Opimas: research and consulting reinvented. Octavio Marenzi, Axel Pierron

We begin with
an understanding

Opimas pursues an entirely open approach to knowledge sharing, providing our clients direct access to our entire pool of intellectual capital.

Research Highlights

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Report

Derivatives and Stock Exchanges Time to Embrace B2C?

2022-05-29

EXECUTIVE SUMMARY   This report reviews the market for traditional stock and derivatives exchanges. Since early 2020, equities trading volumes have increased significantly. This increased activity has continued into 2022 despite a market downturn. Conversely, derivatives volumes have been flat or even falling. Overall, exchange revenues in 2021 reached US$33 billion, an increase of about 10% year-on-year. The exchange business is a scale business, and operational efficiency is largely determined by the volume of trades. However, volume is not the only determinant and even after normalising for scale, we see a wide dispersion. The most efficient exchanges have operating costs of about 2¢ per trade, while the least efficient are staggeringly worse at over $2 per trade.  Several decades of exchange mergers have been driven largely by the desire of capture greater economies of scale. However, not all mergers have worked, and we consider the successes and failures on this front. Astoundingly, crypto exchanges managed to surpass traditional exchanges in revenues from trading in 2021 and we believe that the core lesson is that crypto exchanges cater to retail investors and not just institutions. While traditional exchanges are reticent to compete head-to-head with broker-dealers, we believe that the B2B-only business model may have run its course and exchanges should look to embrace the retail investor directly. FIGURE 1. REVENUES AT TRADITIONAL EXCHANGES CONTINUE TO GROW STEADILY

Chart

Efficiency and Scale of Exchanges

2022-05-28

Report

Crypto Infrastructure Tech - The Firms Backstage

2022-05-19

EXECUTIVE SUMMARY While Binance, Coinbase and other crypto exchanges frequently make the headlines, little attention is paid to the infrastructure technology vendors that power the back-end systems of these behemoths. That is not to say these companies are undervalued by the market. Altogether, the sum of crypto tech vendors’ publicly known valuations is a formidable US$61.2 billion, and 18 vendors have even achieved unicorn status. To-date, crypto tech vendors have received a combined US$10 billion in funding. This report examines these unfamiliar, yet critical, providers that are building and selling the “back-bones” needed to run a successful crypto services business. These vendors can be grouped together based on the activity or activities they cover within the Crypto Markets Lifecycle: from the origination phase, to pre-, at-, and post-trade processes, all the way through to compliance and risk management. Opimas anticipates that altogether, crypto tech vendors will generate revenues of close to US$2.1 billion in 2022. This is a significant increase from 2021, when vendors were estimated to have earned just over US$800 million. Looking ahead, Opimas predicts that more and more crypto tech vendors will expand their market reach by joining forces with well-established, incumbent vendors, a trend that has already begun to take hold. Legacy banks, such as BNY Mellon and State Street, have also entered the scene, and have turned to crypto tech vendors to help them add support for cryptocurrencies. However, vendors that do not tick the box when it comes to cybersecurity controls and fourth-party vendor management will have a hard time bringing in big banks as clients.

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Where Vendors Sit in the Crypto Markets Lifecycle

2022-05-19

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Top 3 Vendors Account for 60% of the ESG Data Market

2022-04-19

Report

ESG Data is Now Worth It

2022-04-19

EXECUTIVE SUMMARY Consideration of Environmental, Social and Governance (ESG) factors in the investment process has gone mainstream. In fact, 2021 was a landmark year for ESG data vendors. Based on publicly available information, interviews, as well as companies’ actual or estimated revenues, Opimas finds that the global market for ESG data surpassed US$1 billion for the first time in 2021. Supported by an impressive 28% annual growth rate over the past five years, the market could exceed US$1.3 billion by 2022 (Figure 1). ESG research and analytics, which includes ESG ratings, raw data and other dedicated solutions, represents around 70% of the market. However, ESG indices, which make up the other leg of the market, have grown even faster. This is due to the broad success of ETFs and the global increase in the number of indices. With a 38% annual growth rate over the past five years, the ESG indices segment surpassed US$300 million in 2021. Figure 1: The Market for ESG Data Surpassed US$1 bn in 2021   The top three ESG data providers, namely MSCI, ISS ESG and Sustainalytics, account for about 60% of the market. This is partly the result of the impressive number of ESG-related mergers and acquisitions that took place over the past decade. Despite its concentration, the ESG data market remains relatively crowded, with many boutique firms and upstarts. The market’s growth stems, in part, from increasing demand for funds that incorporate ESG risks into their investment strategies, but also from the emergence of new regulatory requirements around ESG reporting and disclosure. Europe has led the pack with ambitious regulations resulting from the EU Action Plan on Sustainable Finance. However, other regions are following suit, including a long-awaited proposal from the US Securities and Exchange Committee (SEC) on climate disclosure by public companies. In addition to government regulations, several international initiatives such as the Task Force on Climate-related Financial Disclosure (TCFD) have helped drive climate disclosure. In order to meet new requirements and standards, ESG data vendors have enlarged their product offerings. This is particularly true regarding climate-risk solutions and EU reporting tools and services. Beyond traditional ESG data products like ESG ratings, most ESG data vendors now offer a gamut of sophisticated products focusing on carbon footprint calculations, climate scenario analysis and the financial impact of climate change. In just one decade, ESG data has evolved significantly, and its use cases have expanded from basic performance assessments to encompass risk management and regulatory reporting. Opimas expects regulatory requirements around climate stress testing and ESG disclosures to become more stringent, and the market for ESG data to continue growing at a healthy pace.

Our approach

Opimas is a management consultancy focused on global capital markets. Our mission is to help leading financial institutions set and reach their strategic goals. Our specialisation and experience as financial practitioners allow us to dedicate our expertise to clients by quickly providing insights and crafting strategies without sacrificing quality or pragmatism.

To renew our accumulated skills and stay at the cutting edge, Opimas routinely invests about one third of revenues in market research. In fast-changing markets these investments create a constantly updated store of intellectual capital on issues of strategic importance to our clients, not least the risks and potential costs of emerging competition and regulation.

Uniquely among consultants, Opimas follows an open approach to knowledge sharing, giving our clients direct access to our entire pool of intellectual capital. This means you have the choice of either using our insights and knowledge to support your strategic decisions independently, or to work directly with our specialists on a project. Either way, we have a proven record and are here to help.

Our services

Strategic Advisory

Our consultants are highly specialised experts in market dynamics. We strive to be ahead of the curve and are practised at participating in brainstorming sessions to assess and guide your strategy amid evolving market trends and the competitive landscape.

Consulting

As forces ranging from regulations to technology push toward a major restructuring of Europe’s financial industry, Opimas specialists work closely with our clients to solve the most critical challenges facing them today, whether those are improving efficiency or integrating an acquired company. Leveraging deep-rooted market knowledge acquired through our professional experience and ongoing research, the Opimas team can help you meet your greatest needs.

Intellectual Capital

Access our library of research by annual subscription. From up-to-the minute analyses of capital market dynamics, to strategies for handling new regulations or data on your peers’ performance, Opimas reports can be chosen to match your goals: You may want to understand the forces at work in challenging areas of your business, or access our guides to devising and executing a successful strategy.

Our markets

Risk Management & Regulation
Asset Management
FICC
Securities Servicing
Equities

Risk Management & Regulation

We work with clients on enterprise risk management, governance and international public policy, analysing all their exposures and strategies. We offer advice on all categories of risk ranging from qualitative and quantitative risk strategies, stress testing and capital management, to risk analytics, risk-based performance, and the impact of regulation, risk culture and risk governance. We analyze the effect of global and regional regulations on financial stability and the competitiveness of the financial sector

Asset Management

Our asset management specialists work on diverse issues with clients on both the buy-side and the sell-side. In an increasingly competitive market where and digital media greatly impact investment decisions, we guide them on concerns such as the evolution of the buy-side to-liquidator provider, the impact of changing regulations such as the Alternative Investment Fund Manager Directive, shadow banking regulations, the Markets in Financial Instruments Directive II, transparency requirements, the issue of asset allocation in view of the vacuum left by traditional sell-side institutions, asset allocation in an ultra-low interest rate environment, evaluations of prime brokerage services, and the changing relationship with custodian banks

FICC

We offer wide-ranging research and guidance for participants in cash and derivatives markets for bonds, rates, foreign exchange and energy, as well as soft and hard commodities. We analyse regulatory and structural changes, the impact of technology and electronic trading platforms and the progress towards standardised products, as well as emerging new trading strategies and investors.

Securities Servicing

We work with securities servicing institutions across the entire ecosystem of securities trading. As Europe’s financial industry restructures, our research provides a detailed analysis of the changing infrastructure, from exchanges and central clearing counterparties to custodians and central securities depositories. Our team delivers an unbiased view of the evolving opportunities and threats to all organizations involved in processing securities.

Equities

We offer wide-ranging guidance to equities traders and investors in the cash and derivatives markets. We can show how you might be affected by, and might respond to, regulatory and structural changes in the markets, the impact of technology and electronic trading platforms, new trading strategies — including high-frequency trading — and changes in post-trade processing. We survey market liquidity on a pan-European and regional basis.

An innovative way to share our content

Save, collect and collaborate

Our clients have the ability to personalize our platform to their needs. Saving charts and data from both entire reports or just selected passages, available anytime in your Opimas personal vault.

A video is worth 30 pages

Reading is not the only way to gain insights. Opimas also delivers its analysis in videos and podcasts.

Our content fits your pace

At Opimas, we know that one size does not fit all. We have a tailored reporting method that comes in three different sizes: a short version, which gives you the essentials you need to understand; a 15-minute version giving you a more analytical overview and a detailed version, allowing you to master a topic inside and out.

We are online, collaborative and interactive

Opimas publishes online reports that are available anytime and interactive, inviting clients to question our analysts directly, save selected passages or charts and data in a personal vault, and share content with colleagues.

Our data is your data

The Opimas platform allows direct, unlimited access to written thought leadership and videos containing our analyses, statistics, forecasts and models, which are all continuously updated. Our clients will find both extensive data created by Opimas to serve their needs, and outside data targeted and compiled by our expert analysts.

Who we are

Our team of financial industry veterans and strategists, led by founder Octavio Marenzi, has worked at top financial institutions and consulting firms, giving us a practical understanding of the transforming business model and the challenges clients face today.

Opimas' research analysts have expertise in asset management, equities and fixed income, currencies and commodities trading, market structure, securities processing, regulation, and the growing influence of FinTech on business and organizational operations.

om@opimas.com

Octavio Marenzi is the co-founder and CEO of Opimas. He directs the firm's research in the areas of equities trading, asset management, and regulation.

Octavio has performed a variety of consulting engagements including the: Creation of an international expansion strategy for a major US derivatives exchange;

Analysis of the impact of the merger of two major Austrian banks, including identification of cost and revenue synergies;

Delineation of the strategy for the merger of the back-office and technology operations of two major Wall Street brokerage firms;

Review of non-Japan Asia equities markets for a major Japanese bank. This involved market sizing, competitive landscape, and recommendations for acquisitions.

Prior to founding Opimas, Octavio was the founder and CEO of Celent, which was acquired by Oliver Wyman. At Oliver Wyman, he served on the firm’s management committee, overseeing 2,000 consultants globally. Previously, he worked at UBS in their asset management division in Zurich, as well as at Booz, Allen & Hamilton’s financial service group in New York. He received his MSc and BSc degrees in mechanical engineering from MIT.