The first meeting of a new independent industry body focused on post-trade issues, the Asia Clearing Council, will take place on 15 June in Hong Kong.
The group, the brainchild of Barnaby Nelson, head of client development for banks, broker-dealers and corporate issuers in Asia for BNP Paribas Securities Services, is set to meet quarterly to address issues thrown up by the ever-changing financial market landscape in the region.
“Over the last 12 to 18 months, the weight of market and regulatory change in the post-trade space has been getting very, very heavy,” says Nelson. “If you look at what’s going on from a market infrastructure perspective in places like Indonesia, Hong Kong and Singapore, there’s so much change happening but not enough attention is being paid to this by brokers.”
Nelson concedes that topics related to post-trade, back office or operational issues are not the sexiest and it can be a struggle to get some of the more trading-minded market participants to maintain focus.
“What we are trying to do with the Asia Clearing Council is take all of these issues and package them up into something that is really relevant to brokers, something that CEOs, heads of sales and heads of desks will find meaningful,” explains Nelson.
The topic-driven roundtable meetings will take the form of discussions between invited participants on subjects about which extensive research and consultations have been carried out. Nelson says he has spoken to senior executives at “20 to 25 brokers over the last month” to canvass them on the issues they want to see addressed.
“I’ve seen a few of these industry groups come and go in Hong Kong and the formula this time is to have a clear profile of what we’re going to address, rather than a coffee morning-type meeting about things people feel like chatting about,” says Nelson.
One of the focus topics for the first session will be alternative venues in Asia, a key market infrastructure development affecting market participants across the entire region, but about which there has been “limited amount of realistic conversation”, suggests Nelson.
There are a lot of people who want alternative venues in Asia to succeed but there hasn’t been much concrete stocktaking of what the realistic landscape is, and how much scope there is for them to succeed given the fact that the clearing for them is just so complicated at the moment.
Alternative venues have been established in financial centres across Asia, notably in Hong Kong and Tokyo, but unlike Europe no pan-regional platform has thrived, in part because post-trade structures are so tied into the incumbent exchanges.
Another topic that is likely to be on upcoming agendas is liquidity, given the increased requirements for brokers’ collateral in the region, says Nelson.
“If you want to be an exchange member, your collateral has just shot up by a multiple of ten in Hong Kong and is going to go up by a multiple of ten in Singapore,” points out Nelson.
The next meeting is scheduled for September and will have a focus on developments in ASEAN markets.