The future of the Nordic custody industry

The Nordic markets are going through enormous changes at the moment and the next four to five years will mean that the custody industry will have to change rapidly. This is the case in most parts of the world but is more challenging in Europe and the Nordic markets. Common for the custody industry on a global basis is the focus on risk mitigation and needs for improving efficiency and lowering cost. In Europe we see the development to a great extent driven by political and regulatory initiatives that started with the Lamfalussy report in 2001, continued with the second Giovannini Report, and is now further accentuated in the post-trade universe by initiatives like MiFID and the Code of Conduct. To the development in Europe we can add the implementation of Euroclear's Single Platform, the Clearstream lead initiative among several European Central Securities Depositories (CSDs) to interact through LinkUp Capital Markets and the plans from the European Central Bank (ECB) to develop T2S. The Nordic markets are challenged by all the developments mentioned above, plus the initiative to implement central counterparty clearing in all four markets. Right now, there is a struggle between the options of an open access and competitive clearing system in Denmark, Finland and Sweden or through a protective and expensive silo structure in Norway. This paper will mainly look at the consequences for the Nordic region and the custody industry in light of what is happening on a global and European basis.