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Europe–Baltics
I
n 2017, the three countries agreed
to create a pan-Baltic capital market
with the support of the European Com-
mission (EC) and the European Bank
for Reconstruction and Development
(EBRD). A memorandum of understand-
ing set out an agreement to harmonise
capital market regulations and disman-
tle investment barriers with the aim of
creating a common capital market.
Nasdaq OMX is the primary exchange
operator in all three markets. As part of
this larger initiative, Nasdaq merged its
central securities depositories (CSDs) in
the Baltics to create a new single CSD
for the region, also joining the European
Union’s T2S platform. In December 2019,
a direct link between Clearstream Bank-
ing, the German CSD, and Nasdaq CSD
was implemented to facilitate cross-bor-
der settlement in T2S markets, giving
foreign investors easier and efficient
access to the Baltic securities market.
Estonia, Latvia and Lithuania col-
lectively account for 6% of responses
received for ABFM with roughly equal
shares. Scores for each market are rela-
tively similar with the bulk of categories
comfortably in Good range (5.00-5.99).
As capital market integration progresses,
we would expect scores for individual
markets to continue to converge.
One apparent anomaly appears to be
asset servicing which is rated poorly
across the three markets. However,
calculated on a non-weighted basis, the
region as a whole achieves a more than
acceptable 5.6. For most clients there-
fore, it would seem that service levels in
this area provide no cause for concern,
while one or two large respondents may
have strong negative views based on
particular experiences.
SEB is the star in this region, amass-
ing the majority of responses. One large
global client of the bank singles out SEB
in Estonia as “a consistent performer;
the relationship team has strengthened
in recent years.” Another describes the
bank’s operations in both Latvia and
Lithuania as providing “Good response
times and overall service.”
Where it is not, in fact, setting the
78
Global Custodian
Spring 2020
COUNTRY SCORES Europe–Baltics Estonia Latvia Lithuania
Account Management 5.81 6.13 5.80 5.56
Asset Safety 5.81 5.83 5.88 5.71
Asset Servicing 2.89 3.00 2.94 2.73
Cash Management and FX 5.50 5.60 5.60 5.25
Client Service 4.13 4.11 4.21 4.06
Innovation 4.29 4.29 4.29 4.29
Liquidity Management 5.60 5.60 5.60 5.60
Pricing 4.67 4.40 4.83 4.73
Regulation and Compliance 5.48 5.40 5.50 5.50
Relationship Management 5.34 5.38 5.38 5.25
Risk Management 5.29 5.29 5.29 5.29
Technology 5.29 5.40 5.40 5.00
regional average, SEB tracks close. Of
particular note are account management
and client service, both of which record
scores in Very Good range (6.00-6.99).
This is not really surprising with SEB
having chosen to locate a global pro-
cessing centre for its securities services
business in Latvia.
As the magazine was going to press
with the COVID-19 coronavirus pan-
demic upending market expectations,
Nasdaq issued a statement regarding its
Nordic and Baltic market operations,
declaring that, “All Nasdaq Nordic
and Baltic equity, fixed income and
derivative markets remain fully opera-
tional and open during regular trading
hours. In terms of business continuity,
it confirmed that, “Critical operations,
including trading technology and market
surveillance, have been tested over
time to function successfully. Nasdaq
is continuously reviewing its business
continuity plans, and augmenting them
as needed, to account for this rapidly
evolving situation.”
PROVIDER SCORES
(REGIONAL) Europe–Baltics SEB Versus regional average
Account Management 5.81 6.04 0.23
Asset Safety 5.81 5.76 -0.04
Asset Servicing 2.89 2.38 -0.52
Cash Management and FX 5.50 5.50 n/a
Client Service 4.13 6.09 1.96
Innovation 4.29 4.29 n/a
Liquidity Management 5.60 5.60 n/a
Pricing 4.67 4.71 0.05
Regulation and Compliance 5.48 5.40 -0.08
Relationship Management 5.34 5.34 n/a
Risk Management 5.29 5.29 n/a
Technology 5.29 5.29 n/a