When BNP Paribas launched its Colombian custody service in 2013, from the outset the idea was to ultimately use its Bogota facility as a centralised operational centre for tapping into other regional markets, thereby providing clients with a single point of entry for investments throughout Hispanic LATAM.
Having already extended its custody reach to include Peru in 2016, earlier this year the bank went live with its new Chilean sub-custody service, making available the likes of custody, cash management, settlement, corporate actions and regulatory reporting on behalf of both global and regional non-resident investors. In compliance with Chile’s regulatory standards, local CSD Depósito Central de Valores will act as tax agent on behalf of BNP Paribas.
Managing multiple markets through a main financial hub is key to the bank’s centralised booking initiative, the latest in a series of efforts by BNP Paribas to boost foreign investment in the region. Through its Bogota office and team of skilled personnel, BNP Paribas is able to oversee custody, transactions processing, corporate actions and other activity for each of the three countries, a unique approach that brings to bear a number of efficiencies.
The KYC (Know Your Client) process will be simpler as its done once its completed through the centralised process, and there will be no need to replicate it across various countries. One of the advantages for clients is that processes such as onboarding and KYC can be easily accomplished without the need for detailed information around such activities. This leaner setup also allows clients to easily interface with the Bogota headquarters to address any issues they may have, on an ongoing basis. Should a client require a due diligence visit covering any of the three markets, the centralised team has the expertise to handle their queries.
For the provider, centralised booking offers a more holistic view into client activity across each region, making it easier to create harmonised, simplistic operating models on behalf of the client.
Tapping into LATAM
Conditions remain favourable across Hispanic LATAM. Responding to investor interest, Colombia continues to streamline its markets, including recently transitioning to T+2 while tapping local CCP Cámara de Riesgo Central de Contraparte to handle equities clearing and settlement.
In Peru, BNP Paribas clients are afforded direct access to CAVALI, the country’s central securities depository that paved the way for the bank’s clearing/custody offering five years ago; similarly for Chile with a direct link to DCV. As in Colombia, BNP Paribas has maintained a strong and very close relationship with Peruvian and Chilean infrastructures, regulators, tax authorities and issuers in order to stay in sync with any market or regulatory change and upcoming initiatives.
Key to any centralisation initiative is a universally recognised technology platform. At BNP Paribas, all custody and settlement services are supported by Neolink, a web tool that ensures accurate processing of order instructions to the custodian, as well as the interactive data navigation analysis tool DNA, capable of delivering highly granular risk and performance analysis even when dealing with massive volumes of data.
In addition to regional custody services, BNP Paribas partners with local banks in each of the markets to offer the likes of FX and cash management through its centralised platform. Product teams in Bogota also continually monitor regulatory regimes and alert clients to any important changes in the works.
One for all
Having a centralised point of entry is essential to streamlining custody and related services, thereby making investing in the region more attractive to foreign participants. Through its operational support hub in Bogota, BNP Paribas offers fully integrated, local account management, allowing clients to liaise directly with regional personnel who can quickly respond to their inquiries. Furthermore, such harmonisation is key to promoting the consolidation efforts of Mercado Integrado Latinoamericano or MILA, the LATAM market association that unites the CSDs and securities exchanges of its member nations.