NEW YORK, Oct. 8, 2020 /PRNewswire/ -- BNY Mellon today
released its paper, developed leveraging data provided by SWIFT,
entitled "Capital Markets Infrastructure: What is the New Normal
after COVID-19?". The paper assesses the impact that the
COVID-19 pandemic had on the world's capital markets infrastructure
(CMI), and what CMI providers need to think about going forward.
The CMI consists of all of the components that make the flow of
money across global financial markets possible. While CMI providers
traditionally were exchange complexes, clearinghouses and
depositaries, the landscape of providers has broadened to include
many critical elements, such as: global trading access and
connectivity, data and analytics, process efficiency, and
regulatory, risk and compliance management.
In addition to disrupting people's health, lives and jobs, the
COVID-19 pandemic ended the 11-year U.S. stock market bull run. It
also prompted the most extreme stress event since the 2008 global
financial crisis with the quickest draw-down on record. The paper
points out that message volumes in March
2020 were four times normal levels while transaction sizes
slumped by 46% during the first half of 2020. However, CMI
providers remained resilient despite sharply increased trading
volumes, helping to absorb the massive shocks and strengthen the
overall capital markets community.
The COVID-19 crisis and consequent market volatility has played
out against a backdrop of a fast-changing financial services
environment. The surge of pandemic-driven digitalization, combined
with central bank and regulatory intervention, competitive dynamics
and evolving investor behavior, are driving a transformation of
various financial services segments, including:
- Asset managers: Scale and AUM are increasingly
important; advanced analytics, digital engagement and targeted
wholesaling can create distribution advantages. Passive
strategies continue to gain ground over active strategies, as
investors demand transparent and low-cost products.
- Asset owners: Pension trends, such as the transition
from defined benefit to defined contribution plans, have increased
allocations to private markets. Asset owners are prioritizing
resilience and the ability to operate remotely.
- Alternatives: Consolidation continues as the largest
managers dominate fundraising and investors' hunger for
uncorrelated returns fuel alternative manager product growth.
- Banks, brokers, dealers and advisors: Outsourcing is on
the rise to counter revenue and expense pressures, as players drive
to bolster balance sheets by reducing inventories, adopting agency
models, and optimizing liquidity, funding and collateral.
- Insurance: Changing customer needs (e.g. retirement
security, usage-based insurance, digital advisory etc.) continue to
push businesses to evolve.
- Corporate and technology: There is an increased demand
for liquidity, credit and working capital, with the potential for
big tech to embark on tactical and strategic acquisitions.
As we look ahead and learn from the COVID-19 market dislocation,
financial markets and CMI interaction will continue to evolve with
a focus on:
- Streamlined communications to ensure that communication
is transparent, frequent and fluid among client and regulatory
communities.
- Enhanced collaboration between asset managers, brokers,
dealers, advisors and insurance funds to better withstand the
shocks of volatility.
- Standardized data across the entire trading process, to
ensure crisis and regulatory reporting and compliance expectations
are met, to protect both clients and firms, and to ensure the
industry is operating at an accelerated and efficient pace.
- Business and market resiliency as financial services
companies continue to reevaluate and stress-test their processes
and systems.
To learn more about BNY Mellon Asset Servicing, please visit our
website.
About BNY Mellon
BNY Mellon is a global investments company dedicated to helping
its clients manage and service their financial assets throughout
the investment lifecycle. Whether providing financial services for
institutions, corporations or individual investors, BNY Mellon
delivers informed investment management and investment services in
35 countries. As of June 30, 2020,
BNY Mellon had $37.3 trillion in
assets under custody and/or administration, and $2.0 trillion in assets under management. BNY
Mellon can act as a single point of contact for clients looking to
create, trade, hold, manage, service, distribute or restructure
investments. BNY Mellon is the corporate brand of The Bank of New
York Mellon Corporation (NYSE: BK). Additional information is
available on www.bnymellon.com. Follow us on Twitter
@BNYMellon or visit our newsroom
at www.bnymellon.com/newsroom for the latest
company news.
Contact: Paul Patella
BNY Mellon Asset Servicing
paul.patella@bnymellon.com
+1 212 635 1378
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SOURCE BNY Mellon