly benefitted from detailed discussions with representatives from 17 major industry participants representing different types and categories of players across the world. Find out more about the report at Celent or Nasdaq's website.