The power of networks that enable an industry-changing dialogue

Fri, 28/06/2019

The Network Forum 2019 took place in Greece                                                                                                                                                

UniCredit GSS, as one of the founding partners, once again had the pleasure to participate in the landmark European industry conference, the Network Forum, which brings most of the key players from the securities services industry together once a year. After Warsaw and Vienna, Athens hosted the event this year welcoming over 420 professionals representing global custodians, broker-dealers, local and regional agent banks, regulators, stock exchanges, CSDs and post-trade professionals from all across the globe.

It is a must-attend event for the securities services industry with great focus on building relationships, as organisers recognised “the transformative power of those networks to enable industry-changing dialogue”. Along with this sentiment both the Closed-Door Session on the Network Managers Only day and the two main conference days addressed the numerous unique challenges the industry is facing today and that is how this year’s main theme came to be “Transformation, Innovation & Collaboration – Embracing the Future”. In the form of presentations, panel discussions and special focus lunch roundtables, delegates had the chance to engage in discussions on the most relevant topics ranging from cyber security and data analysis to geopolitics, from regulatory impacts to due diligence processes.

CSDR and its challenges

On day one, a panel of financial institution representatives discussed “Regulation and Enforcement Costs Across the Chain” moderated by industry veteran John Gubert. Conversation revolved around the upcoming regulatory changes, with special focus on the CSDR penalty regime and its impacts. Júlia B. Romhányi, Global Head of Securities Services at UniCredit, was one of the panellists who asserted even though there is not much time left until the 2020 autumn implementation, there was still uncertainty around the penalty fees for settlement failures and its management across the value chain. In most countries the exact operational rules are still to be defined and issued by the individual CSDs which are crucial for defining enhancement needs and procedural changes. As a consequence, custodians will need to introduce stricter controls to manage settlement delays and buy-ins. There is a consensus among participants that a lot of effort will have to be devoted to move towards much higher levels of efficiency in order to mitigate penalties.

Another session examined technology partnerships and the changing roles of Network Managers within the new environment. In light of the growing interest of clients in more IT focused questionnaires Network Managers will need to acquire a higher level of expertise on the subject matter in order to meet client requirements. This clearly poses a challenge and necessitates collaboration with IT personnel to understand specific topics which could cause capacity issues with IT staff. Julia was outlining the growing complexity in answering increaslingly detailed and sensitive questions related to IT and system infrastructure while Mária Bíróné Kejla (Global Relationship Manager) attended the discussion on technology partnerships and the role of Network Managers going forward. Beáta Szönyi (Head of the Global Relationship Team) helped explore the current state of due diligence processes with special focus on the AFME questionnaire, which 80% of market participants are happy to use, however we’re aiming to reduce any forthcoming additional questionnaires.

New competition

Some sessions explored the trends in the evolution of business models, such as the hub-models versus direct access to markets, the competition of custodians with CSDs and the outsourcing potential and differentiators of service providers. Günter Schnaitt, Head of Global Securities Services Austria, joined a panel which delved into the details. In his opinion, even though ICSDs do take over some roles previously filled by regional custodians as a result of outsourcing of certain functions, value added services from a trusted partner - flexibility, local knowledge and relationship management - are still appreciated  elements, even when many processes are standardised. Clients tend to prefer the zero-intervention approach which supposes broad technical and logistical pre-settings from the custodian and standardisation of formats so that sustainability in the post-trade cycle can be guaranteed. Still, in times of constant change, when all players on the market have already leveraged on digitalisation, the competitive edge is getting shaped more and more through value added services. Ultimately, the client experience is what retains and attracts business.

Throughout the days of the gathering, our GSS Team was constantly engaged in client interactions and the UniCredit stand was a popular point in the exhibition section, serving genuine Italian coffee to help conference goers stay refreshed throughout the event. In keeping with tradition, UniCredit co-hosted an evening event, which offered the advantage of a less formal networking opportunity.