Summer used to be a quiet month or two for news. Not so this year (or even the last few years perhaps). What with the M&A rumour mill on overdrive, restructuring and musical chairs within the vendor community, endless regulatory toing and froing, and the recent announcement that the UK is potentially opting out of Target2-Securities (T2S), it’s been a busy month.
On that last item, although the Bank of England hasn’t confirmed it, there has been a rumour doing the rounds this week that the UK has vetoed joining the European Central Bank’s (ECB) T2S project. The project, which aims to harmonise settlement across Europe, will impact the securities services industry throughout the region and, more importantly for the back office and data crowd, the corporate actions processing function (see more here).
The T2S team has identified standards that must be adopted in the corporate actions function in order to participate in the new settlement system. The responsibility for the adoption of these new corporate actions standards has therefore been laid at the feet of the central securities depositories (CSDs) who will be compelled to adopt them as they sign up to participate in T2S. However, it is not yet certain what the impact will be for countries that opt out (especially when a country so significant in the cross border traffic stakes opts out – the UK represents around 40% of the flow of euro transactions). Will this put the whole project in jeopardy? What happens to the planned adoption of the new corporate actions standards in that case? Not much is certain as yet.
The same can be said of the unsteady sands of regulatory change, with various parts of Dodd Frank evolving and key aspects of European regulation up for debate. How can definitive operations and technology focused projects be planned with any certainty when the goalposts are constantly moving? That’s certainly a common complaint within the data vendor community about the response of the C level to such regulatory uncertainty. Vital data infrastructure projects can easily languor in the mire in such circumstances.
In other news on the uncertainty front, the vendors currently waiting to learn their fate – Thomson Reuters’ Kondor business line, Misys, SmartStream et al – are having a tense summer. Will the FIS bid for Misys go through? Who is bidding for SmartStream and when will the winner be announced? What on earth is going on at Thomson Reuters?
I’m fairly certain that given these uncertainties, the summer will continue to be a hectic one on the news front.