Some 56% of respondents from a live survey conducted a NEMA 2011 conference panel discussion, which was moderated by Global Custodians Editor-In-Chief Dominic Hobson believe that custodians are not prepared to move from a transaction based pricing model to a risk based model.With an average of 200 people responding to the survey, some 67% believe that clients are also unwilling to move from a transaction based pricing model to a risk based model.
Im not surprised that custodians and clients would be perceived to move to a risk based pricing model, said David Penstone, Head Global Sales & Relationship Management – EMEA at Deutsche Bank. I think the regulatory bodies are going to drive end providers to more risk based model, thats where all costs going to be. In the old days, technology is where the extra cost of capital comes from while nowadays risk based capital is the situation and where the greatest bulk of costs will be.
At the Risk vs. Reward – Do Custodian Banks Have The Right Pricing Model? panel discussion, 87% of respondents believe that the future of pricing in the custody industry will be unbundled, for example meaning fully itemised versus simplified, which means a single all-in-one price.
The industry is naturally moving to unbundling because if you look at the number of extra services and compliance costs in the future, for example, T2S, asset servicing, settlement pricing, data transfer, clients and custodians need to be able to know exactly what they are paying for, said Mark Bosquet, Head of Network Management, Banque Privee Edmond De Rothschild Europe.
Please click here for all coverage of the NEMA conference in Dubrovnik, Croatia this week with Global Custodian.
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