Citi’s whitepaper highlights this shift in the securities industry. Assessing…

• The securities industry is focusing on innovative solutions and automation to meet the challenges of the evolving landscape.
• A remarkable 87% of respondents view central bank digital currencies and stable coins as viable tools.

The securities industry is gearing up for significant challenges as accelerated settlements take center stage. This was as per the latest “Securities Services Evolution” whitepaper by Citi.

In a survey encompassing a wide spectrum of market players, a whopping 77% of respondents foresee a substantial impact on their businesses due to this accelerated settlement trend. These include banks, broker-dealers, asset managers, and custodians.

The move toward T+1 settlement cycles has triggered a consensus among participants on the necessity of innovative solutions. Okan Pekin, Global Head of Securities Services at Citi, emphasized the need to embrace innovation and efficiency in the evolving landscape.

Citi’s comprehensive research involved insights from 12 financial market infrastructures (FMIs) and 500 market participants globally. Amid the anticipation of transformation, market players are prioritizing preparations.

Initial efforts aimed at clients and counterparties, followed by refining in-house systems and processes. Automation and standardization of client communications are the focus for 69% of those surveyed. Furthermore, approximately 64% seek technology platform upgrades or replacements.

Beyond the anticipation of change, the whitepaper highlights recurring obstacles to the settlement cycle shortening. For three consecutive years, respondents have pointed to cash, funding, and liquidity management as the greatest challenges. Furthermore, the move to T+1 is poised to notably impact the securities lending and borrowing sector, as 80% of market participants anticipate.

Market players brace for transformation as Citi’s research highlights challenges and opportunities

The study also revealed the industry’s inclination towards Distributed Ledger Technology (DLT) and digital assets. 74% of respondents engage in such initiatives. Notably, 38% of market participants have already launched digital asset offerings, compared to 22% utilizing DLT.

Digital currencies are also rapidly maturing, according to the report. 87% of participants perceive central bank digital currencies [CBDCs] and stable coins as viable tools to support securities settlement. This figure represents a notable increase from 72% in the previous year. The growing maturity of digital currencies is fostering a collaborative approach among market participants to enhance the overall ecosystem’s stability.

Matthew Bax, Global Head of Custody for Securities Services at Citi, emphasized the importance of collaboration and innovation while ensuring a consistent client experience in a dynamic market environment.

With assets surpassing USD 27.1 trillion, Citi Securities Services stands as a major player in the cross-border support landscape. Operating in over 60 markets, the institution offers an array of tailored securities services solutions driven by local expertise.

The impetus remains on fostering partnerships and capitalizing on innovation for a robust and stable ecosystem. Citi’s comprehensive whitepaper provides valuable insights into the sector’s evolution, cementing its commitment to staying at the forefront of change.