Deutsche Boerse's withdrawal from regtech raises concerns, says Cappitech
23 September 2020 London
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The significant contraction of the regulatory reporting service provider pool this year is expected to increase pricing and force clients to consolidate under a single provider to compensate, says Cappitech.
The warning follows news that Deutsche Boerse is set to become the second services provider to withdraw from the regtech market by suite to MarketAxess Trax.
The German exchange follows CME Group which began winding down its earlier this year.
鈥淭his has reduced the number of market players, with the inevitable effect of reduced competition in the short to medium term,鈥� says Cappitech, which is itself a regulatory reporting service provider.
鈥淚t鈥檚 not unlikely that pricing for trade reporting will continue to increase as a result of this reduced competition,鈥� the firm notes in a statement reacting to the MarketAxess/Deutsche Boerse deal.
As a result, Cappitech explains, firms may need to consolidate their trade reporting to single service providers to access the benefit of consistency and volumes and keep costs low.
鈥淯sing regtech vendors to improve and automate the process to reduce the total cost of ownership may be an appealing option,鈥� Cappitech adds.
Commenting on the transition of the Deutsche Boerse鈥檚 customers to MarketAxess, Cappitech speculates that the move will be 鈥渞elatively smooth, particularly as they did not offer client customisation鈥�.
Cappitech further suggests that other end-point players can now use this as an opportunity to increase their offering by providing services they don鈥檛 currently have, such as transaction reporting for the Markets in Financial Instruments Directive transaction reporting.
The warning follows news that Deutsche Boerse is set to become the second services provider to withdraw from the regtech market by suite to MarketAxess Trax.
The German exchange follows CME Group which began winding down its earlier this year.
鈥淭his has reduced the number of market players, with the inevitable effect of reduced competition in the short to medium term,鈥� says Cappitech, which is itself a regulatory reporting service provider.
鈥淚t鈥檚 not unlikely that pricing for trade reporting will continue to increase as a result of this reduced competition,鈥� the firm notes in a statement reacting to the MarketAxess/Deutsche Boerse deal.
As a result, Cappitech explains, firms may need to consolidate their trade reporting to single service providers to access the benefit of consistency and volumes and keep costs low.
鈥淯sing regtech vendors to improve and automate the process to reduce the total cost of ownership may be an appealing option,鈥� Cappitech adds.
Commenting on the transition of the Deutsche Boerse鈥檚 customers to MarketAxess, Cappitech speculates that the move will be 鈥渞elatively smooth, particularly as they did not offer client customisation鈥�.
Cappitech further suggests that other end-point players can now use this as an opportunity to increase their offering by providing services they don鈥檛 currently have, such as transaction reporting for the Markets in Financial Instruments Directive transaction reporting.
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