Sumesh B, TCS Financial Solutions

The custody services market is an interesting place where an ever-changing landscape of regulation both, within and across countries, has resulted in the innovation of niche services as well as consolidation among various global as
well as local players.

There is no single definition by any leading agency as to what is an emerging market. From an economic and academic
point of view, the emerging markets require no specific support from international agencies for the prevention of epidemics nor global interventions with regard to political stability as compared to developing economies. This is in contrast to an investor point of view where high potential of capital growth, often associated with high risk and market volatility, makes emerging markets an attractive destination.

Today, the emerging markets are capturing more mindshare from fund managers than any other time since the last global crisis and as they continue in their quest to capture the elusive alpha. This has made global custodians respond
by providing direct custody or by creating a strong network of sub custodians in markets that differ in infrastructure and
connectivity. Fund managers, in return, are asking for a more cautious approach on how their assets are maintained by their custodians, as the emerging markets are complex in nature vis-à-vis market regulation as well as local market practices. The key consideration being the capability of the global custodians or their network sub custodians to safe guard client assets and ensure securities as well as cash settlement by adhering to local rules and regulations.

One emerging market that is currently witnessing renewed investor interest is the Middle East where the opening up of the Saudi Market and the addition of new markets such as Qatar and UAE to the MSCI EM index has created profound interest in investor community.

This paper will examine these new markets and the opportunities available to incumbent custody providers as well as
new entrants.

Read the white paper.

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