I have no hesitation in identifying both T2S and the bunch of new regulations targeting the asset management industry, UCITS IV, UCITS V and the AIFM directive, as those that will have the biggest long-term impact on the industry.
T2S will require significant developments and changes to our IT platforms and organisation. At the same time, we will have to adapt our offering to comply with the requirement of our clients, who should reconsider their approach to the European market in terms of settlement and asset servicing
As for asset managers, they will have to comply with a new regulatory framework which, despite being more restrictive on certain aspects, offers opportunities for developing their business across Europe and for reconsidering their business models and organisation. In this context, as securities providers, we have to accompany our clients in their reflection and projects and to seize the related opportunities, for instance in the organisation of their fund distribution, and the development of master-feeder funds, an area where we are currently reshaping our offer.
These reforms will without doubt impact heavily the providers of securities services from an organisational and financial point of view, while the achievements in terms of harmonisation and integration of the European financial landscape will still remain unsatisfactory, which in itself is a cause for concern.
That is why, as counterparty to the particular burden these initiatives impose on securities services providers, there needs to be recognition of the role and value of our industry which goes beyond simply seeing us as providers of services.
The asset management industry is likely to be more concentrated and more European focused than today due to two different factors: the economic context and UCITS IV, which offers asset managers the necessary tools to review their set up accordingly.
Besides those created by the financial crisis, the trends that have done most to transform the securities services industry over the last decade are consolidation on the one hand, and harmonisation on the other.
This move is the result of the will of the European public authorities to build an integrated financial market as the logical consequence of setting up a single currency, and the anticipation of the financial industry that it could be achieved overnight.
Until the financial crisis, the move mostly concerned the consolidation of the securities services industry, with securities services firms acquired by players for whom it was a strategic activity, and also the consolidation of infrastructures with some important mergers, notably Euronext and LCH. Clearnet.
Unfortunately, until the crisis, the insufficient harmonisation of the regulatory framework and processes across Europe hampered the integration of the financial market and consequently limited the level of consolidation, whether through corporate mergers or through the ability of merged entities to rationalise their organisation and to mobilise the potential synergies.
In 2000 the prevalent feeling was that all would become simple, quickly, and lead to a race for lower costs. In fact, the process has been, and remains, very slow and progressive, even if the crisis has boosted the process, characterised by a succession of measures (including T2S, Giovannini barriers, AIFM, UCITS) which are still far from complete but which will change the financial landscape in Europe in the long term.