welcome to your global sales convention. keynote presentation arindam das – regional head of hsbc...
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Welcome to your Global Sales Convention
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Keynote Presentation
Arindam Das – Regional Head of HSBC Securities Services, MENA
February 2013
SWIFT Global Sales Convention
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MENAMore people than the US,….Larger GDP than Brazil… More oil than the rest of the Planet
Morocco
Algeria
Tunisia
LibyaEgypt
SyriaLebanon
JordanIraq
SaudiArabia
Kuwait
Bahrain
QatarUAE
Oman
Yemen
Iran
· 56% of world hydrocarbon reserves1
· $383 billion worth of current account surplus2
(US Deficit = $1.4 trillion6; Euro Area Deficit = €561 billion7)
· $1.6 trillion GCC external assets3
(Russia ~$1 trillion; Brazil & India hold ~ $0.5 trillion7each)
· $2 trillion worth of infrastructure projects4
· $1.7 trillion HNWI wealth in the region5
· $104k GDP Per capita of the Qatar 10
(UK ~ $39k ; US ~ $49k ; France ~ $41k ; Germany ~ $42k ;Japan ~ $48k)
· 45 million GCC population with 51% below the age of 259
( Europe & Japan ppn. expected to decline by 2050; US ppn. may increase marginally but old age ppn. expected to increase)11
Source: 1- OPEC; 2&3 – IMF; 4 – Citi; 5 – Cap Gemini Wealth Report, 2011 6- Whitehouse Website, 7- DB research, 8- IMF, 9- Markaz research dt June12, 10 – IMF , 11 PRB.org
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The region has strong ambitions ….
Sources: Images from various websites, facts and figures as announced in media
Dubai in 1991 & 2005
• Dubai announced the Mohammed Bin Rashid City:
i. a park equipped to receive 35M visitors, ii. largest shopping mall in the worldiii. largest area for arts galleriesiv.environment for entrepreneurship and innovation
costing
King Abdullah Economic City - KSA
Bahrain Qatar Causeway
Al Maktoum International Airport
Louvre Museum , Abu Dhabi
Guggenheim , Abu Dhabi
Qatar in 1991 & 2005
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• Under the “Dubai World Central” theme , Dubai aims to become a global center for logistics, tourism and commerce costing $32Bn
• Dubai is also expanding the creek with a “suspended canal” at a projected cost of ~$400M
• Abu Dhabi - Louvre & Guggenheim museum in Saadiyat Islands costing ~ €108M and $ 200M resp.
• Qatar announced spend worth $100 Bn to gear up for the World Cup in 2022
• SAGIA in KSA to invest US$900 billion by 2020 on developing energy, ports, logistics and education
• Qatar Bahrain Causeway link announced with estimated cost of $ 5 billion
• GCC states are constructing the largest interlinked rail network costing $16 billion
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To be the Financial Centers of the World !
Sources: Bahrain Economic Board, Ministry of Foreign Affairs , Arabian business.com, DIFC and QFC websites
Bahrain
Widely regarded as the best-regulated financial centre in the Middle East, for more than 40 years
Gained prominence after Lebanon had civil war in 1970s replacing Beirut as the ME’s financial hub.
Financial services currently make up 27.6% of Bahrain’s GDP, over 400 licensed financial institutions based there
QFC
Set-up in 2005, with an independent regulatory authority, Civil and Commercial Court and a Regulatory Tribunal. It is a fundamental part of the Qatar Vision 2030 strategy and has around 160 registered firms
QFC allows investors to do business on an onshore basis irrespective of where they are based. Registered firms are also allowed to deal in any currency (unlike DIFC)
QFC won the “Best Financial Center in the ME” award from Global Finance last year for the second occasion
DIFC
Offshore Financial hub with independent regulators, Common Law framework, supportive infrastructure and tax-friendly regime
Fills the time-zone gap between London and New York in the west and Hong Kong and Tokyo in the east
Despite the global crisis, DIFC has registered 256 new companies, the largest absolute annual increase in its history since inception in 2004. Total 899 companies by June 12.
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2012 – Still not out of the woods!!
• Gap between MENA’s oil exporters and importers
has widened
• Eurozone crisis dampening demand for goods and
services
• The US debt ceiling worries are also looming
• High socio-political risk following the advent of the
Arab Spring
• Fear of Iran’s nuclear ambitions are still sensitive
• GCC Monetary Union – still uncertain
Syria turmoil
Arab Spring
China slowdown
Fiscal cliff Iran fears
US election Gaza conflict
Unemployment
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The region at a glance
Sources: Zawya dt 31-Dec-2012
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ADX7% Bahrain
2%
DFM4%
Egypt7%
Jordan3%
Kuwait12%
Lebanon1%
Oman2%
Nasdaq Dubai
3%Palestine
1%Qatar15%
Saudi Arabia43%
Market Capitalization
ADX
Bahrain
DFM
Egypt
Jordan
Kuwait
Lebanon
Oman
Nasdaq Dubai
Palestine
Qatar
Saudi Arabia
$1 $500,000,000 $250,000,000,000,000,000
$23,745,796
$1,127,383
$52,492,126
$82,103,136
$10,850,137
$103,644,369
$1,347,662
$10,522,553
$1,999,064
$1,194,822
$61,752,960
$2,032,769,640
Daily Average Turnover
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Sample AMEDA Markets Nigeria Egypt Morocco South Africa Kuwait Oman UAE QatarMSCI Classification Frontier Emerging Emerging Emerging Frontier Frontier Frontier Frontier
Openness to foreign ownershipInvestor qualification requirementForeign ownership limit (FOL) levelForeign room levelEqual rights to foreign investors
Ease of capital inflows / outflowsCapital flow restriction levelForeign exchange market liberalization level
Efficiency of the operational frameworkMarket entry
Investor registration & account set upMarket organization
Market regulationsCompetitive landscapeInformation flow
Market infrastructureClearing and SettlementCustodyRegistry / DepositoryTradingTransferabilityStock lendingShort selling
Stability of institutional framework
MSCI Market Accessibility Review 2012
No issues No major issue, improvements possible
Improvements needed, extent to be assessed
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Key Initiatives
• Regulatory:
Kuwait: Independent CMA set-up; new Mutual Funds regulation to be included in the CMA laws
Qatar & UAE: New regulations announced on Short Selling, Liquidity Management, SBL and Market Making
Bahrain: New Regulations for CIU (funds) announced
• Market Developments:
Qatar & UAE: Implemented DVP, Key to MSCI upgrade
Kuwait: New X-Stream trading system
Saudi Arabia: Depository rules published and signed agreement with MSCI on data usage
Oman: New trading system; Planning to introduce DVP
Bahrain: Planning to introduce DVP; Looking to implement end-to-end SWIFT connectivity
• New Products :
Qatar: Introduced T-bills & Sovereign Bonds; planning introduction of ETF’s
Bahrain :Implemented IBANs
UAE: Planning to introduce SBL
Egypt : Announced the introduction of ETFs and Rights trading
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Opportunities and Challenges
Challenges
• Political Instability
• Sensitivity to Costs
• Legacy mindset, Procrastination & Indecisiveness
• Market participants not very tech savvy
• Shallow markets , more retail oriented, lacks scale
• Resistance to international solutions for national requirements (RTGS)
• Compliance & Sanctions
• Expand reach into the corporate world
• Corporate governance not at par with international standards
Opportunities
• Growth in volume along with economic progress
• Capital Markets infrastructure (especially post trade) not very developed
• Regulations - opportunities, not challenges! (E.g.: IBAN, custodian regs)
• Corporate information not easily available, lacks standard
• Regional market integration – interoperability amongst CSDs
• Market penetration - Increase usage of existing users
• Multiple markets with multiple currencies lacking a standard messaging infrastructure
• Documentary credits (DC’s) back in fashion in MENA, hence an opportunity for a further increase of traffic in trade PUBLIC
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Action Plan
• Educate the Buy Side and Intermediaries on the advantages of SWIFT
• Set up a Securities Market Practice Group in the key ME markets
• Introduce cost effective alternatives for the region
• Engage closely with Regulators, Exchanges and Depositaries to drive reforms - Interoperability
• SWIFT needs to help us
continue to reduce costs
ensure backward compatibility (to ease legacy issues)
make it easy and cost effective to connect to SWIFT - and provide services to further ease connectivity
address our sanctions and compliance challenges
improve standards of corporate governance based on international best practices
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Thank you
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Gottfried LeibbrandtSWIFT
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$ 1 000 000 000 000
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Mobile, devices
Internet of things
Virtualisation
Regulation
Data location
Cyber security
Resilience
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Gradually evolve the core
+
+
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Invest in core platforms
Expand connectivity
Reinvent MI business
Expand the core
Grow in APAC
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Platform
Connectivity
Apps20
30
Traffic MIs
15
15
10G
eographic Expansion
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FIN Price before rebate(EURcent / msg)
FIN Traffic(Millions of msgs)
0
5
10
15
20
25
30
35
40
45
50
0
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
3,000,000,000
3,500,000,000
4,000,000,000
4,500,000,000
5,000,000,000
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Increase non-NBI revenue
2010 2012 2015
Revenue
NBI
Non NBI
40%
50%
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More efficient
More investment
2015
Cost
2010
BAU
Total
2012
Investments
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Javier Perez-TassoHead of Marketing, SWIFT
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27
PerceptionsTeamMission
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28
ConnectivityTraffic & MIsApps
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Perceptions
Team
Mission
29
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30
Collaboration
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Fabian Vandenreydt,
Securities and CoreBusiness Development
Panel:Traffic Development
Juliette Kennel,
Market InfrastructuresAndré Boico
Pricing
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4 4.55.5
Progress vs 2015 metrics
FIN G FIN Msgs / YearIA Mios kChar / YearFA Mios kChar / Year
FIN
6.0 (hi)5.0 (lo)
‘10 ‘12 ‘15
1.6 1.75
3.2
4.32.5
InterAct‘10 ‘12 ‘15
0.91.7 2.8
3.72.3
FileAct‘10 ‘12 ‘15
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Luc MeurantHead of New Business Development
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Why is non-NBI so important?
Reduce TCO for customers
New source of revenue… and profit
Increase stickiness
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There is more…
Sanctions Lite2 MyStandards
Matching 3SKEY/BPO Bus. Intel.
Integration Services Ref Data
And also…
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Full speed ahead!!!
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Welcome to the Chat roomsand the Deep Dive sessions