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Clearing in Europe is going to heat up Friday, August 15, 2008

European Central Counterparty Limited (EuroCCP) launches tomorrow with 15 clearing firms, including the 9 founding members of Turquoise.

The Turquoise firms are Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley, Merrill Lynch, Citi, UBS, BNP Paribas and Societe Generale. The others are ABN Amro, Barclays Capital, Credit Agricole Cheuvreux, Instinet, KAS Bank and Lehman Brothers.

Of the 15 firms, 6 are general clearing participants who will be able to clear and settle trades for trading firms who are not EuroCCP clearers. The remainder will be clearing and settling their own trades.

Owned by DTCC, this is a overseas significant expansion by the US outfit, albeit it has taken them many years to land a large contract despite having had people on the ground in Europe for many years. It will undoubtedly create an even more competitive landscape in the central clearer market. Moreover, DTCC has deep pockets to fund its efforts thanks to its US revenues.

Labels: ABN Amro, Barclays Capital, BNP Paribas, Deutsche Bank, goldman sachs, Lehman Brothers, Merrill Lynch, Morgan Stanley

posted by John Wilson @ 12:00 PM Permanent Link ,

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Heads or tails for UBS Thursday, August 14, 2008

Image via Wikipedia I was fascinated to read in yesterday's FT that UBS is internally re-organising its' business into 3 distinct stand-alone units :- investment banking, wealth management and private banking. These will be autonomous units, albeit within a common legal entity structure, and will no longer share each other’s infrastructure, people or capital.

This is a marked reversal from previous years where "convergence" was paramount. Duplicate services between entities were rationalised into shared services and cross selling of products was high on the agenda, with the investment bank and wealth management functions seeking to manufacture products for private bankers to sell.

This former strategy is one being vigorously pursued by Barclays, which is heavily investing in upgrading its' woeful "Wealth" business aimed at high net worth individuals, with better people, products and process/systems. Notably it is seeking to manufacture products in Barclays Global Investors and Barclays Capital for Wealth customers, and share knowledge/technology across the group.

Whilst the options for UBS were not as stark as Heads or Tails, it does appears that they've elected to go in a diametrically opposed direction. Some of the Divisional Heads may well enjoy their new found independence, but overall Group costs will inevitably rise as duplicated infrastructures re-emerge and customers in some areas may suffer from the loss of access to more sophisticated offerings.

The re-struturing has also raised speculation that UBS could divest of its investment banking business, something that would have been unthinkable in recent years. Whilst strongly denied by UBS, it certainly makes "amputation" that much easier.