Could last years’ tide of regulation give way for technical progress and service innovation? Many hope so, judging by the intense first morning of the PostTrade 360 Stockholm conference.
Alan Cameron, London-based head of brokers market strategy at BNP Paribas Securities Services, kicked off the day’s speaking by putting today’s situation in the big perspective – globally and historically. He took off from a word play around the various knowns and unknowns of the world (inspired by a classic press conference with US ex-secretary of state Donald Rumsfeld, briefly played on the screen).
Disruptive technology, and ”post trade as a service” are among the forces causing change. With regard to the unknown unknowns, he said ”I think what is healthy is to have antennae out, to pick them up quickly”.
Stakeholders sighed over regulation
Regulation was, of course, one of the dominant themes. Industry actors are clearly burdened by regulatory requirements in the last decade – sometimes compared to a tsunami. Yet several speakers seemed forgiving, noting that it is also forming a base for trust in the markets and eventually more investments.
Loren Lesko, policy officer of the European Commission, came on early to sum up the current situation in regulation. A recent public consultation on post trade issues had 57 respondents. Many of these respondents prayed that the EU should be more selective in its regulatory reforms going forward, and suggested a focus on digesting the large amount of new legislation from recent years.
”There was a general message of caution from the stakeholders, which we took with us,” said Loren Lesko.
Now able to evaluate the effects of the Emir framework, for example, one can see that central clearing has grown – as intended. Now on the table, are a series of amendments.
Buzz word bingo
Optimistic technology prospects was a strong theme throughout the morning.
”Five years from now you will be much more of a cybersecurity company than you are today”, said Magnus Haglind, of Nasdaq’s Market Technology division. He gave his presentation under the caveat that the number of buzz words could be frequent enough for playing bingo.
And Anders Löfgren from Euroclear lined out opportunities under current technology development, including using artificial intelligence to predict settlement failures, to be able to avoid them. Asked by moderator Göran Fors, he said he sees regulation as the primary change driver in recent years, but voiced hopes that technology and service innovation could soon get more space.
Standards? – Forget it
Yet, standardised and automated processes only go so far. A panel discussion about the current boost in non-liquid alternative assets exposed a world very far from the straight-through-processing of trades in liquid instruments like cash equities. With a small number of deals, individually negotiated with each investor and subject to complex compensation schemes, it came across as something of a post trade professional’s nightmare. Until now the asset class was small enough to be treated, with less efficiency and precision, in processes designed for other assets. But the ”wall of money” that has come in in the last 5–7 years, with new types of investors seeking diversification, makes it an issue that has to be targeted.
A business case for diversity
Finishing the pre-lunch block was Åsa Nilsson Billme, responsible for staff diversity at Nordea. She made a strong case for the virtues of diversity, even if it is stripped off moral aspects down to a pure profitability perspective.
”The correlation is so high between who actually does something about diversity, and who performs better,” she said, supporting it with statistics graphs.
She proposed that the word tolerance should be erased from the dictionaries of employers. ”Who wants to be ’tolerated’,” she asked, suggesting instead a focus on seeing, respecting and appreciating the members of the workforce.
Here you can find the full program for the PostTrade 360 Stockholm conference.