It has long been suggested that the role of the custodian would go through less change during the next decade than that of broker-dealers, exchanges, clearing banks, central counterparty clearing houses or central securities depositories (CSDs).
A recent market survey conducted on behalf of BNP Paribas found that more than half (54%) of the custodians surveyed expected to expand to serve markets in new regions or increase their geographical footprint by serving more markets in the same region.
“A lot of institutional knowledge and processes are required to service a global client group, and it would be hard for a fintech to serve this client base, given that these capabilities have been established over so many years,” says Magnus Haglind, head of marketplace technology at Nasdaq.
The new universe around digital native assets presents significant potential for banks while ensuring compliance with regulation
While acknowledging that new asset classes, such as tokenized securities, create opportunities for competition, he describes them more as opportunities for collaboration.
Francisco Béjar, head of CSD services at SIX, agrees that custodians will be fulfilling much the same core functions in 10 years’ time because there will always be a need for solvent organizations to provide security.
