20 February 2018
visit www.nextgenbanking.co.uk/

SIX spotlights concerns over asset safety in custody business

28 September 2016  |  1919 views  |  0 Source: SIX

Independent research commissioned by SIX Securities Services, has revealed that that over two thirds (64%) of financial institutions are concerned that agent banks have both custody and investment business lines.

An inability to separate these two business activities introduce a potentially high level of risk with regard to asset safety. This fear is particularly prevalent amongst global systemically important banks - 80% of such organisations highlight this as an issue, underscoring the systemic incompatibility of these two business lines.

32% of respondents argue that the pressure to ensure and prove asset safety comes primarily from ‘own balance sheet liability’, followed by 26% who point to the regulators and 26% who point to institutional investors. 16% see pressure coming from the clients of these investors, such as pension funds and insurance companies.

Respondents identified the following major concerns
• Counterparty risk of Agent Banks
• Location and security of proprietary and client data
• IT security of providers
• Risk profile of providers (credit, operational, risk management)
• Collateral management

Despite increasingly granular due diligence questionnaires, 28% of respondents don’t feel they are able to accurately assess the risk profile - including creditworthiness, operational procedures, risk management models and security policies - of agent banks.

Collateral shortfall also emerges as a concern. 50% of those questioned believe that the transparency requirements around assets, imposed by regulations such as Dodd-Frank and EMIR are actually contributing to a collateral shortfall.

Thomas Zeeb, Division CEO SIX Securities Services comments: “These results are a clear representation of how seriously our industry is taking asset safety - clients are conflicted by the need to reduce costs, possibly through outsourcing services, with questions being raised around the prudence of being so reliant on service providers. As a Financial Market Infrastructure, it is our role to address these issues and provide safe, secure and robust solutions to our clients.”

Comments: (0)

Comment on this story (membership required)

Related company news

 

Related blogs

Create a blog about this story (membership required)
Visit http://info.nice.comvisit www.nextgenbanking.co.ukVisit www.vasco.com

Top topics

Most viewed Most shared
Saudi central bank provides sandbox for banks to try out Ripple techSaudi central bank provides sandbox for ba...
11768 views comments | 16 tweets | 12 linkedin
ABN Amro moves escrow accounts to the blockchainABN Amro moves escrow accounts to the bloc...
9395 views comments | 15 tweets | 13 linkedin
ECB launches staunch defence of cashECB launches staunch defence of cash
9203 views 10 comments | 22 tweets | 26 linkedin
Coinbase and Visa at loggerheads over erroneous charges on customer crypto accountsCoinbase and Visa at loggerheads over erro...
7964 views comments | 13 tweets | 12 linkedin
FCA explores creation of global sandboxFCA explores creation of global sandbox
7292 views comments | 19 tweets | 18 linkedin

Featured job

to £100K base, double OTE, benefits
London, UK

Find your next job