Is Globalized World in Surge For Capital Market Consulting?

By Swati Jain, AVP - Global Programm Manager, Genpact


Swati Jain, AVP - Global Programm Manager, Genpact

Capital markets are financial markets for the buying and selling of long-term debt or equity-backed securities. These markets channel the wealth of savers to those who can put it to long-term productive use, such as companies or governments making long-term investments. Capital markets are defined as markets in which money is provided for periods longer than a year.

As capital markets continue to evolve under the impact of globalization, regulatory reforms and disruptive technologies, financial institutions are being forced to revisit their traditional business models. With financial markets getting increasingly fragmented, organizations are seeking to diversify their revenue streams by launching new products and services. The global economic meltdown, ensuing regulatory announcements and advancements in technology have brought unprecedented changes to the way business is done in the Capital Markets industry. Current and proposed changes to the regulatory framework and higher costs of capital have forced organizations to evaluate their business models. At the same time, organizations are demanding that firms produce higher profits with fewer employees and associated costs. Capital Markets firms are looking to engage with secure, efficient and reliable partners who understand their changing business environment, providing them with the opportunity to step into the future with greater confidence. Enhanced operational efficiency, through standardization of business processes and technology systems, has emerged as another key business imperative. Capital Market firms are also focusing aggressively on achieving regulatory compliance at minimum cost, apart from looking at leveraging digital platforms to engage and retain customers.


Capital Market consulting companies key solutions consist of the following key service areas at the macro level.

• Client Lifecycle Management

• Capital Markets Platforms

• Capital Markets Analytics

• Collateral Management

• Post-Trade Processing

• Exchanges


The Macro level Activities Can Be Further Divided Into Micro Level Activities as below:

Trade Management:

• Trading infrastructure: Define business and IT transformation roadmap; architect business models

• Sales and trading: Assess and rationalize front-to-back office straight-through-processing (STP); propose framework for business services

Clearing and settlement: Enable central security depositories (CSDs), central counter parties (CCPs), custodians, investment banks and broker dealers to conceptualize business models and enhance operating frameworks. Also includes defining adaptation models and assessing readiness of market participants for Target2Securities (T2S) transformation

Risk management: Define market risk frameworks for various products and service offerings across different asset classes. Enable collateral optimization across the enterprise

Regulatory compliance and Surveillance: Evaluate impact of new regulations (EMIR, DFA, MIFID II) on business processes and systems; implement enterprise-wide compliance program

Wealth and Asset management: Assess business processes and IT systems for wealth and asset management firms


Capital Market Consulting Companies’ Accelerators include:     

• Identify new areas for revenue growth through business transformation

• Drive customer acquisition and retention through digital delivery channels, analytics, mobility, and social media

• Optimize costs, improve processes, and reduce turnaround times

• Better manage increasing volumes and frequency by integrating and consolidating platforms
and functions

• Achieve compliance with regulations in an efficient and cost-effective way

• Enhance organizational competitiveness and agility

• Multi-Tenant Post Trade Services Utility focused on securities processing, reconciliation and instruments data/legal entity data

• Predictive tool that provides a 360 degree data assessment of an organization's data assets

• Data modeling and solutions for customer data, market and reference data, and securities master

• Trading compliance solution jointly owned with a leading asset manager, offering real time Pre-Trade Compliance

• Solutions framework for electronic trading in Futures, Options and Swaps

Although the industry-wide revenue decline in 2013 was not dramatic, at about 2 percent, the largest revenue pool—fixed income, currencies, and commodities (FICC)—suffered a steep drop of 16 percent. This decline was offset to some degree by substantial rises in equity and investment banking division (IBD) revenues. But after-tax return on equity (ROE) remains under pressure, falling slightly in 2013 to 11 percent, with further declines in 2014 & 2015.


Hiring Trends of Capital Market Consultants in India: Firms are looking for consultants with very specific knowledge in areas pertaining to capital market, data warehousing, client-server development, electronic commerce and value management.

While capital market consulting firms normally hire Engineering students, they are now willing to hire employees with functional understanding and expertise in capital market. In India, since capital consulting industry is growing at a faster pace, hiring activity is also expected to rise. Skills required for joining capital market consulting firms include analytical skills, flexible thinking, communication skills, focused approach and overall business understanding.


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