At the same time, the authorities throughout the world, and especially here in Europe, have introduced stricter and more harmonised regulations. This has been a time-consuming work, but now, we can see the effects thereof being introduced in the markets through MiFID II, MiFIR and CSDR, as well as generally stricter capital requirements for the financial industry. If we also include the introduction of a common European Securities Settlement System, the T2S, and the digitalization that is now taking place, it is easy to understand why most business models have changed dramatically. The financial industry has always been in the forefront with regards to deployment of new technology, and the trading of financial instruments between professional parties was in fact digitalized already 20-30 years ago. The retail market is now being further digitalized to make investments in securities even easier. This will also have an effect on the development of the CSDs.
I have spent a lot of time during my first 2 months at VPS talking with customers and partners – both global players, Nordic banks and Norwegian customers. The feedback is quite clear. In spite of the prosperous markets, there is a pressure on cost reductions and risk mitigation in the international markets. The introduction of CSDR and T2S will facilitate a more harmonised European capital market in the post-trade industry, although the achieved effects thereof may still seem to take some time. In the Nordic countries, there are four markets with certain common features, yet different stock exchanges and CSD constellations. Particularly with respect to the CSDs, there is a desire for more cooperation and future harmonisation of market practice. At the same time, the sub-custody model is also under some pressure, as the global players are indicating a possible shift in their counterparty risk to CSDs and central banks. The feedback on our business in Norway, is that we should be more attentive to international market practice and international standards. At the same time, the players emphasize that Norway has well-functioning settlement systems and a high level of service. These are important signals that will be included in future development of strategy and technology.
This year, the Norwegian authorities introduced new schemes to facilitate increased savings in the retail market. The Share Savings Account has been a success so far, with the opening of more than 250,000 accounts in less than 3 months. We at VPS, are pleased to keep more than currently 160,000 of these accounts in our solutions. VPS will continue to work actively to develop solutions that contribute to efficient and enhanced services in the savings market.
Our most recent customer survey shows that the customers have confidence in VPS and we are perceived as a reliable and service oriented CSD. The survey disclosed, however, that we will have to focus more on innovation and sparring with our customers. My experience is that there is a coherence between the ability of innovation and sparring with the customers. Close customer contact is key when it comes to being innovative and strengthening the customer relationships.
Yours sincerely,
Audun Bø
CEO