How to succeed in the new post-trade services landscape: Reduce risks, cut costs and get closer to clients

Abstract

This paper contains an analysis of recent developments in the European post-trade landscape for securities. It focuses on two broad themes and the consequences they will have for market participants and institutions offering support services: efforts by regulators and industry bodies to overcome the barriers to harmonisation detailed in the 2001 report from the Giovannini Group of financial experts and the implementation of a harmonised settlement system in the form of the Target2-Securities initiative, and the fallout from the financial crisis and subsequent global economic downturn. The paper argues that — thanks to economic and regulatory imperatives — both of these developments will lead to a growing trend away from institutions developing in-house administration capability and towards the outsourcing of commoditised back-office services and processes to specialist institutions where both scale and efficiency models can be leveraged.