On the first day of SIBOS here in cold Amsterdam, I attended the market structures keynote and panel session chaired by Chris Skinner, CEO of Balatro. The session opened amicably with Alan Cameron of BNP Paribas exploring the impacts of the Code of Conduct and T2S initiative on the pan-European Settlement and Clearing landscape. All-in-all, he concluded that the markets are silo’ed and need to change. Either the markets consolidate into one global entity or that they interoperate with one another. His analogy for the prescription for change was that of a doctor presenting three methods for weight loss to a patient.
• Option 1: Go on diet (harmonization via baby steps).
• Option 2: Exercise (harmonization via interoperability).
• Option 3: Liposuction: (harmonization by regulation e.g. T2S). He concluded that all three were needed.
Before you say, “Where is this going?” I’m going to say the above describes eerily the silo’ed infrastructures found in many large FS firms. Despite banks’ greater focus on efficiency, there remain barriers to consolidation for many reasons such as interoperability and regulations. As we have seen here at Platform Computing, when firms finally move to a shared pool of resources, they gain economy of scales and IT agility. And like in the Clearing and Settlement space, the way to a shared service operation will likely be due to a combination of diet, exercise, and nip-tuck. More on that tomorrow.
By Jeff Hong, CFA
Director of Financial Services Industry Marketing
A New Chapter In My Life; Google
1 month ago