The Opportunities and Challenges Ahead for Asia Pacific’s CSD Industry

The Asia-Pacific Central Securities Depository Group (ACG) recently gathered in the city of Busan, South Korea, to discuss and debate the major trends impacting the post-trade industry, with an overarching conference theme of “Financial Industry, Navigating the Sea of Uncertainty.”

Nasdaq was proud to be invited as a guest speaker during the conference, which consisted of leaders and key decision-makers from more than 20 countries across the APAC region. The ACG itself is made up of 35 member organizations, ranging from CSDs like KSEI in Indonesia, PDS in the Philippines, KSD in South Korea and JSDC in Japan – all of whom were at the annual general meeting (AGM) in full force.

Throughout the AGM, three major themes stood out: 

  1. Preparing for unforeseen challenges
  2. Future-proofing innovation
  3. Incorporating digital assets into the post-trade ecosystem

For APAC, when the COVID pandemic struck the region in January 2020 (ahead of most of the world), its CSD community reacted to the consequences of the situation by finding an opportunity to proactively digitize their business processes, which previously involved manual forms and paperwork (e.g., the Philippines introduced a new digital model for the signing of allocations in relation to IPOs). Not only did these efforts help future-proof APAC’s post-trade infrastructure, but they also streamlined how it supported a remote and dispersed capital markets ecosystem. 

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2022 has witnessed incredible volatility across the global markets. Volumes, as well, have surged to triple or quadruple levels. While CSDs have been able to manage these volumes, it’s pushing organizations to innovate and future-proof in order to scale with ease and meet the demand head-on. Collateral management also plays a major role as a critical process, and we are likely to see a particular focus in this area in the year ahead. 

The interest in digital assets continues to be front and center across the global financial markets. For APAC’s CSDs, not only does there continue to be significant private sector demand, but governments are encouraging post-trade operators to incorporate digital assets into their ecosystem.

Thankfully, CSDs have a solid foundation in delivering issuance, custody, and settlement services to their existing clients. Coupled with their ongoing digitization efforts, this means they now have the ability to move into and efficiently issue, administer, and settle digital assets.

Further, AGM attendees agreed that the coexistence between traditional assets and digital assets requires safe and secure management for all asset classes through smart regulations and scalable technology.

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On Nasdaq’s end, we are working with the CSD community on a variety of use cases that provide a consolidated view of all assets. These include:

1. Issuance, settlement and registry of digital assets;

2. Custody and settlement of cryptocurrencies;

3. Connectivity to payment networks:

  • One platform for all assets;
  • One consolidated view;
  • One point of access;
  • Facilitated settlement between asset and liquidity pools.

Digital assets are a burgeoning space that requires a balanced approach to innovation and incorporation. From the dialogues at the AGM, we are certainly heartened by the enthusiasm to get it right from a CSD perspective. 

As we look to welcome 2023 soon, we are greatly enthused by the collaborative, forward-thinking attitudes of APAC’s CSD community. This is an industry that sees the opportunities and challenges ahead and leans into collectively embracing them head-on.


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