Post Trade Processing in the Singapore Private Banking Sector
In the first quarter of 2009, Omgeo commissioned InsightAsia Banking & Finance Consulting, a division of InsightAsia Research Group, to conduct a study into the post-trade processing practices of private banks in Singapore. The study revealed that nearly 60% of private banks in the region lack back office automation in trade processing.
Against a background of the growing importance of Singapore within the global private banking sector, Insight Asia surveyed Chief Operating Officers and Operations Managers from twenty nine Singapore-based private banks.
Many international banks are undertaking projects aimed at developing Singapore as the regional (in some cases global) centre for trade operations. The study focused on a range of issues related to trade processing, including the effects of the recent financial crisis on the private banking sector.
The study found general agreement from the private bank executives interviewed that, while recent events in financial markets were unprecedented and posed some challenges to the sector, Asia remains a key element in their global expansion strategies. Indeed, several banks have committed to major trade processing infrastructure investment in Singapore.
In addition, executives think that the focus on counterparty risk has increased substantially over the last twelve months, and is likely to continue in the foreseeable future. Many of the interviewees indicated that they had reduced the number of counterparties with whom they are dealing.
Nearly a third of private banks continue to manually carry out trade allocation and confirmation, in spite of the understanding that higher levels of automation in trade processing would result in a reduction in operational risk. In fact, of the executives interviewed from within private banks currently carrying out trade matching in Singapore, 59% said they either wanted to make improvements to their system or were in the process of doing so.
“This study suggests that Singapore private banks are becoming increasingly aware of the benefits of introducing automation into their back offices” said James Drumm, Executive Director, Asia Pacific for Omgeo. “At present, many private banks operate in a manual environment, but there is a growing consensus that introducing more automated processes will significantly decrease their operational and systemic risk.”
To receive a copy of the study, please contact askomgeoasia@omgeo.com
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