Custody Service Global Market Report 2022

Major players in the custody services market are Bank of New York Mellon, Citigroup, JP Morgan Chase, State Street Bank and Trust, BNP Paribas, Northern Trust Corporation, HSBC, Societe Generale Securities Services, Brown Brothers Harriman & Co., and Caisse d’Epargne Investor Services.

The global custody services market is expected to grow from $35.1 billion in 2021 to $38.17 billion in 2022 at a compound annual growth rate (CAGR) of 8.7%. The market is expected to grow to $53.27 billion in 2026 at a compound annual growth rate (CAGR) of 8.7%.

The custody services market consists of revenue generated by services provided by a custodian to investors.Custody service is broadly characterized as the safekeeping and servicing of an investor’s assets.

The services rendered by a bank custodian include the transaction and settlement, safekeeping, and recording of marketable assets and cash to customers. A relationship of custody is legal, and the facilities rendered for a client varies.

The main services of custody services are core custody services, ancillary services, core depository services, and other administrative services.Core custody service providers settle trades, invest cash balances as requested, collect income, execute corporate activities, prices securities positions, and assist with record keeping and reporting.

The services are available as equity, fixed income, alternative assets, and other types.

North America was the largest region in the custody services market in 2021.Western Europe was the second largest market in custody services market.

The regions covered in this report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, and Africa.

Automation and standardization are key factors driving the growth of the custody services market.The custody services industry is focusing on using technology to improve efficiency.

The automation and standardization of core custody services and operations result in higher visibility, enhanced productivity due to operational efficiency, and cost reductions for customers, improve quality of service, and allow the custodian to react quickly to future needs.Due to the automation and standardization of custody services, in the coming years, the asset-centric model is expected to be augmented by a more data-centric, open platform method where the custodian will have access to a variety of available services.

For instance, an automated reporting system provides daily reports of exceptions, securities available for loan, securities on loan, valuation of cash collateral, daily mark-to-market information, and margin calls. Therefore, such automation and standardization features are expected to drive the growth of the custody services market.

The increasing competition is a key factor hampering the growth of the custody services market.The market for custody services is highly competitive with numerous banks that provide custody services in addition to other banking services, on a global, regional, or local scale.

The price competition, especially, is causing enormous pressure on the banks in the global market.Many custodians find it challenging to keep up with high volumes and offer competitive prices.

Traditional players in securities services such as multinational custodians, local custodians, and specialists in fund management are experiencing increasing competition from Central Securities Depositories (CSD), Central Counterparty Clearing Houses (CCP), and outsourced service providers.Fund services professionals are increasing competitiveness by considerably building new and aimed offers.

Therefore, increasing competition from various areas is expected to hinder the growth of the custody services market.

In March 2019, Forge, a company that provides custom liquidity solutions to private companies and their employees, and offers pre-IPO opportunities to institutions and investors, acquired IRA Services, a trusted company that provides custodial services for retirement accounts managed by individuals and mid-to-large sized institutions, for $55 million. By acquiring IRA Services, Forge expanded its support offerings for private market securities, and more importantly, has become a one-stop shop for private market investors who will no longer have to transfer shares acquired with Forge to external custodial trust.

The countries covered in the custody services market are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, and USA.