CSDs and ICSDs are competing with their clients, ought to compete with them, and will continue to compete with them across an ever-wider range of service areas. Or so concluded a panel and plenary discussion on the question of whether CSDs ought to compete with agent banks at the seventh biennial conference of CSDs in Lucerne today. The one agent banker on the panel warned the assembled CSD officials to “think carefully” about whether this was a good idea.
“The question of how far CSDs and ICSDs should compete with the services offered by their clients gave rise to highly controversial debates,” reads an official dispatch from the conference organisers. “This does not entail a challenge to CSDs and ICSDs to rethink their strategy and orientation as the rapid development of the financial markets with their inherent forces has ensured that such competition is partially already a reality today. With the blurring of the traditional borders between core business and value added services in the securities sector, the possible extension of the value chain is becoming an important question with regard to the strategic positioning of CSDs and ICSDs. A consensus on this issue is not yet in sight, and the debate is likely to continue in the coming years.”
In Europe – where the “debate” is now at the acute stage because a bank (Euroclear) is busy acquiring the domestic CSDs agent banks use to settle trades on behalf of clients – the argument could get ugly. But the conference as a whole was a reminder that CSDs versus Agent Banks is not yet as lively an issue in other parts of the world. The 7th Conference of Central Securities Depositories (CSD7) attracted 150 delegates from 60 countries and – amid criticism that CSDs ought to be talking to their customers, rather than each other – exchanged views on a variety of other matters: the regulation of CSDs, ICSDs and global custodians; the creation of global securities markets standards; the consolidation of the industry; the role of CSDs in the retail sector; and how to make mutual fund processing more efficient.
The conference for central depositories is held every two years and is the sole event worldwide where top executives of CSDs and ICSDs can convene to discuss current issues with fellow depository officials. The 7th CSD Conference, held between 11 and 13 June 2003 in Lucerne, was jointly organised and hosted by SIS Group in Zurich and CRESTCo in London – a reminder of their days as partners in The Settlement Network, before CREST was acquired by Euroclear. DTCC, the Depository Trust Clearing Company, New York, will host the CSD8 Conference in 2005.