Finadium conducted a survey of triparty agents (TPAs) on balances, collateral holdings, operational functionalities, market and regulatory priorities and client growth trends in April 2024. This report provides details on the global TPA business as reported by agents themselves and is part of our regular series of triparty agent surveys starting in 2014.
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Assets held by global triparty agents reached US$9.26 trillion on March 31, 2024, up from US$8.87 trillion in January 2023, a record high. While some organic growth was expected, a drop of nearly US$1.5 trillion in the Federal Reserve’s Reverse Repo Facility (RRP) over this same period means that triparty assets regained this amount elsewhere. Over the last decade, triparty assets have more than doubled according to Finadium surveys of triparty agents themselves. Some of this growth was driven by private sector US repo and diversification of triparty across product types, as well as higher interest rates from the European Central Bank (ECB), which has delivered new life to previously calm European rates and repo markets.
Triparty agents (TPAs) have expanded in a series of new directions and are firmly cemented as core infrastructure in financial markets. The ability for clients to flexibly outsource operations, valuations and related functions has delivered value to the buy-side, sell-side and official sectors. The buy-side in particular is finding more value in triparty as their own collateral requirements have expanded in recent years. This is only set to continue, as recent proposals from the Financial Stability Board and other regulators are asking buy-side firms to prepare their own margin and collateral liquidity backstop plans.
Triparty agents are increasingly central to the functioning of global financial markets; the more assets they support, the more that clients are relying on them to deliver outsourced collateral movement and valuation services. A demonstrated increase in interoperability, where collateral optimization and analytics can be applied to assets held with any triparty agent, custodian or central securities depository, is intended to support clients in driving further balance sheet efficiencies. TPAs are also working to deliver greater visibility and control to clients interested in managing triparty activity more closely.
This survey shows part of the depth and scale of triparty activities today. It should assist market participants with gaining a better understanding of the current state of the triparty business model.
A direct link to the report for Finadium research clients is https://finadium.com/finadium-report-desc/the-global-triparty-services-market-in-2024-a-finadium-survey/
For non-subscribers, more information is available here.