The value of assets under custody for both Australian and foreign investors has declined while transaction volumes have increased to record highs, according to the Australian Custodial Services Association (ACSA).
The new asset servicing industry statistics mark the six months ending 30 June 2020. Key findings show that for total assets under custody for Australian investors, J.P. Morgan ranked the highest at AUD $820 billion.
For the six months ending 31 December 2019, J.P. Morgan had AUD $866 billion, which marks a 5 percent decrease compared to its June results.
Nadia Schiavon, head of securities services, Australia and New Zealand, J.P. Morgan, commented: “J.P. Morgan values its role as a trusted partner to our clients, and it is the strength of these relationships that ultimately supports our leading market position in Australia and New Zealand.”
Schiavon added: “In a unique year, J.P. Morgan’s ability to respond to the needs of our clients, as they experienced unprecedented volumes, has ensured that they are in a stronger position to manage volatility.”
Coming in second was Northern Trust, which had AUD $561 billion for the six months ending 30 June compared with AUD $576 for the six months ending December 2019. This represented a 2 percent decrease.
Citigroup followed shortly after with AUD $544 billion, which represented a 5 percent decrease compared to the six months ending 31 December 2019.
After Citigroup came NAB Asset Servicing, BNP Paribas, State Street, HSBC Bank, RBC Investor Treasury Services (I&TS), Ausmaq, Netwealth, and BNY Mellon.
The largest change was State Street which totalled AUD $405 billion for 30 June 2020, compared to $511 billion for the six months ending 31 December 2019.
Meanwhile, the smallest change shown was RBC I&TS with just 0.8 percent decrease. RBC I&TS results came in at AUD $128 billion for the six months ending 30 June compared with AUD $129.3 for the six months ending 31 December 2019.
Of the 11, the total assets under custody for Australian investors came in at AUD $3,753 billion for the six months ending 30 June 2020. This compares with AUD $4,065 billion for the six months ending December 2019, representing a 7.7 percent decrease.
Elsewhere, for total Australian settlement transaction volumes for six months ending 30 June 2020, HSBC reported 6,060,474 transactions.
This is compared to 5,357,795 for the six months ending 31 December 2019, which marks an increase of 13 percent.
Also coming in the top five in this space was Citigroup, J.P. Morgan, BNP Paribas, and NAB Asset Servicing.
The five were followed by State Street, Net Wealth, RBC I&TS, Northern Trust and Ausmaq.
ASCA’s results showed that Citigroup had a 10 percent increase from December with 3,041,351 transactions for the six months ending 30 June.
J.P. Morgan had 1,183,762 transactions, which was up 23 percent compared to 961,862 in December.
Netwealth experienced the largest increase with 247,000 for the six months ending June 2020 compared to 121,367 for the six months ending December 2019, marking a change of 103 percent.
Commenting on the results, ACSA chief executive, Robert J Brown said the fall in total assets under custody was largely a result of market valuation impacts. The spike in transactions reflected the level of activity by underlying institutions adjusting their portfolios in response to the COVID-19 pandemic.
“According to a recent ACSA member survey, 82 percent of asset servicing professionals are
working from home. At the same time, we have witnessed record volumes of transactions in
the market. Despite the obvious challenges, there has been minimal disruption to service
provision,” Brown said.
He added: “Although our industry is highly automated, there are exceptions. Asset servicing providers have needed to adapt to the social distancing and movement restrictions under public health orders, and this has created challenges for handling physical documents. Mail room and vault access, support for transactions that require wet ink signatures and physical cheques all
triggered changes to process for custodians, registries and other key players in the service chain”.
