Snippets from Sibos Wednesday September 18th 2013

Snippets from Sibos Wednesday September 18th 2013Paul Taylor, Director of Matching at SWIFT talks to ISS MAGISS MAG: SWIFT has announced a threefold increase in the number of brokers using its GlobalElectronic Trade Confirmation (GETC) solution for the automation of allocation and confirmation. Doesthis 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 tenfoldincrease now over the course of this year which is really positive, obviously from the perspective of thecommunity. I think the more interesting stat is that with the clients that we have, we are actually coveringon average 85% of people?s tradeflow, which is a good figure for us. Whether that indicates that peopleare keener on local versus central matching, I think it really does come down to how people want theiroperational 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 electronicconfirmation 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 interestingbecause harmonization means you need to have a certain element of community adoption or innovationin order to get total community capital. Our post-trade survey is showing that people are still onlymanaging to achieve 40-60% affirmation or confirmation across asset class not just securities. And Iwould expect to see that as the time period progresses with regards to T2 settlement that thesepercentages start to increase?.ISS MAG: Do you think there?s a demand in the marketplace for an alternative solution for tradeconfirmation 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 thebuy side on average are using between 1 and 2 systems for confirmation, affirmation. Whereas the sellside are using 3 to 4?.so I would say there is space for the 3 that are there at the moment, I wouldn?t saythere is space for a fourth?.SGSS – Bruno Prigent, Massimo Cotella, Eric de Nexon talk to ISS MAG about changes in CSDs inthe near future.What changes are we likely to see in the CSD space as T2S looms? Will there be consolidation? Arecustodians likely to become CSDs?I think we have to take into account 2 initiatives, not just T2S but also the CSD regulation because I thinkthe double panorama is going to dramatically change. It will take a long time and I think we will go stepby step to consolidation but for a while I think we will go through more fragmentation?why? For differentreasons. Firstly because some global custodians are considering becoming a CSD so we have newCSD?s.With CSD regulation they will be allowed to provide banking services and with T2S they have the ability tobecome an original provider and to offer an access to the different CSD?s, for the different securitiesCLIENT: ISITCPUBLICATION: ISS-MagURL: www.iss-mag.comDATE OF ISSUE: 18thSeptember 2013issued in other CSD?s to their client, becoming one single entry point for Europe. So they are going to goout into the value chain, providing more and more services corresponding to the ones that are currentlyprovided by the intermediaries and global custodians. So are they becoming global custodians, thefunctioning between intermediaries and global custodians is becoming more and more blurred. Andsome global custodians will also consider, in order to compete on the same level playing field as theCSD?s will also consider becoming a CSD?.Matthew Brown, Securities & Fund Services Head – Middle East & Africa at Citi talks about future trendsin Africa and the Middle EastISS 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 dominantlocal banks ? So in South Africa you have ABSA, Standard, Maitland. And then you have a small numberof pan-regional players so there you have Standard Bank, Standard Chartered, ourselves. And then yousee others like Zenith, around the edges in some areas So my sense is that because Africa ispredominantly an emerging continent? it means that the cost of doing business there under the newregulatory environment is only going to increase. So if the local banks want to attract the globalinvestment , they?re going to have to invest the money and bring themselves up to global levels. And thatin my mind is going to be one of the trigger points for the local and regional banks to say ?well as thewallet for the local investors, it?s probably only going to grow relatively slowly over the next 5-10 years soyou really are going to need to attract global companies as customers?. The global players continue tosee 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 thefirst time that Sibos has been to this part of the world, which is a fantastic recognition for where the UAEis? Dubai is a place people can come and do business. The global banks are here, the accounting firmsare here, the lawyers are here and in a way it?s a gateway to the rest of the middle east and North Africaand the fact that you have political stability in the UAE only strengthens it? The fact that this area is sostable, positions it very well?.?To me Qatar is also going to play a very important part in the Middle East strategy? Qatar will ultimatelydifferentiate itself from Dubai and ultimately will end up going down the asset management route ratherthan 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 truehere?.?When we go out and talk to customers and investors, many of them have been in this part of the worldfor a very long time. So if you think about a very sophisticated US pension fund or a very sophisticatedEuropean pension fund, chances are they?ve got an asset allocation in the Middle East and they?ve beenhere for 10-15 years and they?re here for the long haul. So you don?t really get flippancy of moneycoming 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.. ISO20022is a big focus, especially for the Corporate Actions working group, they are very involved, they haveweekly meetings and DTCC participates where they talk about the practical aspects of implementing theISO 20022 and so that?s been a big focus. The Corporate Actions working group is really in favor ofmoving ahead with 20022, across the board with other firms so that?s exciting, that there are actualinitiatives to implement.The other big focus is the regulatory working group. They have weekly calls and the big focus areas, asyou would expect are LEI, CC US, FATCA and Foreign Transaction Tax. I think one of the big challengesis the moving target of regulations. How can you really implement and expect to get some benefit whenyou don?t really know what all the details are yet.Detlef Braun, Senior Consultant, SmartStream talks to ISS MAG about cash management underBasel III.Smartstream?s cash management solution ? ?supports the cash management of the daily cycle, from thebeginning to the end. Basel has issued new requirements on liquidity management and we thought thatthis is something we had better have a look at. Fortunately we have a customer in the UK who iscurrently talking to us and giving his requirements because in London the authorities are a little ahead ofother authorities so we will do whatever is required to be Basel compliant with this customer first and thiswill 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 reportsBasel requires and of course you can do some stress testing which is also required? in addition ourcustomers told us that only reporting might not be sufficient because reporting is only to make the auditorhappy but in order to manage your liquidity correctly, you need to at any point in time, compare historicaldata with what is actually happening on your account and you need to come up with stricter limits that canset off alarms and then you need to try to do something. To do something, in the first place you need tohave a view on what is your available liquidity in cash, in highly liquid assets for example so you need tohave a dashboard that shows you all this. And in addition you might want to apply some payment flowcontrol because in a lack of liquidity, if somebody is not paying you, you might want to defer somepayments as well. Of course if you prevent liquidity going out, it saves you money so we will have aliquidity 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 becausethere?s always two sides of a coin, on is the agent that gets the information and the other delivers it anddelivering information. On delivering information at the moment there is some uncertainty in the marketright now because a lot of banks are not able to deliver this information.http://www.iss-mag.com/news/snippets-from-sibos-wednesday-september-18th-2013‘”