Societe Generale Securities Services (SGSS) has completed a year-long endeavour to integrate its clearing, settlement and custody services into a single model offered through one entity.
The financial services provider has retired the PAREL brand – which was a fully owned subsidiary of Societe Generale offering clearing services – and created a ‘one-stop-shop’ through SGSS.
By hosting the service through a single entity, SGSS is looking to boost its service to financial intermediaries and boost its position against rivals in the space such as BNP Paribas, Citi and BNY Mellon Pershing.
The harmonised offering will provide clients access to eight CCPs in Europe, settlement in the same value chain, global settlement leveraging on SGSS’ technology on settlement and global access to 85 markets. The firm said the markets are mostly European, but SGSS can offer clients access to across the world through its network of sub-custodians.
“It’s part of our global transformation, to be far more efficient and integrated,” said Gildas Le Treut, global head of coverage at Societe Generale Securities Services, speaking with The TRADE’s sister title, Global Custodian. “And now we’re re-entering into the space of servicing large financial intermediaries that went through severe consolidation post-Mifid. They now need to rely on larger service providers that have critical mass, very efficient processes and access to multiple markets, in addition to a strong balance sheet.”
In addition, SGSS has enhanced its risk model to offer optimised collateral management to help them cover the margins from the CCPs, plus collateral for back-to-back settlement.
“Intermediaries that are trading with large counterparties with sound credit rating will benefit from a reduced collateral number,” added Le Treut. “So we optimise not only the collateral at CCPs, but also the settlement based on counterparty risk. And I think that’s quite unique. That’s what has been told to us and we will never try to compete just on the collateral numbers, but we want to secure the overall risk of our service. We consider that clients that trade with sound counterparties will benefit from this specific model.”
The process has taken a year to reintegrate SGSS’s existing clients and the asset servicer will now be pushing the offering out to prospective new clients in 2024.
Steve Gutowski, head of financial intermediaries and banks coverage, SGSS, said: “The single point of contact is the overriding benefit versus having two points of entry from a client into the organisation.
“If I look at a client who historically required clearing, settlement and custody services, they would have a relationship with Parel contract, fee schedule, client service groups, technology integration, and then they also would have an equivalent on the custody side of our business.
“Now, the harmonised offering means that you go into one entity, one technological setup, one contract, one pricing, one client service team, and then be able to leverage that single point of entry. By having one approach versus different technology setups, differing operating models, we ourselves are able to offer economies of scale and realise synergies.”
SGSS has certainly been proactive in its service approach over the past year, seemingly shifting back onto the front foot through a new transformation plan. Le Treut explained this to Global Custodian in August 2023, pointing to consolidation of the post-trading activities, alongside aggressive growth ambitions for its private markets segment and a strong focus on asset manager and asset owner client segments.
The new-look Clearing to Custody solution is a major part of these plans as SGSS bids to enable clients to realise operational efficiency, reduce costs, manage risk and avoid the complexity of regulation, Gutowski added.
“The trading desk now must be looking at post-trade – post-CSDR with T+1 on the horizon – as a cost to them. And because of these kinds of regulations, I’m seeing that trading desks are more interested in who back-offices are using as the providers,” he continued.
“Therefore, by having another strong alternative in this space, that does demonstrate that our commitment to the market in this space and we’re seeing interest from clients because we are another voice.”