Service costs, maintaining their position of responsibility and the notion of being too big to fail pose a challenge to custodians, according to a Pershing director.
Speaking to Global Custodian during the NeMa event in Dubrovnik, Mark John, director of broker dealer services at Pershing, spoke of the immediate challenges that custodians face within the industry.
“The biggest challenges for custodians are in three areas, firstly it’s the cost of providing a service that its clients are prepared to pay.”
“Also, the responsibility on custodians has become very much more in the spotlight in terms of what end clients need or demand.
“The element of being almost too big to fail is also relevant to custodians as wherever you look at there is something that is the next too big to fail which people are currently looking at with CCP’s or investment funds being seen as the next too big to fail.”
John’s suggestion comes a day after a panel stated that operating costs for both global and sub custodians will continue to rise causing inevitable changes to their pricing models.
Yesterday’s panel also concluded that regulatory demands and demands from clients would also lead to increased costs for both global and sub custodians.