The price is “about right”

Half of the managers and service providers in the report say the costs of investment operations are “about right”, Neill says. For 40 per cent of respondents, this cost is between 4 and 8 basis points.

However, the average spend on internal operations is 4 basis points with a costto- income ratio of 43 per cent, while outsourcers pay 2.9 basis points with a cost-to-income ratio of 64 per cent.

Neill, who liaises with colleagues in London, Dubai and Sydney, finds the Australian investment operations market to be small, concentrated and “quirky” compared to those offshore.

The most imminent change in the market will be further consolidation, he says, and the survey shows that 60 per cent of operations providers and 43 per cent of managers think the market will become more concentrated.

“We think something has to give in this market and it’s probably going to be through consolidation,” Neill says.