With automation taking the top priority for market participants, it has fueled many opportunities for service providers in Over The Counter (OTC) Derivatives back-office. There are various service providers, who are rapidly rolling out services to Investment Managers, Hedge Funds and Broker Dealers, for addressing the upstream and downstream processing challenges in the OTC trade life cycle. Likewise, custodians also provide a range of post-trade settlement and collateral management services for Investment Managers.
This paper examines the role of custodians in the OTC Derivatives Trade processing and the functions they perform, the challenges faced that inhibit their ability to serve the growing demands of investment manager community.