What does 2013 hold for players in the OTC derivatives market? Over the next three weeks, I’ll discuss new paradigms in the industry, ways to rebuild the value chain, and strategies for banks to adapt their operating models and stay competitive.
Moving to new paradigms
The tremendous changes coming to the OTC derivatives market are similar to what happened with equity, futures and FX markets. Accenture expects that increased transparency and commoditization will drive down spreads and concentrate volume in a handful of broker-dealers and will favor three operating models in particular: flow monsters, regional champions and product specialists.
- Flow monsters will win by scale, but in order to get there, will require significant technology investments and stringent levels of efficiency. Flow monsters need competitive pricing and Accenture expects they will probably focus their offerings toward hedge funds and large asset managers.
- Regional champions and product specialists are two options for smaller banks that cannot compete across a broad spectrum of products. To achieve success, these banks will need to assess their capabilities, analyze current and future client segments, and establish a clearly differentiated strategy for the post-reform derivatives market.
Learn more about these, and other, operating models as highlighted in the Accenture High-Performance Investment Bank study.
Join me next week as I discuss how banks can rebuild the value chain in the derivatives market.