More competition is required among sub-custody providers in parts of the African region, according to a panel of industry experts.
Speaking at the NeMa Africa event in London, Ian Pledger, global head of depositary receipt network management at BNY Mellon, called for more competition among providers in response to growing regulatory demands.
“I would like to see a bit more competition in these markets not only for commercial reasons but also from a compliance perspective,” said Pledger.
“Looking at the regulation that we are driven by, we want to have alternative providers to alleviate some of that challenge which we face if there is only one provider.”
Fellow panellist Stuart Roy, VP for network management at Northern Trust concurred with Pledger and also expressed how additional providers could improve market advocacy.
“Additional competition would be ideal in this respect as if we look outside of some of the larger parts of Africa such as Nigeria and South Africa, services are restricted to a limited number of providers,” said Roy.
“My preference would be see this grow and expand as in addition to benefits of competition, from a market advocacy perspective, more providers would raise a larger voice on behalf of these smaller communities and give greater influence on capital markets.”
Global Custodian recently investigated the current position of sub-custodians within the industry, with regulatory pressures driving talk of sub-custodians exiting various markets, which in turn has led to a wider debate about the viability of the role.
Speaking earlier this year Commerzbank’s head of market services Rob Scott suggested that there was a future for sub-custodians if they collaborate between themselves in order to grow volumes, spur cost efficiencies and avoid industry obstacles.
Roy also suggested that such collaboration is necessary within the African space as sub-custody providers in the smaller regions have not “collaborated with a single voice.”