As portfolios become more international and multi-asset, investors in Asia Pacific (APAC) need custody partners that can support more connected investment operations.
As APAC asset owners and asset managers expand beyond their home markets, they are accessing a broader opportunity set across geographies, asset classes and investment strategies. Asia now holds the world’s largest gross international investment position, with 41% allocated to US[1] markets, placing the region at the centre of cross-border investment flows.
But with that global reach comes greater operational complexity. Coordinating activity across markets, currencies, counterparties and time zones now requires a far more integrated operating model than traditional custody was designed to achieve.
Gary O’Brien, Head of Financial Intermediaries & Corporates, APAC at BNP Paribas’ Securities Services business, says this evolving market dynamics are reshaping what investors expect from their custodians.
“Clients expect their custodians to handle the operational intricacies of global investing – from settlement and funding to FX, data and market‑specific execution,” O’Brien explains. “Our role is to shield them from that complexity, so they can focus on what matters most: delivering investment performance.”
T + 1 is more than a settlement shift
The transition to T+1 settlement in North America, alongside Europe’s planned move to T+1 and similar discussions across Asia Pacific, marks a shift towards faster, more connected markets.
For asset owners and asset managers it is also a catalyst for change, remodelling how cross-border investment operations are organised.
For Asia Pacific investors allocating to markets such as the US, shorter settlement windows significantly reduce the time available for trade matching, funding, FX and post-trade processes across different time zones. O’Brien says:
For these investors, the challenges are compounded by time-zone differences, which can leave firms managing funding, matching and settlement activities while local teams are offline.
That reality is prompting asset owners and asset managers to rethink where operational responsibility should sit. Rather than simply adding operational capacity, many are redesigning their organisational structures. Some have established teams in offshore locations, while others have appointed specialist managers or outsourced middle-office and post-trade functions to providers with the scale and regional presence to facilitate follow-the-sun operating models.
That trend is also driving greater demand for integrated services. O’Brien says some investors are also looking to use their custodian for broader investment bank capabilities, such as execution or integrated FX, allowing more trade-related activity to be managed within a single operating framework.
From custody provider to operating partner
As investors allocate across more markets, asset classes, and specialist managers, they are seeking support that extends beyond traditional safekeeping and settlement.
Custody is evolving into a broader operating partnership, according to Elaine Tan, Head of Asset Owners & Asset Managers, Client Lines, APAC at BNP Paribas’ Securities Services business, as clients look for integrated models that can support global investment activity at scale. She explains:
This trend towards end-to-end operating models, and more streamlined processes across different borders, is moving custody relationships from a client-provider model to a true collaboration and partnership model.
Data as a strategic enabler
Asset owners and asset managers operating across multiple markets and asset classes also face fresh data challenges as investment activity becomes more fragmented.
“Clients want decision-ready data that supports everything from investment operations and performance monitoring to governance, risk management and oversight,” Tan says, adding that data capability is becoming central to the custody relationship rather than an ancillary service.
With information being drawn from custodians, fund administrators, managers, trading platforms and external data providers, clients are looking for a more unified, trusted view of their investments.
BNP Paribas’ work with one of Australia’s largest superannuation funds, illustrates this trend in practice. Through Data PRISM360, powered by NeoXam’s technology, the client can consolidate investment data into a consistent, governed view, assisting more efficient operations, stronger oversight and better-informed investment decisions.
Managing a vast variety of datasets in a timely and cost-effective manner is now the norm, according to Tan. Investors are progressively expecting their custody partners to connect information across traditional and private assets, managers, markets and platforms, then aggregate, harmonise, normalise and enrich it into a usable view.
Technologies such as application programming interfaces, or APIs, are being used to help navigate that shift, enabling more seamless data flows between market settlement platforms, custodians, fund administrators, trading and investor systems.
“Static reporting from separate systems is no longer enough,” says Tan. “Investors need information from multiple sources to be connected, standardised and enriched so they can act on it with confidence.”
Global scale, local execution
Even as global investment operations remain intricate, global portfolios still run through highly local market realities. Regulation, tax, settlement, funding and infrastructure vary widely across jurisdictions. Rather than building operational expertise market by market, many investors are looking to custodians with established local teams that can help them manage these differences.
O’Brien says providers with a presence in both investors’ home markets and the markets in which they invest are well placed to support that complexity. Local teams can help investors navigate regulatory and market developments, represent their interests in local industry conversations and enable activity where they may not have an on-the-ground presence.
This evolution continues to shape the nature of custody relationships, according to O’Brien. Rather than focusing solely on today’s operational challenges, conversations are shifting towards the organisational frameworks investors need to succeed over the next decade, he says:
Increasingly, our discussions are about where clients want to be in five years’ time, the operating model needed to get there, and how we can help support that journey.
[1] Source: US exceptionalism in Asia | Allianz Global Investors