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UK instruments and for EU instruments , which was something not foreseen when T2S was launched when there was an idea for an integration of CSDs to settle different kind of instruments ,” explains BNP Paribas ’ Boucheta . “ Given Brexit and the regulatory developments which followed , what you end up with is two different liquidity zones . This could result in increased costs for other players that have relied on their core membership using one or two CSDs .” The costs will come from investment firms and banks having to adapt their technology infrastructure to manage a dual post-trade framework . Those larger-sized firms may be able to absorb these costs , but it will make the barriers to entry for smaller-sized firms even harder to overcome . As a result , some asset managers could be forced to only operate in one jurisdiction . “ Firms have broadly adopted a model where you have one system , but you guide the trade processing to different venues , with localised processing funnels . A very small second group are firms who basically decided they didn ’ t have the scale in either the UK or the Continent to make it worthwhile preparing to continue service in that jurisdiction ,” says Samir Pandiri , president , Broadridge International . “ Post-trade solutions need to take into account three variables : trading in multiple geographies , clients in different jurisdictions and where the post-trade processing is actually done . We did a lot of one-off configuration with new client entities since 2016 , and that ’ s all been working well . But the Brexit work is also enabling a broader re-set on post-trade , with providers needing much more flexible / customisable systems to keep
44 Global Custodian Spring 2021