New Capital Markets Industry Structure Emerging
Oliver Wyman and SWIFT report finds market forces combine to disrupt the traditional value chain and force participants to adapt business models.
Boston, MA September 30, 2014 - Oliver Wyman and SWIFT jointly published a report today titled, The Capital Markets Industry: The Times They Are A-Changin', that analyzes the medium-term outlook for the structure of the capital markets industry. Launched during Sibos 2014, the report examines a combination of market and regulatory forces reshaping the industry: economic pressure, constrained financial resources, greater scrutiny of conduct and conflicts, evolving client needs, and technological innovation.
"While these market forces are not new, in combination they will result in major structural changes," said Daniela Peterhoff, Partner at Oliver Wyman. "Execution is becoming commoditized, leading to a shift in services across providers. Core settlement and custody are moving closer to a utility model, while in parallel, value-added post trade and related services are growing, particularly collateral management."
The report also examines the risks that will emerge as these changes occur: financial risk migrating from the execution layer and the sell-side to post-trade market infrastructure providers, plus operational risk increasing market-wide as a result of higher flow and interconnectedness. In addition, the report considers how provider risk frameworks and recovery & resolution planning will need to respond, and the systemic risk associated with individual institutions.
"This research shows interesting changes happening to the structure of the securities markets, with many different market participants shifting into new areas. To be successful, companies will need to understand the emerging risks and opportunities when deciding on their future strategic focus," says Fabian Vandenreydt, Head of Markets Management, SWIFT.
A key conclusion of the report is how market participants will be forced to adapt their business models as a result. The report assesses in depth the ability of the various actors in the industry's value chain to seize emerging opportunities and how their roles will change: broker-dealers, exchange groups, clearing houses, custodian banks, (international) central securities depositories, and data and technology specialists. Finally, it considers how participants should plan given the inherent uncertainty in the market in terms of regulation, competitor action, and macroeconomic environment.
A copy of the joint Oliver Wyman SWIFT report can be found here.
About Oliver Wyman
Oliver Wyman is a global leader in management consulting. With offices in 50+ cities across 25 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm's 3,000 professionals help clients optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a wholly owned subsidiary of Marsh & McLennan Companies [NYSE: MMC]. For more information, visit http://www.oliverwyman.com/. Follow Oliver Wyman on Twitter @OliverWyman.
SWIFT is a member-owned cooperative that provides the communications platform, products and services to connect more than 10,500 banking organisations, securities institutions and corporate customers in 215 countries and territories. SWIFT enables its users to exchange automated, standardised financial information securely and reliably, thereby lowering costs, reducing operational risk and eliminating operational inefficiencies. SWIFT also brings the financial community together to work collaboratively to shape market practice, define standards and debate issues of mutual interest.