COVID-19 and Custody: The catalyst for digitization?

Direct Custody and Clearing | COVID-19 and custody: The catalyst for digitization? 4 In many markets, where Citi holds a large market share, our response was crucial for our local franchise and our clients. In such situations, failing to have in place an effective contingency for remote working could significantly impact not only our clients but also the overall market. The impact of a timely and effective response on the franchise in such cases could hardly be greater. GI: How has digitization preserve access to Asian markets by forewing investors during COVID-19? AM: Several countries added a digital dimension to the processes supporting foreign investors’ registration. For example, Korea simplified the application process for the Investor Registration Certificate which registers each foreign investor as a separate independent beneficial owner, without which foreign investors are not able to keep securities or settle transactions under their name with local brokers and custodians. Previously requiring a physical notarised document, the regulator simplified the requirements to temporarily allow digitally scanned forms. In India, the Securities and Exchange Board of India (SEBI) requires a similar process to grant of licenses to trade under its foreign portfolio investors (FPIs) regime. Again, scanned versions were accepted in place of physical documents. Indonesia smoothed the tax requirements for foreign investors. Whereas investors previously had to provide original signed Certificate of Residence / DGT forms, authorities are now accepting scanned versions and / or documents with e-signatures from countries which recognise digital signatures. GI: How about cases like AGMs, which required people to be physically present? AM: In Indonesia, for example, voter proxy and company meeting processes were digitized, through the introduction of eProxy and eVoting systems. Issuers could then use electronic platforms to accept voting submission from custodians and to host virtual AGMs, requiring this method of attendance for all participants who would otherwise have attended in person. Those shareholders voting by proxy could also communicate their intentions to proxy providers in turn. GI: How did digitization aid the enforcement of short-selling bans? AM: One Asian market to impose new requirements around securities finance was Korea, following a six-month ban on short sales enacted by the Financial Services Commission in March. Citi had to put in place a framework that would support its clients, so that they did not break the ban inadvertently, specifically using host-to-host connectivity with the depository to facilitate real-time lending status reports to help clients manage their lending inventory. GI: What specific digitization initiatives did Citi prioritise with clients? AM: Our Securities Services country heads across our 16 markets in Asia worked closely with regulators, infrastructures and local market participants to devise and implement market-wide responses to COVID-19. We have also been able to fast track digital agenda items with our clients, notably in two areas. The first has been the acceleration of the phased roll out of a digitized client on-boarding process. This process is supported by an electronic workflow platform where all on boarding activities will take place, and electronic signatures will be facilitated by DocuSign. Our workflow platform also features a fully digital storage system, where paperwork submitted by clients is stored and labeled centrally, eliminating the need to ever resubmit a form. We are rolling this out across our network in a phased manner.