Depositaries continue adapting the services they offer to meet the needs of their customers. Flexibility that is necessary in an industry that continues to evolve day after day.
This flexibility carries over to the private markets industry and requires not only support in services that extend to a broader investor base, but a greater level of sophistication and dynamism. The figure of the depositary has evolved in recent years, from exercising a custodian and depositary function, today it plays a very important role in investor protection and acts as a partner of fund managers.
We asked Aurora Cuadros, Corporate Director of Securities Services at Cecabank.
Since 2022, the central banks' fight against inflation has abruptly brought us out of an eight-year period of negative rates. The steep rise in interest rates has increased investor appetite for fixed-income assets. As a result, the attractiveness of the alternative investment industry, which provided higher returns than other assets in a negative interest rate environment, has diminished in recent years. In addition, it has become more expensive to finance operations, which is very common in private markets, impacting margins.
Finally, it is worth noting the prudence of a large number of the entities marketing these products in relation to the access of non-professional customers to this type of assets, even though the minimum threshold has been reduced by regulation, as they are not considered suitable for the majority of customer profiles.
Looking ahead to 2024...
Given the high interest rate environment, in recent months the majority of vehicles launched in the market have focused on fixed-income investments, responding to the investment appetite of traditionally conservative Spanish investors, and we expect this trend to continue in 2024.
The managing entities demand increasingly services that reply so much to the constant regulatory modifications as to its optimisation needs of operational procedures. In this regard, Cecabank offers tailor-made solutions to satisfy both scenarios, providing both leadership in regulatory adaptations, due to our proximity to the regulator, and innovation in defining new services related to such strategic areas as are digital assets.
