How to ensure that your CSD is relevant even in a tokenised future
Central securities depositories (CSDs) are of more recent provenance than impatient reformers of the global financial system sometimes assume. Though they did exist before the great paper-driven securities settlement crunch of the late 1980s – notably in the United States, which chose a CSD in response to a paper settlement crisis of its own in the 1970s – it was the Group of Thirty (G30) Recommendations on how to avoid a repeat of that expensive disaster which prescribed a CSD for every market. CSDs became the great infrastructural innovation of the global securities markets of the 1990s.
One firm which emerged from the maelstrom is Percival Software, whose platform is now installed at 19 CSDs around the world. Recently, Percival added a trading component to its existing issuance, settlement, registration, custody, asset servicing and securities financing functionality. Dominic Hobson, co-founder of Future of Finance, spoke to Chris Richardson, CEO of Percival Software, about the origins of the firm, what he has learned, and how Percival is helping clients respond to the twin challenges of crypto-currencies and tokenisation.
Questions that are being asked
1. Historically, your main products are a CSD platform and a share registration platform. There are obviously links between them, but which came first and how?
2. Does the world need registrars if it has CSDs?
3. Percival is working directly with issuers such as Kerry Group, Coop Bank of Kenya and Ghana Commercial Bank, which use the technology to run their shareholder registers. Are you also working with third party registrars – and, if so, how do their demands differ?
4. What are the advantages to a corporate issuer of internalising maintenance of the share register?
5. Understandably, your share registration business has led Percival to support employee share and share option schemes. How important is it in attracting and retaining issuer interest?
6. Your CSD platform is now in place at 19 CSDs around the world, mainly in Africa (Kenya, BVRM of Benin, Bukina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal, Togo), Middle East (Armenia) CEE (Estonia, Latvia, Lithuania, Ukraine) and the Caribbean (Barbados, Bahamas, Jamaica, Trinidad & Tobago). What do markets such as these require of CSD systems that large, developed markets do not?
7. Why no clients in Asia?