Snippets from Sibos Wednesday September 18th 2013
Paul Taylor, Director of Matching at SWIFT talks to ISS MAG
ISS MAG: SWIFT has announced a threefold increase in the number of brokers using its Global
Electronic Trade Confirmation (GETC) solution for the automation of allocation and confirmation. Does
this mean there?s a tendency amongst buy side firms to favour local matching over central?
?So we?ve gone from 6-8 clients at the beginning of the year, we?re now at 52, so nearly reaching a tenfold
increase now over the course of this year which is really positive, obviously from the perspective of the
community. I think the more interesting stat is that with the clients that we have, we are actually covering
on average 85% of people?s tradeflow, which is a good figure for us. Whether that indicates that people
are keener on local versus central matching, I think it really does come down to how people want their
operational workflow to work but whichever way you look at it, that?s a good growth.
ISS MAG: Forthcoming regulation - such as CSD-R is expected to seek mandatory electronic
confirmation of all trades. How is SWIFT helping its users to ready themselves for this?
?So CSDR is the regulation that seeks to harmonise settlement practices across Europe. It?s interesting
because harmonization means you need to have a certain element of community adoption or innovation
in order to get total community capital. Our post-trade survey is showing that people are still only
managing to achieve 40-60% affirmation or confirmation across asset class not just securities. And I
would expect to see that as the time period progresses with regards to T2 settlement that these
percentages start to increase?.
ISS MAG: Do you think there?s a demand in the marketplace for an alternative solution for trade
confirmation matching amongst the broker community?
?I think there is, I think this is interesting from the sell side perspective. From our survey we found that the
buy side on average are using between 1 and 2 systems for confirmation, affirmation. Whereas the sell
side are using 3 to 4?.so I would say there is space for the 3 that are there at the moment, I wouldn?t say
there is space for a fourth?.
SGSS - Bruno Prigent, Massimo Cotella, Eric de Nexon talk to ISS MAG about changes in CSD's in
the near future.
What changes are we likely to see in the CSD space as T2S looms? Will there be consolidation? Are
custodians likely to become CSDs?
I think we have to take into account 2 initiatives, not just T2S but also the CSD regulation because I think
the double panorama is going to dramatically change. It will take a long time and I think we will go step
by step to consolidation but for a while I think we will go through more fragmentation?why? For different
reasons. Firstly because some global custodians are considering becoming a CSD so we have new
With CSD regulation they will be allowed to provide banking services and with T2S they have the ability to
become an original provider and to offer an access to the different CSD?s, for the different securities
DATE OF ISSUE: 18th
issued in other CSD?s to their client, becoming one single entry point for Europe. So they are going to go
out into the value chain, providing more and more services corresponding to the ones that are currently
provided by the intermediaries and global custodians. So are they becoming global custodians, the
functioning between intermediaries and global custodians is becoming more and more blurred. And
some global custodians will also consider, in order to compete on the same level playing field as the
CSD?s will also consider becoming a CSD?.
Matthew Brown, Securities & Fund Services Head - Middle East & Africa at Citi talks about future trends
in Africa and the Middle East
ISS MAG ? Will we see more consolidation in Africa?
?I think in terms of the service provider landscape in Africa, we have a small number of very dominant
local banks ? So in South Africa you have ABSA, Standard, Maitland. And then you have a small number
of pan-regional players so there you have Standard Bank, Standard Chartered, ourselves. And then you
see others like Zenith, around the edges in some areas So my sense is that because Africa is
predominantly an emerging continent? it means that the cost of doing business there under the new
regulatory environment is only going to increase. So if the local banks want to attract the global
investment , they?re going to have to invest the money and bring themselves up to global levels. And that
in my mind is going to be one of the trigger points for the local and regional banks to say ?well as the
wallet for the local investors, it?s probably only going to grow relatively slowly over the next 5-10 years so
you really are going to need to attract global companies as customers?. The global players continue to
see Africa as a long-term player?
ISS MAG: Please tell us about the effect of political risk in the ME?
?I think the Middle East is going through a very exciting time. I think sitting here in Dubai, I think it?s the
first time that Sibos has been to this part of the world, which is a fantastic recognition for where the UAE
is? Dubai is a place people can come and do business. The global banks are here, the accounting firms
are here, the lawyers are here and in a way it?s a gateway to the rest of the middle east and North Africa
and the fact that you have political stability in the UAE only strengthens it? The fact that this area is so
stable, positions it very well?.
?To me Qatar is also going to play a very important part in the Middle East strategy? Qatar will ultimately
differentiate itself from Dubai and ultimately will end up going down the asset management route rather
than the banking route? I kind of see Qatar and Dubai as being similar to Singapore and Hong Kong,
you know they both have very specific roles to play in the Asia economies an the same is going to be true
?When we go out and talk to customers and investors, many of them have been in this part of the world
for a very long time. So if you think about a very sophisticated US pension fund or a very sophisticated
European pension fund, chances are they?ve got an asset allocation in the Middle East and they?ve been
here for 10-15 years and they?re here for the long haul. So you don?t really get flippancy of money
coming in and out?.
ISITC - Chair Jan E. Snitzer gives us an update on ISITC US
?There?s been a lot going on in the spring and summer and into the fall in our working groups.. ISO20022
is a big focus, especially for the Corporate Actions working group, they are very involved, they have
weekly meetings and DTCC participates where they talk about the practical aspects of implementing the
ISO 20022 and so that?s been a big focus. The Corporate Actions working group is really in favor of
moving ahead with 20022, across the board with other firms so that?s exciting, that there are actual
initiatives to implement.
The other big focus is the regulatory working group. They have weekly calls and the big focus areas, as
you would expect are LEI, CC US, FATCA and Foreign Transaction Tax. I think one of the big challenges
is the moving target of regulations. How can you really implement and expect to get some benefit when
you don?t really know what all the details are yet'.
Detlef Braun, Senior Consultant, SmartStream talks to ISS MAG about cash management under
'Smartstream?s cash management solution ? ?supports the cash management of the daily cycle, from the
beginning to the end. Basel has issued new requirements on liquidity management and we thought that
this is something we had better have a look at. Fortunately we have a customer in the UK who is
currently talking to us and giving his requirements because in London the authorities are a little ahead of
other authorities so we will do whatever is required to be Basel compliant with this customer first and this
will live in the middle of 2014.
Basel requires monitoring on liquidity management so at the moment we are gathering this information.
Information on cash flows that happen at this point in time in the accounts. We build up all the reports
Basel requires and of course you can do some stress testing which is also required? in addition our
customers told us that only reporting might not be sufficient because reporting is only to make the auditor
happy but in order to manage your liquidity correctly, you need to at any point in time, compare historical
data with what is actually happening on your account and you need to come up with stricter limits that can
set off alarms and then you need to try to do something. To do something, in the first place you need to
have a view on what is your available liquidity in cash, in highly liquid assets for example so you need to
have a dashboard that shows you all this. And in addition you might want to apply some payment flow
control because in a lack of liquidity, if somebody is not paying you, you might want to defer some
payments as well. Of course if you prevent liquidity going out, it saves you money so we will have a
liquidity management, payment flow control by mid 2014.
We are also talking to the customers about regulatory requirements. Many of them see it as a burden,
only a few of them see it as an opportunity to deliver additional services to their customers because
there?s always two sides of a coin, on is the agent that gets the information and the other delivers it and
delivering information. On delivering information at the moment there is some uncertainty in the market
right now because a lot of banks are not able to deliver this information'.