Prepared for the future of post-trade

DACSI

DACSI is the principal Dutch trade association for the securities and derivatives industry, with members among banks and the central securities depository. It has a track record for promoting and improving the smooth functioning of ‘securities post-trade’ and advocating the Dutch interests with legislators and supervisors. But while DACSI and other post-trade actors have been largely consumed by the implementation of post-crisis legislation in the last 10 years, it was time to focus on the future again, to prepare DACSI and its members for relevant industry-wide developments.

Increased volatility in a rather stable industry

Changes in the complex securities infrastructure can take years and have always been more evolutionary than revolutionary. But in this volatile world, with fintechs and platforms on the rise and uncertain geopolitical developments, projects and investments with a long lifespan are under increased scrutiny. Can new technologies disrupt securities post-trade as they have disrupted other parts of financial services? Should we invest in new technologies or explore new partnerships and business models as disintermediation is becoming a potential threat?

“A consultant with a profound knowledge of scenario analysis, and with knowledge of the ecosystem. He helped us tremendously in the method of scenario analysis – explaining what it is but also what it is not: it is not a prediction of the future.”

– Henk Brink, chair of DACSI

Four plausible scenarios

Henk Brink, the chairman of DACSI, turned to Turner for help. What will the European post-trade sector look like in five to ten years and how can the Dutch post-trade industry be better equipped to adapt to changing circumstances without losing sight of our common long-term interests? Using scenario planning, Turner’s Thijs Venneman helped DACSI’s team to boil down numerous views and expectations from more than 30 studies and 25 interviews with leading industry experts into a set of key trends and developments and four plausible scenarios for 2025.

 

According to the analysis, the future of post-trade is predominantly influenced by 2 factors: the degree of political willingness to cooperate, determining the level of European financial integration, and the speed of technological innovation. The resulting four scenarios (Great reversal, Regional giants, In transition, Integrated legacy) provide valuable insights into plausible future outcomes for all post-trade actors.

Industry implications and early warning signs

In all these scenarios technology will have a major impact on post-trade, one way or another, and waves of consolidation will sweep across the current market participants. However, the bottom-line impact for each post-trade actor differs strongly in each scenario. Post-trade actors are therefore strongly encouraged to use the descriptions, lists of the impacts and early warning signs to assess the strategic implications for their organizations. DACSI uses these scenarios for industry discussions, to inform members on relevant forward-looking topics and to influence developments in regulation and oversight. Also, DACSI is actively sharing and updating its insights with European counterparts and committees. In short, being prepared for possible futures helps DACSI and its members to influence future outcomes.