The recent halving of settlement times in North American markets has led to a counterintuitive improvement in trade success rates, according to Patrick Colle, BNP Paribas head of securities services.
Colle, on a visit to Australia last week, said the move to T+1 settlement times in the US, Canadian and Mexican markets at the end of May went off without a hitch.
Despite concerns that compacting settlement into a single day (from the previous two-day period) would lead to more trading pile-ups, he said fail-rates have come down.
“Contrary to expectations, the faster settlement times seem to have focused all participants on streamlining the process,” Colle said.
Australia and NZ are likely to transition to T+1, too, within the next few years as global markets increasingly align.
He said offshore institutional investors are also looking to allocate more to Australasia but expect the same level of asset-servicing as in their home markets.
By expanding the range of services it offers – such as the imminent launch of cash equity clearing services on the NZX – Colle said the BNP Paribas securities services arm would help attract further flows from overseas institutions to the region.
“We have a vested interest in growing the market [in NZ],” he said with the custodian set to benefit from both more offshore clients coming this way and a large local investment sector.
The group has targeted servicing “cross-border corridors” as one of the three “key strategic” growth areas for the business, Colle said.
As investment flows between regions – notably, Asia-Pacific, Europe and the US – continue to increase, he said institutional investors would require asset-servicing expertise spanning multiple jurisdictions.
Furthermore, the custodian is gearing-up for the expansion of private markets (a trend hitting NZ as well) while looking for client-growth among asset owners such as KiwiSaver providers, Australian superannuation funds and sovereign wealth funds etc.
Last week BNP Paribas Securities Services also rolled-out a new client ‘portal’ as part of the never-ending efforts of feeding the technology-hungry business.
The upgraded NeoLink client hub combines “an extended digital portfolio of solutions, embedded fintech services, an API store, and artificial intelligence (AI)”, according to a statement.
Jean-Marc Friess, BNP Paribas chief digital services officer securities services, said in the release: “Amidst a market environment of increasing complexity, NeoLink streamlines business transactions, workflows, controls, and reporting processes to support operational efficiency and decision making.”
But Colle said the investment tech battle is taking place across multiple fronts including AI, cyber-security and possible disruptive innovations such as asset ‘tokenisation’.
BNP Paribas is deeply involved in all aspects of the technology challenges – partnering (and taking equity) in fintechs and performing “live experiments” with tokenised assets, for example.
Tokenisation of managed funds is particularly promising, he said, but with many hurdles to overcome before the process becomes mainstream.
“I don’t see tokenisation having an impact on custody before 2030 at the earliest,” Colle said.