The Custodian Issue 7

Transaction Banking Securities Services

THE CUSTODIAN Thought Leadership on all facets of Securities Services

The EU’s Shareholder Rights Directive II (SRD2)

Bond Connect: Two years on, what lies ahead?

Understanding Vietnam

Innovation culture – moving towards agility

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september 2019

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VOL 7

THE CUSTODIAN september 2019

Awards

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Regulatory outlook

Market access

Market profile

Market Updates

SECURITIES NEWS

Scan QR code to read Issue 7 online

THE CUSTODIAN september 2019

In this issue

05 Bond Connect Awards 2019

06 The EU’s Shareholder Rights Directive II (SRD2)

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13

Bond Connect: Two years on, what lies ahead?

17 Innovation culture – moving towards agility

Understanding Vietnam

20 Striking the SGX securities market gong

22 Securities Services update

THE CUSTODIAN september 2019

Introduction As we finalised this edition of The Custodian, all eyes were turning to SIBOS in London, a few weeks later. This global event is one of the highlights for our industry, an excellent platform for exchanging views on latest developments. Standard Chartered – including the Securities Services team – is set to bring a sizeable presence to the event and we are hopeful for the chance to meet many of you in person.

In this seventh edition, we highlight how our business is moving to an AGILE development methodology – and the benefits this brings in terms of faster time to market and greater focus on client partnerships.

Among the technology developments we are working on as part of our extensive innovation agenda, a shift in mindset, culture and methodology is allowing us to ideate and cocreate with our clients.

The EU’s Shareholder Rights Directive II will become effective in September 2020 and the clock is ticking on preparations. We dive into what this means for custodians and our clients.

China watchers among you will be aware that Bond Connect celebrated its second birthday in July. Bond Connect is a key development in the opening of China’s capital markets and continues to attract new clients who like the relative ease of accessing the China’s bond markets through Hong Kong. The article quotes impressive growth statistics, but the huge future potential is also evident when you look at foreign ownership figures for

Chinese bonds. Standard Chartered played a leading role in Bond Connect’s development, a great example of successful market advocacy. We worked closely with regulators and clients to help the scheme through initial teething problems, and you can read about how that process is continuing.

Finally, we look at another rapidly growing economy. Vietnam is the fastest growing economy in ASEAN, outstripping China’s growth rates last year. We focus on how the authorities are aiming to maintain growth and possibly secure inclusion in the MSCI Emerging Markets index. Vietnam is a very important market for us as you will see from some impressive market figures.

We look forward to sharing our post-SIBOS insights with you in the next edition.

Margaret Harwood-Jones Global Head Securities Services Transaction Banking

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Awards

Regulatory outlook

Market access

Market profile

Market Updates

THE CUSTODIAN september 2019 SECURITIES NEWS

Bond Connect Awards 2019 Standard Chartered was honoured to receive three awards during the Bond Connect Anniversary Summit 2019.

This recognises our achievements in providing a one-stop shop service offering bond trading and settlement, and FX hedging. As a first-mover in the China-Hong Kong Bond Connect scheme, we were one of the first Hong Kong settlement banks offering onshore renminbi services.

At the awards ceremony, we took home awards in half of the categories (three out of six awards), which were presented to the top dealers, active banks, active asset managers, custodians and issuers. John Tan, Regional Head, Financial Markets, East; and Biswajyoti Upadhyay, Head of Transaction Banking, Hong Kong, represented Standard Chartered to receive the awards for Bond Connect Top Dealers, Bond Connect Active Banks, and Bond Connect Top Custodians at the ceremony.

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THE CUSTODIAN september Awards 2019 Regulatory outlook

Market access

Market profile

Market Updates

SECURITIES NEWS

The EU’s Shareholder Rights Directive II (SRD2): Why it matters outside Europe too On 3 September 2018, the European Commission published its Implementing Regulation 2018/1212 in relation to the Shareholder Rights Directive (last updated in 2017). Will nonEuropean service providers and investors be impacted?

What’s SRD2 and why does it matter?

The directive establishes a series of measures meant to benefit both listed companies in the European Union (EU)/ European Economic Area (EEA) and their shareholders by enforcing greater transparency and efficiency in terms of shareholders’ identification and rights to vote.

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It also aims to improve communication by the issuers – through the chain of intermediaries – to their shareholders.

Firstly, the directive sets the right for listed companies to identify shareholders, and mandates intermediaries like custodians to take an active role in this process.

This means that custodians would be expected to disseminate

disclosure requests to their customers and collect and submit disclosure information back to the issuers or their appointed agents in a timely fashion.

Secondly, the directive aims at facilitating voting and exercise of shareholders’ rights, especially from a cross-border perspective.

Intermediaries are required to transmit ‘without delay’ corporate

THE CUSTODIAN september 2019

actions and general meetings or proxy voting announcements, so that shareholders can exercise their votes and corporate events decisions in an optimal way.

Intermediaries are also expected to lodge their clients’ votes ‘without delay’ to the next intermediary/agent. The directive also sets requirements about post-meeting voting confirmation transmission timeliness.

SRD2 will be effective in September 2020, leaving the industry less than a year to get ready.

Does the term ‘without delay’ imply instant communication?

The term initially created differences in interpretation. Industry bodies feared this could imply that the immediate delivery of information to the end beneficial owners was obligatory, irrespective of the number of intermediaries involved in the chain, which would pose significant practical challenges.

The implementing regulator has provided further comfort that each intermediary in the chain should transmit corporate actions and general meetings announcements within the same business day if received by 4 pm local time (of the intermediary). If received after this time, the announcement should be transmitted no later than 10 am of the next business day.

One requirement states that the shareholder voting deadline should not be earlier than three business days prior to the issuer deadline or record date, however this does not take into account added complexity if there were multiple intermediaries.

In an industry where less sophisticated providers may still take more than 24 hours to pass information on to their clients, this would create the impetus for further investment in automating corporate actions processing.

However, the directive explicitly outlines its applicability to non-EU/EEA intermediaries.

This ruling comes with its own set of challenges.

So SRD2 only matters to Europeans, right?

On the surface, this might be expected to have little or no impact to investors and intermediaries outside of the EU or the EEA. However, the directive explicitly outlines its applicability to nonEU/EEA intermediaries. This ruling comes with its own set of challenges. For instance, intermediaries are expected to submit investor information disclosures directly to the issuers rather than through the chain of intermediaries. However, being a EU-centric regulation, it is not clear how a non-EU intermediary would be able to comply with SRD2 in a scenario of competing regulations (for example, in terms of data privacy protection) imposed by the non-EU intermediary’s own domestic regulator.

Each EU member state must transpose SRD2 into their national laws, leaving the possibility for variations in technical requirements which will increase the complexity of implementation for cross-border intermediaries and investors.

Another example relates to shares of EU/EEA based companies that have shares dually listed outside of the EEA. These could also face technical challenges in complying with SRD2 as they may also be governed by local listing rules and disclosure requirements.

An informal survey of a few key markets in Standard Chartered’s Asian and African footprint indicates that there is little awareness of SRD2.

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Will the EU directive trigger similar regulations in Asia, Africa and the Middle East?

Relative to the EU, the regulatory landscapes in Asia, Africa and the Middle East are more fragmented and mostly domestically focused.

At this stage, it would be unlikely to see the emergence of harmonised pan-regional regulations.

However, many markets have implemented or are in the midst of implementing either formal rules, market practices or solutions meant to improve shareholders’ voting efficiency – for instance, through the use of e-voting (in Taiwan, Korea, India, Indonesia, and the United Arab Emirates, amongst others).

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The emergence of new technologies such as distributed ledger technology (DLT) also provide opportunities for emerging markets to leapfrog some of the inherent inefficiencies around corporate actions and proxy voting.

Most recently in Singapore, Standard Chartered and other market participants have joined forces with SWIFT, SLIB and SGX to conduct a proof-of-concept for e-voting, leveraging DLT, to streamline the current paper and manual process flows. This could also prove useful to meet requirements for ‘without delay’ communications similar to SRD2.

Conclusion In conclusion, we believe that while SRD2 is focusing on EU-listed companies and would most likely take the hardest toll on EU-based service providers, non-European intermediaries and investors should not underestimate the impacts of the regulation on their EU assets.

At Standard Chartered, a bankwide taskforce, including the Securities Services department, is working with internal and external stakeholders (such as market infrastructure and third-party agents) to ensure adherence to the SRD2 requirements.

Awards

Regulatory outlook

Market access

Market profile

Market Updates

THE CUSTODIAN september 2019 SECURITIES NEWS

Bond Connect: Two years on, what lies ahead?

Bond Connect celebrated its second anniversary on 3 July 2019.

The first year of the Bond Connect journey focused on attracting foreign investors with more diverse backgrounds to join the renminbi (RMB) 86 trillion club. We saw the implementation of enhancements from the implementation of Delivery versus Payment (DVP) settlement to the introduction of block trading capabilities and exemptions for threeyear income tax and value-added tax.

Foreign investors have flowed in through this channel at a steady rate. As of June 2019, 1,038 investors from 29 jurisdictions including United States, United Kingdom, Japan, Taiwan, Singapore, Switzerland, Luxembourg, Hong Kong and Abu Dhabi1 have gained access to Bond Connect.

These investors include the first Irish and Luxembourg Undertakings for

Collective Investment in Transferable Securities (UCITS) fund2.

With connectivity to the Bond Connect scheme well established, investors’ focus has now shifted towards Foreign Exchange (FX) and hedging instruments.

During the Bond Connect Anniversary Summit in July 2019,

People’s Bank of China (PBoC) announced new measures to support further enhancement of Bond Connect3. Through the promotion of bond index products and Exchange Traded Funds (ETF): These products would provide foreign investors who are interested in Chinese bonds with more options in passive-index tracking investment.

1

Bond Connect Company Limited (2019, July). Flash Report for June 2019. Retrieved from https://www.chinabondconnect.com/documents/ FlashReportforBondConnect-2019-06.pdf

2

Bond Connect Company Limited (2019, 22 March). News release “CBI Greenlights Irish UCITS and AIFs to Invest via Bond Connect”. Retrieved from https://www.chinabondconnect.com/documents/News2019-03-22EN-IrishFunds.pdf

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Bond Connect Company Limited (2019, 3 July). News release “Bond Connect Hosts Summit to Mark its Second Anniversary”. Retrieved from https://www.chinabondconnect.com/documents/News-2019-07-03-EN.pdf

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THE CUSTODIAN september 2019

Bond Connect timeline 1,038 investors

Attracting foreign investors with more diverse backgrounds

from 29 jurisdictions

ETF

Introduction of block trading capabilities Bond index products FX

3 year

income tax exemptions

2017

Total

RMB1,954 billion Increase 130%

Implementation of DVP Hedging instruments

2018

2019

Launch of Bond Connect

So, what lies ahead for Bond Connect?

A reshape of the Repurchase Agreement (repo) mechanism: Repo offerings vastly differ when comparison is drawn between onshore and offshore markets.

For example, documentation – the international markets have largely adopted the use of the Global Master Repurchase Agreement (GMRA) and International Swaps and Derivatives Association (ISDA) for repo trading and derivatives trading, while the China markets

from RMB843 billion in June 2017

Second Year Anniversary

use the National Association of Financial Market Institutional Investors (NAFMII) agreement. As foreign investors are accustomed to negotiating terms according to the ISDA, additional time is needed to familiarise and review the NAFMII. Another major difference is evident around the re-use rights of securities. In traditional repo markets, Bond title is transferred to allow rehypothecation of the bonds.

In China, a pledge repo system is in place, where bonds cannot be reused. The Bond Connect Company Limited (BCCL) is actively working with market infrastructures to

permit repo and derivatives trading under the Bond Connect scheme considering the differences that exist today between the China and international markets4.

Establish default bond transaction mechanism: Currently a standardised process to resolve bond defaults is not in place in China, as a result the repayment rate is low. The historically high recovery rate is unsustainable and debt restructuring is not common5.

On 28 June 2019, PBoC published a consultation paper seeking

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Hong Kong Exchanges and Clearing Limited (2019, April). “Bond Connect scheme – New strategy for internationalisation of China’s bond market” Part 2 Chapter 4 “Bond Connect: Development and prospect of mutual connect between Mainland and overseas bond markets”

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Standard Chartered Bank (Hong Kong) Limited Global Research (2018, 26 September). Retrieved from China onshore bond defaults – Growing pains https://research.sc.com/research/api/application/protected/rp/api/data/render/136194

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public feedback on the proposed arrangements in relation to transfer and settlement, information disclosure requirements, risk prevention mechanisms and intermediary duties for matured bond defaults. The Chinese authority is also considering establishing a default bond transaction mechanism to further protect investors investing in the China bond market.

More flexible access to FX: The current Bond Connect rules require investors to appoint only one Hong Kong Settlement Bank for FX conversion. For more efficient pricing and best execution, some investors would like to trade with multiple FX counterparties.

When the FX requirement under the Bond Connect is further relaxed to allow investors execute FX with multiple parties, an established mechanism, for example a centralised FX registry system, should be in place to maintain and monitor investors’ cash bond and onshore foreign exchange exposure6. We will continue to engage our clients as well as the market infrastructures to explore

more flexible FX access for Bond Connect investors.

Fungibility across China Access programs: Today, there exist many routes for investors to access the China market including Bond Connect, CIBM Direct, QFII or RQFII. These schemes are different in terms of account setup, crossborder repatriation and so on.

Some investors feel that the cost of maintaining multiple access mechanisms is becoming burdensome and would welcome some harmonisation or even consolidation7. Some possible directions include setting up a mechanism to allow easy transfer of securities holdings across the schemes particularly from QFII and RQFII into CIBM and Bond Connect; allowing equal treatments in terms of repatriation capabilities, eligibility of foreign investors and access to onshore securities and derivatives under existing schemes8.

Total foreign holdings of bonds in CIBM show more than 130 percent increase, from RMB843 billion in June 2017 (prior to Bond Connect launch) to RMB1,954 billion in June 20199. The inclusion of China bonds in the Bloomberg-Barclays Global Aggregate Index in April this year was the first step toward global index inclusion. JP Morgan has had China on its ‘Watch List’ for inclusion in its Government Bond Index-Emerging Markets series since March 2016. FTSE Russell is also considering whether to include Chinese bonds in its World Government Bond Index. It is predicted that when China bonds are included in the more widely used global indices, foreign inflows into the China Interbank Bond Market will increase in the range of USD100 billion to USD400 billion with a three-fold increase in current foreign holdings of Chinese bonds10. With these kinds of flows predicted, it will not take long for China to surpass Japan to become the world’s second largest bond market.

The Bond Connect scheme has played a key role in the openingup of the China bond market.

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International Monetary Fund (2019). The Future of China Bond Market – “Clearing Roadblocks to Foreign Participation”. Retrieved from https://www. elibrary.imf.org/doc/IMF071/25402-9781484372142/25402-9781484372142/Other_formats/Source_PDF/25402-9781484393147.pdf?redirect=true

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Standard Chartered Bank (2018). Clarity, simplicity, practicality: China investments enter a new era. Retrieved from https://www.euromoney.com/ Media//documents/euromoney/pdf/sponsored/WEB04-SC-nn-RMB-Investors-Forum-Whitepaper_200618_FINAL2.pdf

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International Monetary Fund (2019). The Future of China Bond Market – “Clearing Roadblocks to Foreign Participation”. Retrieved from https://www. elibrary.imf.org/doc/IMF071/25402-9781484372142/25402-9781484372142/Other_formats/Source_PDF/25402-9781484393147.pdf?redirect=true

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Bond Connect Company Limited (2019). Market Data. Retrieved from https://www.chinabondconnect.com/en/market-data.htm

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Hong Kong Exchanges and Clearing Limited (2019, April). “Bond Connect scheme – New strategy for internationalisation of China’s bond market” Part 3 Chapter 8 “Bond Connect and the inclusion of China into global bond indices”

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Awards

Regulatory outlook

Market access

Market profile

Market Updates

THE CUSTODIAN september 2019 SECURITIES NEWS

Understanding Vietnam Over the past quarter century, Vietnam has undergone a remarkable economic transformation. Vietnam has rapidly emerged as one of Association of South-East Asian Nations (ASEAN)’s fastest growing economies. With increased macroeconomic stability and an increasingly pro-business environment, Vietnam is gaining attractiveness as a destination for foreign investors. To improve conditions for foreign investors to access Vietnam’s capital markets and accelerate Vietnam’s move up the ladder from frontier to emerging market status, local market authorities have implemented a raft of reforms.

In 2018, Vietnam’s gross domestic product (GDP) grew about 7.1 per cent, marking one of the highest growth rates among key ASEAN economies. Vietnam’s growth has also outpaced that of the global economy, which grew at about 3.8 per cent in 2018. Vietnam is seeing tremendous growth and progress in terms of market capitalisation and trading volumes, and market access has improved due to several measures implemented by the local authorities.

The Vietnamese market authorities have made efforts to improve the legal framework, introduce new securities instruments and align Vietnam’s capital markets to international standards. One of the key efforts is an amendment of the securities law that would level the playing field for domestic and foreign investors. The State Securities Commission (SSC) issued a draft securities law in late 2018 and submitted it in May 2019 to the National Assembly for debate. The draft securities law is expected to

come into effect in January 2021, if it gets the vote of approval from the National Assembly in October 2019.

Some of the proposed amendments to the draft securities law are expected to accelerate Vietnam’s inclusion in the Morgan Stanley Capital International (MSCI) watch list for emerging markets.

The draft securities law submitted to the National Assembly includes changes such as new conditions for public offering and private placement.

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THE CUSTODIAN september 2019

Vietnam market in numbers Fastest growing economy in ASEAN

In comparison to China

7.1%

6.6%

growth in 20181

growth in 20182

Market capitalisation

Foreign capital net value

71.6%

USD2.8 bn

GDP as of Dec 2018

3

in equity market as of 20183

Bond market

Derivatives market

USD48.13 bn 20.3%

total value as of 2018

>21,600

GDP as of 2018

3

contracts traded in its first year of operation3

Stock market capitalisation

USD170.93 bn a record high as of Dec 20184

Source 1 https://www.bloomberg.com/news/articles/2018-12-27/vietnam-s-economy-remains-outperformer-as-growth-tops-7-mark 2 https://www.cnbc.com/2019/01/21/china- 2018-gdp-china-reports-economic-growth-for-fourth-quarter-year.html 3 https://vietnamnews.vn/economy/483563/2018-a-banner-year-for-local-equity-market.html#xG76AW1UXWeQG5c6.97 4 https://focus.world-exchanges.org/issue/january-2019/market-statistics

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Proposed changes to foreign ownership limits (FOLs) will be captured in a separate regulation.

Meanwhile, Vietnamese market regulators are also planning to attract foreign investors through non-voting depository receipts (NDVRs), which would enable them to trade trade securities of Vietnamese companies without voting rights. NVDRs are aimed at

foreign investors who are interested in investing in a company but are unable to do so due to FOLs. To be classified as an emerging market, Vietnam needs to meet MSCI’s size and liquidity requirements and market accessibility criteria. Vietnam has a dozen of companies which have satisfied MSCI’s quantitative requirements in terms of market size

and liquidity i.e. a minimum total capitalisation of USD1.55 billion, a free float above USD776 million and a 15 per cent annualised traded value ratio. As MSCI closely monitors the market accessibility for foreign investors, Vietnam’s move to improve and modernise its securities law may improve its chances of being classified as an emerging market.

Our view – current highs and lows Highs In January 2019, Vietnam announced its plans to form Vietnam Stock Exchange. Currently, the Hanoi Stock Exchange (HNX), Ho Chi Minh Stock Exchange (HOSE) and the Vietnam Securities Depository (VSD) operate on three different systems. The market will embark on a project to enhance the technological infrastructure to establish connectivity for these separate systems. This is expected to bring more market efficiency through a streamlined process.

Lows Local market authorities have made conscientious efforts to liberalise and develop Vietnam’s capital markets. Despite strong economic growth and other positive indicators, MSCI did not place Vietnam on the highly anticipated watch list for emerging markets.

In its 2019 Global Market Accessibility Review report, the global index agency has highlighted openness to foreign investors as one of the areas for improvement in Vietnam.

As Vietnam continues to work towards building its derivatives offering, the Vietnamese market authorities have announced the launch of Government bond future contracts and covered warrants. The continued development of derivatives market is integral to the eventual development of fully functioning capital markets in Vietnam.

Taking a leaf from Kuwait, MSCI recently announced its decision to reclassify the MSCI Kuwait Index to Emerging Markets status, subject to availability of omnibus account structures and same National Investor Number (NIN) cross trades for international investors by November 2019. These features were publicly announced by the Capital Market Authority to address concerns raised by foreign institutional investors during MSCI’s consultation on the potential reclassification of the MSCI Kuwait Index from frontier to emerging market status.

The proposed amendments to Vietnam’s securities law may also accelerate the Government’s State-owned Enterprise (SOE) reform agenda. Equitisation of SOEs and divestment of state capital have been given high priority in recent years by the Government as it aims to equitise and divest state capital in more than 500 enterprises by 2020.

Vietnam’s capital markets have outperformed many of its peers in the ASEAN region. It has been the third-ranked market globally over the last five years. As a sign of what could be in store, Financial Times Stock Exchange (FTSE) Russell, in September 2018, added Vietnam to its watch list for possible reclassification to secondary emerging market status.

As part of Vietnam’s guided reform process, the Vietnamese market authorities have been reviewing and liberalising a myriad of regulations and implementing numerous enhancements to the capital market infrastructure to open the domestic equity market to foreign investors.

Local market authorities are working towards addressing the gaps identified by the MSCI. It is only a matter of time for Vietnam to tick all the boxes and achieve emerging market status.

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Supporting clients in Vietnam In recent years, Vietnamese market authorities have embarked on several initiatives to further develop Vietnam’s capital markets. For instance, Vietnam launched its first domestic exchange-traded fund (ETF) in July 2014. Recognising the crucial role pension funds play in encouraging long-term savings and their positive impacts on the equity market depth and liquidity, the Government issued the first decree guiding voluntary pension schemes in 2016. This decree sets out requirements for establishment and operation of a voluntary pension fund. Vietnam’s first pension fund is expected to be launched this year.

Following Vietnam’s economic achievements in the last few years, the country’s capital markets have recorded outstanding performance.

The benchmark VN-Index recorded a 12 per cent gain on the HOSE in 2019 after declining 9.3 per cent in 2018. There is a lot of optimism from both domestic and foreign investors. Vietnam’s growth is expected to continue and potentially accelerate in years to come – it is important for foreign investors to access Vietnam’s capital markets with a trusted partner with rich knowledge of the intricacies and requirements of the local market.

NORTHEAST

NORTHWEST

THÁI NGUYÊN

SƠN LA HẢI DƯƠNG HANOI

HẠ LONG

HẢI PHÒNG

HÒA BÌNH

THÁI BÌNH

In Vietnam, Standard Chartered is the top service provider for offshore focused funds and foreign insurer clients. In May 2019, Standard Chartered was recognised as the ‘Best Fund Administrator – Retail Funds’ for four years running (2016-2019) by The Asset Triple A Asset Servicing, Institutional Investor and Insurance Awards.

THANH HÓA

NORTH CENTRAL

VINH

HUẾ ĐÀ NẴNG SOUTH CENTRAL TAM KỲ

GDP

USD 244.95 bn Population

95.54 million

PLEIKU

QUY NHƠN

CENTRAL HIGHLANDS BUÔN MÊ THUỘT

Vietnam’s growth is expected to continue and potentially accelerate in years to come – it is important for foreign investors to access Vietnam’s capital markets with a trusted partner with rich knowledge of the intricacies and requirements of the local market.

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NHA TRANG SOUTHEAST

ĐÀ LẠT

THỦ DẦU MỘT BIÊN HOÀ LONG XUYÊN PHU QUOC

HO CHI MINH CITY

CẦN THƠ RẠCH GIÁ MEKONG SÓC TRĂNG RIVER DELTA CÀ MAU

BẠC LIÊU

CÔN SƠN

PHAN THIẾT

Awards

Regulatory outlook

Market access

Market profile

Market Updates

THE CUSTODIAN september 2019 SECURITIES NEWS

Innovation culture – moving towards agility We are living in an era of hyper convergence and instant gratification; everything needs to be fast and free. Fintech has become the new buzzword, yet Financial Institutions (FIs) have built their systems and processes on technology for decades.

Stakeholder clients demand is changing rapidly. The introduction of disruptive technology means firms must change the way they think and operate to keep up and avoid disintermediation.

The proliferation of fintech startups, digital assets and data opportunities are increasingly grabbing FI’s attention. The banking industry is maturing in its appreciation and adoption of the potential of technology and

the efficiencies and changes in business models that it enables.

The divergence in focus of large at-scale technology players is accelerating that focus. Tech giants such as Facebook, Amazon and Alibaba are increasingly leveraging their client bases to offer basic financial products. The additional competition and choice that this brings to investors seems to have regulatory support in some jurisdictions. As an example, Ant

Financial, Tencent and Xiaomi have been awarded virtual banking licenses in Hong Kong.

Tech firms have already embraced or been built with a culture of innovation and change, making them generally more agile than FIs. How can we as FIs keep up with this wave of technology and stay competitive to deliver the solutions that meet client expectations and enhance their experience?

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The answer is to change the way we work and shift towards an innovation culture within the industry. This starts with a new mindset – from how we hire, engage and train staff – and carries through to the way we interact with our clients.

Client engagement is shifting to a partnership-centred approach that focuses on fully understanding client needs and concerns, with co-creation to requirements are met. One way to do this is via workshops focused on collaboration and understanding client pain-points.

Many FIs are working to streamline their internal processes and are looking at self-disruption through in-house innovation teams. For this to work, hiring strategies need to be rethought. As data matures as an enabler, we are seeing a greater requirement for data scientists. Our industry must train our staff to ensure they have adequate exposure to new technologies and understand how deployment can help clients.

A mindset change to future-proof FIs It should no longer be the job of specific teams to come up with new business solutions. Everyone has a role to play in ideating new solutions that leverage technology.

By cultivating an innovative spirit and entrepreneurship among staff, we increase our chances of remaining relevant in the years to come.

An ‘agile’ change environment takes these elements and shift in culture and brings them together in a methodology that allows companies to deliver solutions that adapt as they are being implemented. For a business this means accurately identifying the unique needs of clients and building an agile organisation that can reorient itself towards valuable opportunities as clients, technology and regulations change.

An ‘agile’ change environment takes these elements and shift in culture and brings them together in a methodology that allows companies to deliver solutions that adapt as they are being implemented.

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An agile Standard Chartered Securities Services

The Securities Services team is embedding the ‘agile’ methodology, which allows focus on:

Linking our strategy to our investments

Delivering to market faster

The client-centric focus of the ‘agile’ environment allows a greater focus on client needs and incremental improvements that solve challenges for clients, instead of simply delivering an end product.

A clear direction on the strategic focus and teams that are empowered to ensure that investments and projects delivered are aligned with the overall business strategy.

Agile methodology

A delivery model that adapts as we deliver

The iterative, incremental development cycles used under the ‘agile’ methodology allows feedback to be incorporated into the design and implementation process. This gives the opportunity to reassess and reallocate resources as needed.

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THE CUSTODIAN september Awards 2019 Regulatory outlook

Market access

Market profile

Market Updates

SECURITIES NEWS

Striking the SGX securities market gong On 24 July 2019, Margaret HarwoodJones, Global Head of Securities Services, officially opened trade at Singapore Exchange Limited (SGX) by striking the SGX securities market gong to mark the start of the trading day.

This was a celebration of the SGX’s 20th anniversary and at the same time, marked Standard Chartered’s 160th anniversary in Singapore.

Standard Chartered and the SGX have a long history of working together. In Singapore, we are one of the SGX’s key partner banks and depository agents.

Over the years we have collaborated on various areas such as post-trade settlement, liabilities management, FX hedging and bond trading.

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As the largest market clearer and one of the largest settlement banks in Singapore, we are pleased to support SGX’s growing fixed-income business as the sole settlement bank for SGX Bond Trading Pte Ltd. We look forward to working closely to drive commerce and prosperity to people and businesses in the future.

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Awards

Regulatory outlook

Market access

Market profile

Market Updates

SECURITIES NEWS

Securities Services update Recent organisational changes and appointments have allowed us to drive commercial performance across our key origination markets even more. They also ensure Standard Chartered is strongly aligned with the organisation of the FI teams in Global Banking in these markets.

This demonstrates our commitment to our US-based clients, by increasing the seniority of our on-the-ground securities services expertise. This will further build Standard Chartered’s sales focus and re-double our efforts to capitalise on business momentum achieved.

Please join us in congratulating all three on their appointments.

Congratulations to Craig Perrin, who has been appointed Global Head of Sales, Securities Services. This is in addition to continuing in his role as Regional Head of Securities Services, Americas, where he focuses on originating opportunity for Standard Chartered across a mix of client segments, including investors, insurance, intermediaries, and broker dealers. Craig will be moving to New York for his new role.

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Craig Perrin Global Head of Sales, Securities Services

THE CUSTODIAN september 2019

Madeleine (Maddy) Senior Regional Head Securities Services, Europe

We are pleased to have Madeleine (Maddy) Senior join the team as Regional Head of Securities Services, Europe. Maddy joined Standard Chartered on 3 June 2019 from Northern Trust and brings with her 25 years of senior management experience across sales, relationship management, business and product development functions. Her most recent role with Northern Trust was as the Managing Director of Australia and New Zealand. Based in London, Maddy is part of the Securities Services Management Team (SSMT).

We are pleased to announce that Rick Hu has been promoted to the role of Head of Securities Services, China. Rick was Head, Product for Securities Services China for almost three years and he has also been Acting Head of Securities Services, China for the past six months. He has a wealth of experience in the securities business, having previously worked with HSBC for almost 15 years in roles related to securities services.

Rick Hu

The role of Head of Securities Services, China has a high market profile and is a key position for the Securities Services business globally. Rick will have a pivotal part in continuing to build Standard Chartered’s leading presence in the China securities market for both local and cross-border clients.

Head of Securities Services, China

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