Securities Processing in Asia
From the ID markets (India and Taiwan) were two thorough and insightful presentations on the structure of these highly regulated and challenging financial industries. First, Richard Lin of Deutsche Bank’s Domestic Custody service provided an overview of Taiwan’s trading flows. Among the many interesting tidbits was that in Taiwan securities are delivered before payment is made. He then proceeded to tell us about the trades Lehman received delivery of on the Friday before the bankruptcy that hadn’t been paid for. It was the only such incident in twenty years of trade processing in Taiwan.
The second representative from the ID markets was Mr. Harikrishnan the senior Vice President of ICICI Securities in India. His was an information packed presentation on the structure and products of India’s financial services industry.
Francis Edwards of Clifford Chance, a law firm specializing in China, gave us presentation on the legal challenges of multi-jurisdiction trade settlement and the nuances of deciphering the exact instance when ownership actually changes hands. Of course, Lehman was used as the backdrop in highlighting these complexities.
The second day saw Liza Ching of Nomura divulge best practices of operational risk mitigation and later Karim Chabane of Euroclear continued the discussion of risk focusing on mitigating counterparty risk.
A panel discussion on “How we can increase the efficiency of clearing and settlement processing through automation” was represented by Tim Marsh, Chairman of Serisys Solutions and Silver sponsor of the conference, Karim Chabane and David Gilmour. It was a lively discussion on the state of technology in Asia to cope with the increasing trading volumes. It was interesting that Tim and David disagreed on how processing should be managed with David preferring country specific operations and Tim likened to one central location. I challenged Tim afterwards citing that no mention of the front office in the chain of trade dispensation was raised. In my opinion if account information is wrong or incorrectly applied in the front office the whole trading ecosystem fails.
Doctor Golaka Nath rounded out the day with his discussion on the role of the Clearing Corporation of India. The Hong Kong Monetary Authority was represented by Haster Tang and Othman Al-Issa from the Kuwait Investment Authority was also in attendance. All in all it was great event that answered many questions and raised new ones of the trade processing space. In the competitive brokerage business and its squeezed trading margins the focus is now placed squarely on operational efficiencies, risk mitigation and harmonization. Exciting times ahead even in the back office.