Scaling businesses in Asia
16 April 2024
Broadridge鈥檚 Darren Crowther sits down with Carmella Haswell to discuss the events shaping Asia鈥檚 key markets as the firm sets to expand in the region, as well as the technological trends catching the eye of clients
Image: stock.adobe/YiuCheung
Firms in Asia require modern technology that will enable them to scale their business, and a partner that can be flexible as companies position themselves for global expansion to better service clients. Broadridge clients are steadily growing their businesses and are now identifying a wider adoption from both onshore and offshore participants. To maintain this growth, firms will need to increase their technology footprint and system demands.
Broadridge鈥檚 Darren Crowther, head of 麻豆传媒 Finance and Collateral Management (SFCM) solutions, pinpoints key movements in the APAC markets to keep top of mind as he highlights opportunities in the region.
Regional break down
Recent changes in the regulatory landscape, an example being the announced tightening of short selling rules in Thailand, are shaping the way industry participants transact. Offshore regulatory amendments are also shaping strategy in the region, as the journey to shorten the settlement cycle in the US to T+1 takes a toll on firms鈥� ability to operationally manage their clients鈥� US positions in Asia Pacific.
Markets within the APAC region share a key focus to improve trading and operational processes, as well as to nurture new sources of liquidity.
The Philippines remains a work in progress as a relatively new securities lending market, where regulators and market participants continue to shape how its securities lending programme will operate. The future of this market is driven by the Philippine Stock Exchange (PSE) onshore and offshore participants, but most importantly via the introduction of best practices through interactions with the Pan Asia 麻豆传媒 Lending Association (PASLA) and other market bodies.
Meanwhile, ongoing minor changes are driving additional securities lending opportunities in the Malaysia market. This region is still growing, although 鈥渘ot as quickly as initially expected鈥�, according to Crowther. As an example of a market with specific needs, Bursa Malaysia introduced an Islamic securities-based lending (SBL) framework in 2017 which is facing further amendments in relation to the ease of onboarding and standardised documentation.
Singapore is seen as a relatively mature market. More organisations are introducing new liquidity pools into their securities lending programmes from the wealth management side and through retail investors. As a result, market participants in the region require improvements to onboarding processes and an upgrade to their technology stack, according to Crowther.
In Hong Kong, the growth of asset flows via the Southbound Stock Connect is a driver of additional volumes in the region. 鈥淲e are hearing this on a regular basis in conversations with Chinese-backed international banks, which are looking at expanding their securities finance offerings to meet new demand,鈥� he adds.
Broadridge is seeing a demand for its services in these previously mentioned regions, specifically from organisations looking to grow their capabilities quickly.
Broadridge鈥檚 SFCM business is a global, real-time, multi-asset solution for securities finance market participants of all sizes and complexities. Both its Full Service Mainline solution and the new FastStart rapid spin up operating solution support agency and principal trading of equities and fixed income securities across securities lending, repo and collateral management.
Speaking to SFT, Crowther says: 鈥淭hese firms require modern technology that will enable them to scale their business. They rightly only want to pay for what they use 鈥� they do not want to invest in something large for three years forward. Instead they are looking for a trusted partner like Broadridge that can be flexible and grow with them.鈥�
Crowther explains that these types of businesses evolve and grow over time. These companies may begin with a single entity in APAC and then want to position themselves in the UK, Europe or US markets. Organisations in Hong Kong and Singapore initially start locally and then realise that 鈥渢o service their clients they need a presence in the US or London as well鈥�. The firms will then increase their technology footprint and system demands to meet this growth.
Up in the cloud
鈥淐loud, if done properly, gives firms a higher level of security, availability and scalability along with the ability to run 24/7,鈥� says Crowther.
The terms private cloud and public cloud refer to the on-demand delivery of IT resources over a network. In a private cloud, a single organisation controls and maintains the underlying infrastructure to deliver the IT resources, such as technology firm IBM. In a public cloud, external providers such as Amazon Web Services and Microsoft Azure, deliver the resources as a fully-managed service.
Broadridge works alongside both private and public cloud providers. The ability to use and offer cloud is not new for the financial technology company; the firm provides flexibility in whether it uses cloud or on-premise solutions.
Crowther sees cloud as 鈥渢ransitory鈥�. He explains that, while a number of market participants are open to moving to the cloud, other countries are more hesitant 鈥� plagued by concerns surrounding data residency and protection. There are data residency restrictions on firms in APAC, where regulators require firms鈥� data to be held onshore.
鈥淲e believe that we can help run a bank's business better by allowing Broadridge to run the technology and software concurrently. But it all comes down to the choice of the organisation 鈥� whether they have the IT capability to run it, or if they want to outsource that to us,鈥� Crowther adds.
It is important for Broadridge and its clients that the cloud infrastructure it puts in place is elastic. Elastic capability gives a firm on demand capability for processing power and users. Thinking specifically of organisations looking to start from zero, Crowther says cloud gives these firms the ability to 鈥渟pin up鈥� very quickly and track expense with growth.
In terms of technology, AI has become a popular buzzword in the industry in recent years.
Generative pre-trained transformers, otherwise known as GPT, is a type of technology that Broadridge has embraced fervently in the last 18 months. The firm is harnessing the use of GPT tools to act as a catalyst for its development process, assist with test case creation and execution, as well as automatically create framework code for use in the development process.
Broadridge is able to ask questions to GPT tools around a particular product or functional area 鈥� the tools can quickly summarise, based on the data held in multiple data stores within Broadridge, and point staff to more detail and help solve problems quickly.
鈥淚t is not the end solution; people are still needed to validate. It simply gives firms an edge that was not there before,鈥� Crowther highlights.
Externally, Broadridge has a number of real-world systems that are using AI products, such as its BondGPT platform and OpsGPT.
The roadmap to success
Broadridge鈥檚 SFCM has strategically created two separate roadmaps to advance the platform in terms of its technology evolution and market demand.
Crowther says it is vital for the firm to continue to invest in its technology to improve and keep pace with security protocols, user experience and interaction with current and new market standards, such as the Common Domain Model (CDM).
The company will evaluate collaboration opportunities as these add value to Broadridge鈥檚 offerings, and in other cases the firm collaborates with its competition 鈥� otherwise known as 鈥渃oopetition鈥�.
鈥淚t is important we continue to do this as creating an interoperable ecosystem that banks can use is key to the success of all parties,鈥� he confirms.
Historically, the company has had a heavy focus on increasing its collateral capabilities due to an increase in clients鈥� collateral obligations following the introduction of the Uncleared Margin Rules (UMR). This was in tandem with the 麻豆传媒 Financing Transactions Regulation (SFTR) and the Central 麻豆传媒 Depositories Regulation (CSDR) driving product change.
Now that these regulations are in full swing, Broadridge continues to work with clients and prospects on creating and improving its synthetic product support, dealing with the impact of US Treasury clearing rules which are driving participants towards cleared repo 鈥� either sponsored or self-cleared.
Over the next 12 months, Broadridge will focus on supporting clients as the industry moves towards a shorter settlement cycle, T+1, in the US and the move towards mandatory clearing of US Treasuries.
Broadridge will also continue to innovate and further invest in digitised asset and AI offerings. And finally, the firm will continue to onboard clients to its range of services across the world with a focus on growing its brand and market share in APAC.
Broadridge鈥檚 Darren Crowther, head of 麻豆传媒 Finance and Collateral Management (SFCM) solutions, pinpoints key movements in the APAC markets to keep top of mind as he highlights opportunities in the region.
Regional break down
Recent changes in the regulatory landscape, an example being the announced tightening of short selling rules in Thailand, are shaping the way industry participants transact. Offshore regulatory amendments are also shaping strategy in the region, as the journey to shorten the settlement cycle in the US to T+1 takes a toll on firms鈥� ability to operationally manage their clients鈥� US positions in Asia Pacific.
Markets within the APAC region share a key focus to improve trading and operational processes, as well as to nurture new sources of liquidity.
The Philippines remains a work in progress as a relatively new securities lending market, where regulators and market participants continue to shape how its securities lending programme will operate. The future of this market is driven by the Philippine Stock Exchange (PSE) onshore and offshore participants, but most importantly via the introduction of best practices through interactions with the Pan Asia 麻豆传媒 Lending Association (PASLA) and other market bodies.
Meanwhile, ongoing minor changes are driving additional securities lending opportunities in the Malaysia market. This region is still growing, although 鈥渘ot as quickly as initially expected鈥�, according to Crowther. As an example of a market with specific needs, Bursa Malaysia introduced an Islamic securities-based lending (SBL) framework in 2017 which is facing further amendments in relation to the ease of onboarding and standardised documentation.
Singapore is seen as a relatively mature market. More organisations are introducing new liquidity pools into their securities lending programmes from the wealth management side and through retail investors. As a result, market participants in the region require improvements to onboarding processes and an upgrade to their technology stack, according to Crowther.
In Hong Kong, the growth of asset flows via the Southbound Stock Connect is a driver of additional volumes in the region. 鈥淲e are hearing this on a regular basis in conversations with Chinese-backed international banks, which are looking at expanding their securities finance offerings to meet new demand,鈥� he adds.
Broadridge is seeing a demand for its services in these previously mentioned regions, specifically from organisations looking to grow their capabilities quickly.
Broadridge鈥檚 SFCM business is a global, real-time, multi-asset solution for securities finance market participants of all sizes and complexities. Both its Full Service Mainline solution and the new FastStart rapid spin up operating solution support agency and principal trading of equities and fixed income securities across securities lending, repo and collateral management.
Speaking to SFT, Crowther says: 鈥淭hese firms require modern technology that will enable them to scale their business. They rightly only want to pay for what they use 鈥� they do not want to invest in something large for three years forward. Instead they are looking for a trusted partner like Broadridge that can be flexible and grow with them.鈥�
Crowther explains that these types of businesses evolve and grow over time. These companies may begin with a single entity in APAC and then want to position themselves in the UK, Europe or US markets. Organisations in Hong Kong and Singapore initially start locally and then realise that 鈥渢o service their clients they need a presence in the US or London as well鈥�. The firms will then increase their technology footprint and system demands to meet this growth.
Up in the cloud
鈥淐loud, if done properly, gives firms a higher level of security, availability and scalability along with the ability to run 24/7,鈥� says Crowther.
The terms private cloud and public cloud refer to the on-demand delivery of IT resources over a network. In a private cloud, a single organisation controls and maintains the underlying infrastructure to deliver the IT resources, such as technology firm IBM. In a public cloud, external providers such as Amazon Web Services and Microsoft Azure, deliver the resources as a fully-managed service.
Broadridge works alongside both private and public cloud providers. The ability to use and offer cloud is not new for the financial technology company; the firm provides flexibility in whether it uses cloud or on-premise solutions.
Crowther sees cloud as 鈥渢ransitory鈥�. He explains that, while a number of market participants are open to moving to the cloud, other countries are more hesitant 鈥� plagued by concerns surrounding data residency and protection. There are data residency restrictions on firms in APAC, where regulators require firms鈥� data to be held onshore.
鈥淲e believe that we can help run a bank's business better by allowing Broadridge to run the technology and software concurrently. But it all comes down to the choice of the organisation 鈥� whether they have the IT capability to run it, or if they want to outsource that to us,鈥� Crowther adds.
It is important for Broadridge and its clients that the cloud infrastructure it puts in place is elastic. Elastic capability gives a firm on demand capability for processing power and users. Thinking specifically of organisations looking to start from zero, Crowther says cloud gives these firms the ability to 鈥渟pin up鈥� very quickly and track expense with growth.
In terms of technology, AI has become a popular buzzword in the industry in recent years.
Generative pre-trained transformers, otherwise known as GPT, is a type of technology that Broadridge has embraced fervently in the last 18 months. The firm is harnessing the use of GPT tools to act as a catalyst for its development process, assist with test case creation and execution, as well as automatically create framework code for use in the development process.
Broadridge is able to ask questions to GPT tools around a particular product or functional area 鈥� the tools can quickly summarise, based on the data held in multiple data stores within Broadridge, and point staff to more detail and help solve problems quickly.
鈥淚t is not the end solution; people are still needed to validate. It simply gives firms an edge that was not there before,鈥� Crowther highlights.
Externally, Broadridge has a number of real-world systems that are using AI products, such as its BondGPT platform and OpsGPT.
The roadmap to success
Broadridge鈥檚 SFCM has strategically created two separate roadmaps to advance the platform in terms of its technology evolution and market demand.
Crowther says it is vital for the firm to continue to invest in its technology to improve and keep pace with security protocols, user experience and interaction with current and new market standards, such as the Common Domain Model (CDM).
The company will evaluate collaboration opportunities as these add value to Broadridge鈥檚 offerings, and in other cases the firm collaborates with its competition 鈥� otherwise known as 鈥渃oopetition鈥�.
鈥淚t is important we continue to do this as creating an interoperable ecosystem that banks can use is key to the success of all parties,鈥� he confirms.
Historically, the company has had a heavy focus on increasing its collateral capabilities due to an increase in clients鈥� collateral obligations following the introduction of the Uncleared Margin Rules (UMR). This was in tandem with the 麻豆传媒 Financing Transactions Regulation (SFTR) and the Central 麻豆传媒 Depositories Regulation (CSDR) driving product change.
Now that these regulations are in full swing, Broadridge continues to work with clients and prospects on creating and improving its synthetic product support, dealing with the impact of US Treasury clearing rules which are driving participants towards cleared repo 鈥� either sponsored or self-cleared.
Over the next 12 months, Broadridge will focus on supporting clients as the industry moves towards a shorter settlement cycle, T+1, in the US and the move towards mandatory clearing of US Treasuries.
Broadridge will also continue to innovate and further invest in digitised asset and AI offerings. And finally, the firm will continue to onboard clients to its range of services across the world with a focus on growing its brand and market share in APAC.
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