In Box: Capital ideas

Hold on tight, 2013 will be “year of adaptation” to rapidly evolving global capital markets landscape. So says Deloitte in its 2013 Capital Markets Outlook report. Subtitled “It’s the end of the world as we know it” the report outlines 10 major challenges facing the industry.
Deloitte’s Center for Financial Services bemoans the sector’s many problems: its market fragmentation, aggressive competition “for millisecond’s advantage”, overcapacity, “slim to none at all” profit margins, and damaged reputation.
Despite this, Deloitte sees positive option for way forward.
The report concludes that the larger impetus of the regulatory regimes of Dodd-Frank, the Volcker Rule, and Basel III “could do worse for the industry than to force its expulsion from the control of bank holding companies”.
This may help return the industry to privately held status, and allow its leaders to make the best longer-term decisions to strengthen the industry and firms’ balance sheets.
“Perhaps capital markets firms should consider revisiting the concept that launched this industry – the vision of independent, privately held firms whose core business is really promoting the development of capital and applying that capital to business growth – rather than trading on the margin for millisecond advantage,” Deloitte suggests.
From this perspective, at least, 2013 may not be the end of the world for the capital markets industry. “But, instead, new beginning.”