[ M A R K E T
Client base
Rather than attempt to compete head on with incumbent
providers from the start, BNP Paribas set out to meet the needs
of the broader corporate group. “We first moved all the BNP
Paribas branches that had custody elsewhere onto our platform,”
says Thiry. “The next focus was to attract European clients,
where the BNP Paribas name is well known. If you look at our
client base now, it basically consists of three groups: clients from
within the wider corporate group, European clients and US
clients looking for a global custodian.”
In addition to mainstream global and local custody, the bank
offers broker-to-custody and account operator models. The
former is available to clients based in Europe and Asia and offers
order entry, routing, monitoring and advanced execution. Under
the latter, the client maintains full operational control over its
end-client’s assets, while BNP Paribas operates its DTCC account,
handling all custody-related processes such as trade settlement,
corporate actions, tax reporting, proxy voting, reconciliation and
cash management. “I’d say there’s a trend to the account operator
model in the US,” says Thiry. “The accounts are in the client’s
name, so they bear the risk, but do not have the burden of con-
nectivity to the CSD or the integration of the data back from the
DTCC, which is generally in flat file format. There’s an opportuni-
ty to help such clients streamline their operations.”
Technology
All of these services run off the same IT platform. “We have
a single system for local and global custody. One advantage of
being a recent entrant to the market is having the latest technol-
ogy, which allows us to be particularly competitive with cut-off
times,” Thiry explains.
The system is managed centrally. “We have an IT lab in Pontin,
France, but also some dedicated IT people here working for the
US market with operations based in Jersey City. We also have
what we call a ‘dual office’, based in Lisbon. Staff in Lisbon have
the same access to the platform as our people here in New York,”
says Thiry. “As a French bank, we have a lot of European clients
who we can service in European hours, so they don’t have to wait
till early afternoon their time for answers to questions. They can
directly contact our Lisbon hub. In that way, we can provide 16
hours of daily processing and service coverage, including same-
day cut-off for voluntary corporate actions in the US.”
Thiry estimates that at the moment, some 25% of European
clients go via Lisbon. “We are also working to attract the US
assets of Asian clients through our Asian offices,” he says. “The
concept would be that the client could have an account here
directly or they could use one of our Asian hubs.”
Local clients
When it comes to attracting US-based clients, Thiry acknowl-
edges that it isn’t easy. “The US market is very mature and, as we
know, it is something of an operational burden to move from one
custodian to another,” he says. Nevertheless, he sees the appropri-
ate combination of technology and pricing levels as an attraction.
“There’s also what I would consider an underserved part of the
US market that we can target, including mid-tier institutions,
where we can draw on our global custody experience to explain
global market distinctions,” he says. One specificity, for example,
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is the tax side. Others are liquidity and risk
management. “Given the experience in the
US, it’s not always obvious that in some for-
eign markets, especially in Asia, there can
be a huge risk from not settling on time,”
Thiry notes, adding that cybersecurity is
another area that’s not really commoditised.
While admitting the bank is not the
cheapest available, Thiry suggests that its
relatively modest scale in the US means
the bank is able to provide tailor-made
services. “You’re getting the depth and
breadth of resources of a major global
custodian with a more boutique service
experience,” he says.
Client requirements
Beyond the core service, which by all
accounts is well-handled by all major
service providers, Thiry detects a shift in
service priorities among potential clients.
“When I look at the past two years of RFPs
we’ve received, clients are not really that
interested in the way we vault securities,
process trades or handle corporate actions.
“One advantage of being a recent entrant to
the market is having the latest technology,
which allows us to be particularly
competitive with cut-off times.”
FLORENT THIRY, AMERICAS HEAD OF FINANCIAL INTERMEDIARIES
& CORPORATES. BNP PARIBAS SECURITIES SERVICES
It’s taken for granted that we know how
to do that,” he says. “The shift I see, and
this year in particular, is that they are
really asking for advice. This year during
the RFP process with two of our main
prospects, for example, we had to analyse
all of their internal systems and were then
able to provide the most appropriate offer,
which in that case was an account opera-
tor facility.”
Thiry is also looking at continental
opportunities outside the US. “We see
some interest from Latin American asset
managers and pension funds,” he says. “We
used to service these clients from Spain,
but now they can have a direct relation-
ship with us in New York. To help with
that we’ve put in place a client window in
Bogota. We do have a presence in Chile,
Colombia and Brazil for local custody in
those locations, but global flows can be
redirected here.”
Winter 2018
globalcustodian.com
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