At BBH, our global Financial Institutions business has been a substantial component of our Investor Services business for over 200 years. Our valued client relationships now span across Japanese trust banks, Chinese, European, and U.S. banks, insurance companies and Latin American pension funds. As we look to the future, our goal is to continue to support the evolving needs of each of our clients as they seek efficiencies, scale, and competitive advantage.

In addition to a growing need for a differentiating custody service, many are looking to modernize legacy platforms to enhance their data quality and streamline increasingly complex operating models. Others are seeking ways to integrate transformational technologies like AI and machine learning into their systems to enhance efficiencies. At the core is an evolution in thinking around broader industry partnerships and shared infrastructure solutions to deliver outcomes.

By combining our core custody and tax capabilities with our connectivity and data services, we have evolved our solutions to help our clients achieve:

  • Interoperability and connectivity across operating models to help streamline data flows, reduce costs, and lower risk
  • Shared infrastructure and technology solutions to help add new revenue streams and enhance the client experience
  • Enhanced access to view, customize and package their data through BBH Infuse®

We will continue to focus on the development of bi-directional partnerships, by region or by product, to achieve our collective goals. While these partnerships have always been at the core of our strategy, today’s environment offers greater opportunity to work with our clients to build mutually beneficial relationships for the long term.

It’s an exciting time to lead our Financial Institutions business. The team and I look forward to meeting and engaging with you throughout the year.

Alan O'Sullivan
Principal, Global Head of Financial Institutions
alan.osullivan@bbh.com

What's Trending in the Industry?

Policy makers have their work cut out with new and revised regulations ahead. The SEC has continued its steady output of proposals and rulemaking, with top takeaways for financial institutions noted below. You can find further details on our On the Regs blog.

  1. Division among T+1 engagement: May 2024 is fast approaching and yet many firms are still just coming to grips with the scope of changes required.
  2. Capital Provision and Resolution: U.S. banks are currently sharply focused on open proposals implementing the final elements of the Basel III framework, which applies a broader set of capital requirements to a wider range of banking organizations. In Europe, the European Banking Authority has issued revised guidelines on resolvability and the Capital Requirements Directive (CRD6) will more tightly calibrate the direction for EU banks as well as third country branch operations in the EU.
  3. Operational Resilience: The global regulatory focus on operational resilience remains persistent. With the publication of a number of regulatory technical standards for the E.U.’s Digital Operational Resilience Act (DORA), this focus will endure throughout 2024 for banks and financial institutions globally.

Adrian Whelan
Global Head of Market Intelligence
adrian.whelan@bbh.com
Connect on LinkedIn

A Look at Global Tax:

The industry is headed into the first end of year reporting cycle under IRC Section 1446(f), which provides the rules governing withholding on transfers of partnership interests by non U.S. holders. Under Section 1446(f), beginning on 1 Jan 2023, 10% of the amount realized by a non-U.S. seller must be withheld from the sale (or other disposition) of an in-scope publicly-traded partnership interest unless an exception applies. These new rules have had a significant impact for buyers and sellers of these investments. The first reporting associated with such transactions will be issued in March on IRS Forms 1042-S, to the IRS and the holders of in-scope securities.

Stephen Vescio
Managing Director, Global Tax Services
stephen.vescio@bbh.com
Connect on LinkedIn

Spotlight

Check out our new T+1 blog. In our latest posts, we look at the common myths around T+1 and global updates from Asia to Canada.

Read Blog

Join the conversation with our Talking T+1 webinar series

Watch our latest webinar with DTCC available on-demand to answer everything you need to know on T+1 and stay tuned for future sessions on ETFs, Affirmations, TA, Securities Lending and FX.

What's New at BBH?

BBH continues to invest in three key areas, aligned to our clients’ goals:

  • Data servicing and optimization
  • Building resilient operations for our clients and BBH
  • Supporting our clients' product innovation

1. Data Servicing and Optimization

  • Infomediary®: We’ve enhanced Infomediary and the user experience InfoMonitor
  • Industry Changes: ISO 20022 for cash statements is now live for early adopter clients. Leveraging Infomediary, Data Services, and Business Transformation tools (AI/ML) we are helping streamline operating models and adapt to the compressed settlement cycles associated with the upcoming move to T+1.
  • InfuseDX: We have completed the first phase of deployment of our new data tool: Infuse DX™. Accessed via BBH Infuse®, this new data-centric user experience is a completely new way for clients to view, customize, and package their data, to enable faster and more informed decision making. Rolled out to all custody clients, more data sets will be added in coming months. Click here to view our launch video.
  • Infuse: New tile cloning and filtering features enable Infuse users to personalize their dashboard by replicating tiles and then applying filters to display user defined aggregate metrics

2. Building Resilient Operations For Our Clients and BBH

  • Business Transformation: Continued Expansion of Artificial Intelligence (AI) and Machine Learning (ML) capabilities by investing in enhancements to our AI platform, we have developed a sandbox, for prototyping new AI and ML use case opportunities. This allows us to quickly determine the feasibility of use cases and scale the demand for our AI and ML program.
  • The growth in utilization of the AI and ML ecosystem across our operating areas is continuing to unlock opportunities in processing efficiencies, data transformation and oversight analytics. Some recent examples include:
    • Integrating AI and ML into our account opening process to allow account opening forms to be consumed and data extracted automatically, reducing manual intervention and data entry.
    • Streamlining the digitization of unstructured MT599s; using natural language processing (NLP) to classify the messages for appropriate next steps.
    • Creating market specific tax document templates that can be consumed automatically without the need for manual data entry and can be used to perform speedy tax reclaim reconciliations.
  • T+1 Readiness: Engaging clients on the impact of various affirmation models, especially our FIT clients who need to support their underlying clients with being ready to affirm. Continued interest in the simulation reports being provided as numerous clients reached out in January asking for Q4 data after previously having Q1, Q2, Q3 data. Monitoring as further markets beyond North America (such as Latin America, Europe) are considering timelines for their local conversion to T+1 settlement.
  • Corporate Actions: Partnering with DTCC on automating Corporate Actions Reorg Instructions which will allow for shortened CA deadlines in the US market. This will result in faster turn-around times of instructions and the ability to improve deadlines bringing them much closer to market expiration.
  • Fax elimination: First phase of development for inbound faxes completed with testing underway – with the initial focus on non-standard instructions. A weblink has been created allowing documents to be uploaded and directed to RightFax queues to reach the required operational teams to handle further. Later phases expected to address BBH outbound messages as well as other examples of client needs.
  • SWIFT Developments: SWIFT Release 2023 completed, and SWIFT Release 2024 kicked off with initial analysis and planning under way. Conversion of MT messages into MX format continuing – completing the MT940/MT950 conversion to camt.053 in the first half of 2024, while continuing to support the co-existence of CBPR+ messaging before the final November 2025 conversion date.

3. Supporting Our Clients' Product Innovation

  • Global Tax: Enhanced tax withholding and information reporting capabilities to allow financial institution clients to delegate withholding and reporting required by new US tax rules (1446(f)) to BBH as Custodian.
  • Fund Order and Custody: Deployed a bulk instruction and document upload functionality in the Fund WorldView application.

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Out and About

Our teams have been busy! Here they are at Sibos in Toronto, The Network Forum Meetings in New York City and Athens, BBH's Navigating the Global Tax Landscape Seminar in Hong Kong and BBH's Custody & Beyond session in Geneva.

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