[ I N D E P T H | S U B - C U S T O D Y ] consistency for their own clients ,” says Pemberton . “ Our job is to bring those clients closer to the market in terms of transparency , insights and connectivity to the local market infrastructures . What we strive to do is create that consistent client service across our entire proprietary network .”
Still a place for local market providers For Pemberton , a regional value proposition helps clients from a relationship and a leverage perspective , but also helps the provider understand their client ’ s growth ambitions . He rejects the assumption that the choice of a regional provider necessarily involves sacrificing local nuance .
“ The biggest clients tend to recognise that you can only price so low before a business becomes unsustainable .”
STEPHEN PEMBERTON , GLOBAL HEAD , DIRECT CUSTODY AND CLEARING , AND BROKER OUTSOURCING PRODUCT , HSBC
“ We have on-the-ground expertise in every one of the markets in which we operate ,” he says . “ Where you have fairly standardised , commoditised , low-risk processes from an operations or technology perspective , some of those functions are centralised , but from a sub-custody perspective , the real value we bring is the eyes and ears on the ground and the connectivity to the local market infrastructures .” Osborne confirms that for a global custodian , access to local market perspectives remains crucial . “ A one-stop shop creates enormous flow efficiency for the global custodians , but it can create a little bit of distancing from the marketplace , so we will always review the local market providers . There are certain markets where access is best served through a hub , where it is best to go through one of the offshore locations , but we still do our due diligence on the ability of the local banks to meet our standards .” RBI , which runs its own network for outbound investors from the region , has over the years seen a change in the makeup of its own provider landscape . “ We used to come from having single market providers ourselves , but over many years , with the increased due diligence requirements , it ' s just not feasible anymore . It doesn ' t pay to have a different provider in every market in a region .” Interestingly , while the bank has consolidated its providers in Asia , Latin America and Africa , the potential of T2S in this regard remains for the moment unfulfilled . The benefits for RBI of T2S have rather been in facilitating direct access to local CSDs for its own regional custody offering . “ We still haven ' t come to a compelling reason to migrate to one and only one T2S provider ,” says Kreuzmair . “ There is not yet one T2S provider that ticks all the boxes , at least not so far .” Osborne , however , believes that the landscape changes initiated by T2S will eventually play out . “ It will put further pressure on any provider in those markets because it introduces an infrastructure that really does facilitate easy access to the market ,” he says . “ So we may see going forward that that in itself brings additional pressures to both regional and domestic , single market providers .”
In Part ll , to be published in summer , single country providers respond to the challenges posed by regionalisation .
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