The case for reviewing costs embedded in operations
has never been that compelling, particularly in post-trade.
Systems, flows and products complexity have crept
up; regulatory compliance is weighing down balance sheets;
commissions unbundling will add to the costs of running funds;
margins are shrinking due to asset allocations to more passive
products; and core operational processing are increasingly
becoming features in due diligence before investors part with
their money – particularly in hedge funds.
At the market level, the inefficiencies and
complexities of multiple institutions will have an impact on
the overall risk while adding barriers to entry. Technology and
standardisation may help lower those barriers.
The regulatory focus, aimed at making market participants
more transparent, safer and more efficient during the financial
crisis, also comes at a cost. It...