John Gubert on Citigroup – Computershare Alliance

Lateral thinking could produce a variety of possible outcomes. Trading platforms, new retail record keeping utilities, netting engines and so on. The market is populated by great ideas and competitive ventures. ECN's were a classical example. The key issue is

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Lateral thinking could produce a variety of possible outcomes. Trading platforms, new retail record keeping utilities, netting engines and so on. The market is populated by great ideas and competitive ventures. ECN’s were a classical example. The key issue is what the market needs.

There are manifest areas of inefficiency. In Europe transfer agency is an obvious candidate especially for the mutual fund market. Trade matching is a further example especially in the cross border field. Interoperability, albeit often the compromise solution to re-engineering time expired market structures, is also a problem. Referential data is a further one. Central counterparties may be efficient within a single jurisdiction or market but generally fail the cross border test.

As experience has shown, the solution to the problems are hard to come by. A more common line of attack has been at seeking to redistribute the existing wallet in a market place rather than reduce the cost of transactions. The big wallets are inevitably those that are closest to the buy side. Order management on the broker side, synthetic securities (such as ADR’s) on the investor side and so on.

The field is wide open. Legacy thinking is still silo based. Pioneers and plagiarists abound in our markets; the trouble for the pioneers is that many of them recently have just ended up with arrows in their back!

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