Nasdaq, together with financial research consultancy The ValueExchange, have published the results of a survey aimed at drawing out a new post-trade operating model for Asia. Titled “Creating Asia’s post-trade operating model of tomorrow”, the study looks at how the region can “leverage standardisation to support growth, generate efficiencies, and modernise for the future”.

380 market participants from across the globe took part in the survey to share their growth plans, pain points, and opportunities for cost savings in the Asian markets of Hong Kong, Singapore, Indonesia, Malaysia, Thailand, and South Korea.

25 per cent of respondents expect to grow their investments in these six Asian markets, although the developed markets (Hong Kong and Singapore) are expected to attract more investors while the emerging ones (Indonesia, Malaysia, and Thailand) will see gain in average assets under management (AUM). South Korea is seen as a market positioned between the two levels of development. The region’s most important growth partners are North America and global investment banks. ETFs, unlisted equities, and OTC derivatives are the three asset classes most poised for growth.   

Calls for change

46 per cent of respondents indicated facing artificial limits on their ability to trade in Asian markets, with challenges more strongly felt in emerging markets. More than 75 per cent named trade processing costs as a core challenge while 60 per cent identified corporate action errors as a consistent issue. More than a third of the firms are using single-country platforms in a region where 39 per cent of systems are legacy. Registry and asset servicing platforms were identified as posing “the largest obstacles to change”.

Participants indicated they want to see change in Asian markets, with offshore investors expressing the most keenness. 32 per cent believe that post-trade change through regional harmonisation of rules and processes or consolidation of platforms would “deliver meaningful benefits and cost savings”. The study estimates that standardisation in settlement and corporate actions could deliver more than 10 per cent efficiencies in routinely voiced problem areas.

Action plan

To conclude, the report recommends a four-step industry checklist for building Asia’s next post-trade operating model:

• Align market practices and rules in post-trade processing through standards and best practices to reduce costs and errors.

• Harmonise and consolidate developed and emerging economies to drive market efficiency and regional integration.

• For participants, invest in change management to optimise and streamline operations in problem areas.

• For market ecosystems, prepare for artificial intelligence (AI), tokenisation, digital assets, and other innovation through platform modernisation.