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The Clearing Broker Conundrum: Is Post-Trade an Area of Competitive Edge?

The Clearing Broker Conundrum: Is Post-Trade an Area of Competitive Edge?

Self-clearing isn’t for every firm, but if it enables the firm to retain competitive edge, it’s the right option.

London, 13 September 2018 – The global sell-side community has spent the last few years battling the rising cost of compliance and operating in a margin-compressed environment. Numerous clearing brokers have strategically exited the client clearing space, and regulators have been vocal about the rising specter of concentration risk within the market. Sell-side firms must also scrutinize a trade’s full life cycle, beyond just execution costs, to remain profitable and comply with transparency requirements. Consequently, middle- and back-office technology environments have come under the industry spotlight.

Based on Aite Group’s in-depth interviews with 28 operations executives at both buy-side and sell-side institutions during the second half of 2017 and first half of 2018, this report explores the post-trade processing environments within sell-side firms and the regulatory and market-structure changes they are facing. It highlights the dynamics behind a firm’s decision to self-clear versus outsource post-trade processes and reviews the derivatives clearing environment within key global markets. It also provides an overview of the derivatives clearing environment in 2018 and the volumes across key central clearing counterparties.

This 29-page Impact Note contains 23 figures and two tables. Clients of Aite Group’s Institutional Securities & Investments service can download this report, the corresponding charts, and the Executive Impact Deck.

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This report mentions CME, ICE, JSCC, LCH, and OTC Clear Hong Kong.