by Joanne Gill, Head of Global Custody and Agency Services within Equities & Asset Management Services EMEA, Bank of America Merrill Lynch
Keeping a company’s asset management strategy up to date is important in any climate – and is particularly critical during periods of upheaval. In the current market, regulatory developments such as Basel III and the European Union’s Alternative Investment Fund Managers Directive (AIFMD) are affecting everything from the cost of transactions to the way in which companies approach the financial markets. This, in turn, is prompting corporate treasurers to think differently about asset management.
Regulatory change may affect companies in different ways, depending on their priorities, goals and business models. For example, many companies are no longer willing to accept exposure to a single counterparty in the current environment. Treasurers are also placing increased emphasis on the need for asset protection, segregation and diversification, resulting in greater demand for custody services.
Treasurers are increasingly being tasked with managing the impact of regulatory change – and in some cases, they are responding to these changes by adopting banking services which may not have previously been on their radar. Organisations which are looking to manage increasingly large cash balances are using custody services more widely than in the past. Treasurers may also be seeking alternatives to bank lending, leading to a greater need for securities-based services.