[ T H O U G H T L E A D E R S H I P | S I X ]
Why financial market infrastructures must be at the heart of increased market connectivity
It ’ s hard to remember a Sibos where connectedness of markets was not a central theme of the annual blue ribboned event of the securities services industry . The growth of markets globally is , in large part , a result of greater economic opportunity in markets beyond the domestic , facilitated by connectivity between markets and market participants . As we come together once again to discuss the pressing themes for our industry , there are a number of challenges and opportunities in securities services where greater connectivity must be prioritised , with the financial market infrastructures ( FMI ) playing a central role .
European settlement Since Sibos 2023 , we have witnessed a huge shift in the securities landscape . The much-anticipated move to T + 1 settlement in the United States , together with other countries , has come and gone . Despite all the warnings , the transition appears to have gone smoothly . Now everyone is looking at the move to T + 1 in Europe . The challenge is , aligning settlement will not be so simple . We have multiple market structures , multiple currencies and increasing regulatory fragmentation , following the UK ’ s departure from the European Union . Alignment between the main three market regions of Europe – the EU , Switzerland and the UK – is a must in order to create harmony in
Javier Hernani , head of securities services at SIX , stresses the need for greater connectivity within the securities services ecosystem , at a time when new technologies and innovations are changing the status quo .
European markets . To achieve this , we must see greater connectivity between the different markets , reducing the frictions to trade and settle across the European continent . Local market infrastructures are vital to accompany financial institutions in their quest for competitiveness in a globalised economy , but building bridges between these pillars is crucial . But it is not a question of a post-trade monopoly , it must be a network of connected infrastructures .
Going global Looking beyond Europe , there is a lot to be excited about . Despite some structural challenges , the interconnectivity of markets and capital is becoming deeper , aided by the growth in assets in emerging markets and investment from the APAC investors in markets around the world . While the desire of investors to seek new opportunities elsewhere is what drives the movement of capital between regions , it is the market infrastructures that make it a reality . We have seen this very recently with growing interest from the APAC region in the custody and market access services provided by SIX . For example , SIX was able to support many Asian market participants navigate the move to T + 1 providing them with connectivity to US markets and supporting core asset servicing functions , such as corporate actions processing , in the new T + 1 timeframe . As global economic conditions , the regulatory and liquidity landscape fluctuates , market participants around the world need access to far flung markets with high quality service to mitigate the potential pitfalls .
Bridging traditional and new The definition of connectedness is changing , as technology evolves at a rapid pace . As is clear at this year ’ s
40 Global Custodian Fall 2024