Interoperability: Potential Game Changer for Indian CCPs

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Nov 29th, 2015

India has many stock exchanges, but trading is dominated at two main exchanges – the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). BSE is among the oldest stock exchanges in the world, while NSE was established as part of India’s economic liberalization process in the early 1990s. The NSE was quick to gain market share and now accounts for around two-third of stock trading and most of derivative trading in the country. BSE was slow to react to competition in the early days, but in the last five to six years has taken steps to up its game by making major changes in its technology. Structural issues with the Indian capital market have so far limited its ability to close the gap with NSE.

The Indian CCPs that clear exchange trades are owned by the respective exchanges and at present only clear trades executed at the owner exchange. National Securities Clearing Corporation Limited (NSCCL) is the CCP for NSE while Indian Clearing Corporation Limited (ICCL) is the CCP for BSE. Interoperability among CCPs at an investor level is not allowed; i.e., investors can choose which exchange would execute their trades, but cannot choose which CCP would clear them. Therefore, in spite of having multiple players in the clearing space, there is not much competition among the CCPs. The dynamics in the Indian CCP space therefore are largely driven by the competitive developments on the exchange front.

The capital market regulator SEBI allowed direct market access in India in 2008 and soon afterwards allowed colocation and smart order routing (SOR). This should ideally allow investors to execute their trades at any exchange of their choice. However, most of the liquidity is concentrated at the NSE due to its dominant position. Furthermore, since almost all of derivative trading takes place at the NSE, investors tend to prefer NSE for their equity trades as well, since that allows them cross-asset margining benefits of clearing trades in different asset classes at the same CCP. Because of this, smart order routing has not picked up in India yet. Thus algo trading reached around 15% in the cash segment in NSE in 2014, but smart order routing was only around 2%. Similarly algo trading was 70% at BSE’s cash segment, but SOR was around 1%. This shows BSE (and its CCP ICCL), with its improved technology and latency capabilities, is attracting a higher share of algo trades but is still unable to capture share in smart order routing, due to unique clearing arrangements in the market.

Going forward potential allowing of interoperability promises to be a significant force of change for the Indian CCPs. It would give investors the freedom to choose their CCP, and if they get better latency and pricing from ICCL, they could choose ICCL regardless of BSE’s smaller share in trading volume. SEBI is considering this and is in consultation with a range of market participants. Eventual interoperability may be a boon for BSE and ICCL, allowing it to catch up with the dominant NSE and NSCCL.

HKEX’s China based Strategy: Fruitful Past, Uncertain Future

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Nov 28th, 2015

A key reason behind Hong Kong’s high rank in terms of capital market development, in spite of being the 37th largest economy in the world, is its vicinity to China. Hong Kong acts as a conduit between Chinese companies and international investors, helping Chinese companies access capital from the outside world as well as providing Chinese investors access to investment opportunities in the Asian region; around half of companies listed on the HKEx are from China. Consequently, since the mid-1990s, Hong Kong’s capital market growth has largely been driven by growth of the mainland economy.
Hong Kong’s exchange operator, the HKEx group, has built its core business around the China growth story and came out relatively unscathed from the crisis of 2008. A dominant theme in the group’s recent strategy has been to move even closer to the mainland market by connecting to the mainland’s stock exchanges and providing members of two exchanges mutual access. In November, 2014, HKEx launched the Shanghai-Hong Kong Stock Connect program, enabling Chinese investors to trade shares listed and traded in Hong Kong and vice versa; Shenzhen HK connect is planned in the near future.
In the last three years China has been opening up the Renminbi (RMB), and Hong Kong is positioning itself as China’s offshore RMB center by building RMB capability and developing diversified RMB products. HKEx is looking to capitalize on this opportunity as well.
The mainland’s high demand for raw materials and international trades in commodities is another driver for the HKEx group. It recently acquired the London Metal Exchange (LME) Group to signal its intent to grow a commodity business. Leveraging on this acquisition it plans to build an “East Wing” of commodities clearing for the whole Asian region and during Asian time zone.
HKEx’s future prospects, like its historic growth, are contingent on the mainland dynamics. While it has many upsides, too much reliance on China can have downside risks in case of slowing down of the Chinese economy or emergence of policy hurdles. Recent slowdown of Chinese economy has raised concerns about the prospects for its future growth and its potential adverse impact on the China-Hong Kong trading link. On the commodities front China seems uninterested at this point in taking help from other markets. Furthermore, commodities trading practices differ between China and Hong Kong as investors in China, unlike those in Hong Kong, want physical delivery. This requires significant warehouses that the HKEx is still in the process of developing. Lastly, neighboring Singapore will present competition in the OTC space as it also plans to be a major player in the region focusing on South East Asia and China.

From the Celent Innovation Forum, Tokyo

Neil Katkov

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Nov 27th, 2015

At Celent we have been focusing on financial services technology since our inception. Now of course all eyes are focused on fintech, which we might inversely call the use of technology to disrupt (traditional) financial services. Investment in fintech startups is significant, and the financial markets involved are huge – US$218 trillion annually in the capital markets alone.

Celent recently held our latest fintech event in Tokyo to a full house, an indication of the intense interest in fintech in the Japanese market. The day consisted of two Celent presentations on fintech in the retail and institutional securities industries, followed by a discussion panel.

Celent senior analyst John Dwyer presented on blockchain technology and its potential use across capital markets. Smart contracts powered by this technology could conceivably replace existing means of executing market transactions, and by enabling direct ownership might displace custodians and other intermediaries. As if this weren’t food for thought enough, governments including the US and UK are taking a serious look at putting the dollar and the pound on blockchains. Talk about fundamental disruption!

Senior analyst Will Trout provided an analysis of how automated advice (robo advisory) is reshaping the wealth management industry. After the financial crisis many individuals quite naturally want to manage their assets themselves, but also require investment advice. Robo advisory, which perfectly suits the self-service, mobile lifestyle, is an answer to this dilemma.

SoftBank, Nomura Asset Management and The Bank of Tokyo-Mitsubishi UFJ joined the panel discussion, bringing their respective views on cognitive computing; the potential of fintech to lure Japan’s famously reticent retail segment to participate in the markets; and how to mobilize a large organization for innovation.

A fundamental question about fintech is who will ultimately derive value from these innovations: fintech startups; technology giants like Alibaba and Google; or the incumbent financial institutions? Due partly to the regulatory stance, in Japan more than in most markets financial institutions may be in the best position to end up in the winner’s box. Only time will tell, for Japan and for markets across the globe, but you can rely on Celent to continue to provide our clients with insights in the rapidly developing world of fintech.


John Dwyer

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Nov 9th, 2015

11日のイノベーションフォーラムで講演するため、初めて東京を訪れるのを楽しみにしています。 私のプレゼンテーションで取り上げるトピックをご紹介します。



ブロックチェーン2.0/ 分散型帳簿








See you in Tokyo!


Will Trout

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Nov 6th, 2015

Six ice creams in cones on white background

来週、11日に東京で開かれるセレントイノベーション・フォーラム にスピーカーとして参加することになっており、今からわくわくしています。 それに先立ち、注目度が急上昇するこの分野のキーワードを紹介したいと思います。まず、最も基本的なコンセプトから始めましょう。

  • ロボアドバイザー: この言葉は自動投資アドバイス(Automated Investment Advice)の略語のように使われることがありますが、正確には全くの同義ではありません。「ロボアドバイザー」は人的介入が全くないことを前提としているのに対し、「自動投資アドバイザー Automated Investment Advisor」は完全に自動化されたモデルと人間のアドバイザーを補完して自動化テクノロジーを使うモデルの両方を指します。スタートアップ企業の多くは、「自動投資アドバイザー Automated Investment Advisor」を好んで使っています。こちらの方がよりプロらしい(かつより正確な)響きがあるからでしょう。


  • B2Cモデル: ロボアドバイザーの第一世代は、個人顧客向けで、ほとんどが人的介入のない、完全自動化モデルでした。しかし、個人顧客の獲得コストが嵩んだことから、人間のアドバイザーをロボで補完するハイブリッド型モデルにその多くが移行しました。
  • B2Bモデル: 2007年頃に登場したロボアドバイザー企業のうち、人的介入のない完全自動化モデルを固持しているのはWealthfront(運用資産残高は30億ドル超)だけです。その他のプレーヤーは、B2Bまたはハイブリッド型モデルに転換することで成長を実現しました。例えば、BettermentはFidelity Investmensと提携し、同社の数千人のアドバイザーをロボテクノロジーでサポートしています。




Call for nomination for Model Insurer Asia Award, deadline extended

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Oct 26th, 2015

Celent is still accepting nominations for our Sixth Annual Model Insurer Asia Awards. To nominate a firm, fill out the entry form at by November 13, 2015.

Please read the Guidelines on the same page before you complete the nomination form.


Email Wenli Yuan at and copy KyongSun Kong at


Post by

Oct 18th, 2015



① グローバリゼーション:

② アセットマネージメント:

③ FinTech:





DigitalConsumer_JP DigitalConsumer_US DigitalConsumer_JPvsUS




Post by

Oct 14th, 2015







図 1:保険会社のシステムランドスケープ






  1. 自動化とその複雑系への適用:
    最初の、そして最後のターゲットは、プロセスとサービスの自動化であろう。保険事務処理のストレート・スルー・プロセッシング(Straight Through Processing:STP)と、システムのみならず、事務及びコミュニケーション・プロセスの高運用性の実現の鍵を握るのは、事業プロセスの自動化とその複雑系(輻輳し、例外処理の多いプロセス)への適用である。
  2. コアスタンダードの確立と、ローカルバリエーションの許容:
  3. ソーシングモデルの見直し:
    モダナイゼーションプランは、ソーシングモデルの見直しを含むべきである。それは設計フェーズから始まり、構築フェーズで評価され、その実現可能性が十分に検証されるべきである。グローバルな保険ITサービス企業のオファーは基幹システムの構築、運用、保守全てに広がり、選択肢は多い。既存アプリケーションの保守、テストに関するCenter of Excellence(CoE)、データ移行など、活用範囲も拡大している。


図 2:モダナイゼーションのターゲット: ソーシングモデルの見直し






  • 先端をゆくデジタル顧客とのコミュニティーの形成
  • バリューチェーン全般でのエコシステムの構築
  • 再利用と深化の出来るテクノロジーの採用
  • テクノロジーのサービス化、ホワイトラベル化、そして収益モデル化




日本の保険業界におけるレガシー・モダナイゼーション パート1:調査結果分析と現状把握

日本の保険業界におけるレガシー・モダナイゼーション パート2:保険業界への提言


Disruption and Disruptors, Part 3: UX Disruption

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Oct 6th, 2015

This post illustrates how Japan’s mobile carriers, which have disrupted the mobile phone industry, are creating technology businesses that will form the core of the mobile Internet era. This is instructive in that it illuminates elements that will be essential for creative destruction. Ultimately, the challenges undertaken by mobile carriers should serve as a significant catalyst for the financial services industry.

The first addresses the initiatives of management. The second is about how the application of new technology is disruptive to existing and established ways of thinking. This third post deals with innovations in user experience (UX) portended by disruptive technology  that were also addressed at SoftBank World 2015.


3. Watson Global Partner (introducing corporate partner initiatives):

The presentation showcased a number of advanced initiatives undertaken at domestic and international corporate partners. These included efforts spanning in-store examples as well as customer service, advertising, work style, security, and contents delivery—all areas that hint at potential innovation applications in financial services. Here Celent  will touch upon cases in the area of user experience (UX) made possible by disruptive technology.


Go Moment: Mobile concierge to improve hotel stays through innovation

  • Go Moment caters to clients in the global hospitality industry. Major international hotel chains are increasingly subject to competition that goes beyond price as comparisons of service ratings online become more important. Go Moment is providing a UX that from the moment a guest checks in harnesses online support for a mobile, local, and personal touch.
  • It is easy to imagine  such a UX repurposed and applied at financial institution branches.
  • Ivy for hotels by Go Moment
  • Go Moment

Pathway Fit: Mobile mentor to coach users to better health

  • Pathway Fit is designed to meet many needs of consumers that want to live healthier lives. It is both mobile and personal, proposing optimal lifestyle choices for users in their daily lives. Pathway Fit’s UX takes the form of a virtual healthcare mentor, beyond which more formidable and reliable medical support can be expected.
  • It is easy to imagine innovative applications of this UX being used to offer support to insurance policyholders and underwriting.
  • Pathway Fit
  • Pathway


Disruption is coming to UX at financial institutions and in the financial industry, and, here again it is entrepreneurs steeped in the newest  technologies (IoT, AI, and smart robots) who have tired of existing financial service experiences that are the purveyors of this disruption .




Disruption and Disruptors, Part 2: Disruption of the established way of thinking

Post by

Oct 5th, 2015

This post illustrates how Japan’s mobile carriers, which have disrupted the mobile phone industry, are creating technology businesses that will form the core of the mobile Internet era. This is instructive in that it illuminates elements that will be essential for creative destruction. Ultimately, the challenges undertaken by mobile carriers should serve as a significant catalyst for the financial services industry.

The first addresses the initiatives of management. This second post discusses the application of the latest technology to disrupt existing paradigms.


2. Disruption: Cutting-edge technologies that Create and Disrupt (Ken Miyauchi keynote session):

President Miyauchi spoke about Pepper and Watson as both agents of disruption and creation in the context of customer service and how people work.

Customer service revolution:

  • The time when robots will offer customer service is only a few years off. SoftBank is planning to deploy Pepper robots as store staff at more than 3,000 SoftBank and Y!mobile shops nationwide.
  • Monthly rental rates for Pepper robots are around 50,000 yen (about $420). Not being subject to labor and overtime regulations, robots offer the benefit of being able to work around the clock. This is seen greatly enabling some  business to cut costs. In addition, all information is processed in the cloud and robot-offered services can be expected to lead to optimal customer service because cameras and sensors record interactions, noting customer characteristics, interaction time, and can survey customers about their opinions—all without bias.

Revolution in work style:

  • AI will trigger a revolution in how people work. Working with IBM, SoftBank will help further develop Watson in Japan to create cognitive computing business powered by AI. Watson, with its ability to learn from experience (so-called deep learning) and draw on a vast pool of information for hypotheses and verification will open the door to a revolution in business possibilities.
  • SoftBank will develop business applications using Watson including what has been dubbed SoftBank Brain—an internally housed version of Watson that will offer business support. Coupling SoftBank’s data with that of Watson will spawn a revolution in operational efficiency through devices such as smartphones.

SoftBank’s management was clear in its approach: they intend to create and spread something that will contribute to greater productivity. Some SoftBank devices are already outfitted with features that allow advice to be given based on statistical data. Moving forward, the company will move to introduce this technology  across a broader scope, including call centers and at corporate clients. The targets of their disruptive activities are equally clear: established paradigms  and business processes inside companies. Miyauchi explained that since its founding, the company has sought out and aggressively adopted cutting-edge technology even if doing so was potentially disruptive to its existing business operations.



SoftBank World 2015 Keynote Session Ken Miyauchi


The need for a revolution in customer service and working style is something that applies to all companies. Celent  believes that the ensuing creative destruction resulting from the combination of IoT, AI, and smart robots could well reshape the world in a way that rivals the industrial revolution. Of course, financial institutions in Japan are also beginning to sit up, take notice, and undertake initiatives.

Disruption is already manifesting itself at financial institutions amidst the preconceived ideas and existing paradigms of the financial industry. The disruptors of this are entrepreneurs and companies that are well versed—more so than the financial services sector—in the disruptive capacity and have demonstrated what this technology can do.