NeMa Americas: Examining the Changes in Network Management

At the first day of NeMa Americas in Miami, attendees discussed how the network manager role has expanded and increased in importance dramatically over the years, with one quipping, “I’m not a lawyer, but I feel like I should be with everything I have to review.”

While compliance functions have increased, regulation has arguably been a key factor behind this increased importance.

“As a network manager, you’re the quarterback bringing everyone in from risk, legal to operations,” said one network manager.

Another said that with the work around the Alternative Investment Fund Managers Directive (AIFMD), for example, “the due diligence process and the knowledge we obtain from it is really the value that network management brings to all of our organizations.”

While AIFMD has increased network management’s relevance, it has not necessarily caused a sea change in process per se but rather has reinforced what network managers have long done.

In some instances, though, the due diligence process has been refined, with one global custodian, for example, noting that it added an online tool to bring efficiencies, as sub-custodians can go in and more easily update the due diligence questionnaire.

Although network managers have a heightened role, attendees agreed that there is a more thoughtful process nowadays that goes into expanding the network, rather than trying to open as many markets as possible.

In Latin America, certain markets like Ecuador may not have the scale for it to be worthwhile for some network managers, but another manager at a global custodian mentioned that in the organization’s view, Ecuador, Trinidad and Panama are draing that most attention from clients.

As an example of the change in the industry, though, this global custodian no longer has a dedicated “new markets” team as it used to, because the amount of markets they were in had grown past the point of needing that group. Now, they can rely more on what they about new market interest to then dive in and see what steps to take to open the new market if deemed worthwhile.

Attendees also agreed that having more than one provider in a market provides net benefits, with competition raising the service bar. In the past, there was a lack of sufficient providers in Latin America, but this is changing with the growth of investment in the region.

Specifically, attendees looked at Mercado Integrado Latinoamericano (MILA)—the integration of the stock exchanges of Chile, Columbia, Peru and soon Mexico—as a huge opportunity to grow the markets and make room for more providers.

While there was also a bit of skepticism in terms of trading on MILA actually taking off, most agreed that the opportunities are enormous.