Emerging Trends inPost Trading Space

Shikkoh Malik27 October 2011

Regulatory Changes

Infrastructure Evolution

Impact on Custodians

3Major heading

Regulatory Changes

What’s in the air (Globally)?

UCITs (Undertaking of Collective Investments in Transferable Securities)

DODD-FRANK

EMIR (European Market Infrastructures Regulation)

SLD (Securities Law Directive)

AIFMD

4Major heading

Regulatory Changes

What’s in the air in Emerging Markets?In the emerging & frontier markets its a mixed bag as some markets might still be trying to find their feet in terms of having regulations for all spheres of capital markets (especially post trading environment) while others might be revisiting existing regulations. But in general, following is being considered:

Framework around segregation of duties “Custody with Custodians ”

Independent NAV calculation for Funds

Identification of functions as separate service lines (Fund admin etc)

Laws & Regulations governing infrastructure companies

Opening up of capital markets Access to Foreign Investors

Foreign Ownership Limits

Enhancing the depth of markets

5Major heading

Infrastructure Evolution

Consolidation Of Exchanges

Discussion around CCPs are “a la mode” again

Ideas of regional platforms• ASEAN Initiative

And there are the T2Ss of this world

6Major heading

Impact on Custodians

Politicised regulatory regimes

Enhanced focus on risks through out the supply chain

Enhanced reporting requirements

Rise in cost base due to increased investments in internal & external

infrastructure and enhanced risk premium

Pressure on margins

Loss of revenue streams owing to market/regulatory environment

Monumental exercise of re-building trust* in the system

Where does the remit of a custodian start and more importantly where

does it “stop”

7Major heading

The way forward

Build awareness around the asset protection the custody/depository chain

brings

Share global best of breed practices with stakeholders in Middle East & Africa

Work with the regulators & market entities on liquidity enhancement

mechanism

Give confidence to investors around the stability of post trading

flows/infrastructure

Make the process of investing in Middle East and Africa easier for investors

Build agent networks that are robust & financially strong

8Major heading

AFRICA

Footprint: 3rd-Party:

Russian Federation

• Botswana

• Ghana• Kenya• Mauritius• Tanzania• Uganda• Zambia• Zimbabwe

• Malawi• Namibia • Rwanda

MENA

Footprint: 3rd-Party:

• Bahrain• Oman• Pakistan• Qatar• UAE (3)

• Egypt• Kuwait• Saudi Arabia

NORTH ASIA

• China (2)• Hong Kong• Korea• Taiwan

SOUTH EAST ASIA

• Indonesia• Malaysia• Philippines• Singapore• Thailand• Vietnam

SOUTH ASIA • Bangladesh• India• Sri Lanka

Footprint Markets

3

6

57

8

3

29

• Australia• New Zealand

Footprint: 3rd-Party:

2

Securities Services – Core Region Network Coverage Map

Direct Third-Party Agents

6

• Cote d’Ivoire

• Nigeria• South

Africa

12

Footprint: 3rd-Party:

• Japan

1

Regional Custody Service Hubs4