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‘ Short-term’ optimism around‘ long-term’ projects
I’ ve always wondered what the securities services industry considers the definition of short-term to be.
The next 12 months? One-to-three years? Or up to five years? Surely it can’ t be any longer than that. If you look at what’ s on the immediate agenda right now, it is very much focused around settlement cycle shortening, digital assets and private markets( among others of course), but these feel like matters that will play out for years and decades to come before they reach their respective nirvanas. So what’ s really short-term? In my opinion it is AI, data and the asset servicing battlegrounds of ETFs, front-to-back offerings and client / provider consolidation. We can often get distracted by shiny new things while the most important things are overlooked due to their relative mundaneness. What remains fascinating to me is how the custody landscape continues to evolve. There are some obvious players – to me – who must be weighing up their position as the biggest just continue to get bigger and more powerful in this game of scale. For those entities, some long-term decisions may need to be made. Look at the Australian custody market for example, the asset servicing league table is becoming top heavy as client consolidation is occurring on a grand scale and the sheer size of those remaining require capabilities that only a few can offer. It makes you wonder whether we’ ll see further retrenchment of service providers over there and whether this trend will soon stretch to the UK market. But back to my initial question, what is short-term? The digital asset saga in the US has been fascinating, and our cover feature is a fascinating deep dive into what has occurred in recent years as custodians have had to think short-term, long-term and then once again short-term, amid a yo-yo of regulatory changes. So often, just when asset servicers think the opportunity is there, it is taken away again. This has been a nightmare in terms of planning, staffing, technology and investments. Right now, there’ s an air of optimism around digital asset servicing with a very pro-crypto office in place. So what happens next? Custodians are waiting for a few final dominos to fall before the green light is truly there for this service to take full flight. But how long will it take for this to become a fruitful business? Tokenisation talk is rife in the industry but still feels eons away, while crypto is right here, right now. But when will the floodgates open for the traditional securities services industry? It seems opportunities lay somewhere between short-term, long-term and so far off that we’ ll be teleporting over to sign deals. On the plus side, these subjects all fall into the category of opportunities, rather than challenges, giving a feeling of‘ short-term’ optimism around the industry … whatever that means.
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Jonathan Watkins Managing Editor Global Custodian
Spring 2025 globalcustodian. com 3