Sunday, June 19, 2011
Current Status And Challenges of STP and Asset Managers Part.II
The new drivers of STP - the regulatory and standardization work at European level:
The Giovannini Report in 2003 pointed to weaknesses of the RL at European level concerning cross-border transactions. Regulatory works to address them are underway. They will lead to harmonization of cycles RL (and therefore a shortening of RL in some places), and impose a uniform technique, the different tax and legal depositories (CSD) Europe.
MiFID requires the tendering systems RL Europe, in the fall of 2007. The current model of a settlement made systematically at the CSD in the country of the title, lived. If they want to benefit from the introduction of competition, the players in the securities business (especially the trustees) will have to upset their traditional organization into streams.
Finally, Target 2 Securities project proposes the establishment of a European central depository, in 2012. Current European CSDs will have to focus primarily on the functions of overall conservation (settlement being provided by the system TS2), where they will find themselves in competition with the traditional custodians.
In other words, industrialization goes into high gear. For asset managers, the challenge is twofold: make the most of the opening to competition, and ensure the levels of STP always higher.
Set up middle office function common to different managements (conventional management, alternative investments) and various subsidiaries (foreign, for example) are, for large asset managers, an opportunity to reduce costs and increase operational efficiency. It is also a way to refocus the subsidiaries of their management activities.
Finally, some will choose outsourcing middle-office function. Bet that the trustees, in competition with the CSD in the field of conservation, will benefit from their proximity to the asset managers to develop the services of this type.