ISDA Technology Forum: Small tech changes not enough for capital markets
Capital markets firms cannot afford to focus on short term profit and loss or take small steps when it comes to technological innovation, according to a panel at the International Swaps and Derivatives Association (ISDA) Technology Forum in London on 6 November.
The seven-member panel talked standardisation and innovation
“You don’t increment your way from a Nokia to an iPhone, it will kill your business,” says Leo Labeis, CEO and co-founder of REGnosys. “You need someone to come in with a radical vision and say ‘this is how we’re going to do things,’ we’re approaching that Nokia point now and decisions need to be made.”
Andrew Dyson, CEO of the International Securities Lending Association (ISLA), adds that short terminism isn’t something that can be underestimated. “Investing in a new technology platform isn’t what many people are keen to think about especially when it may hit their bottom line this year.”
Standardisation, he adds, is a golden opportunity to change markets. “We may have been overwhelmed with regulation but there are plenty of opportunities.”
Marcus Robinson, head of group business development at LCH, states that the market has had to deal with a glut of regulation lately, and trying to tie up new processes in an efficiency manner remains a challenge.
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“We’re continuing to see an increase in scrutiny from regulators and customers on our underlying processes. We are clearing an increasing number of trades and managing an increasing amount of risk. We need to make sure we invest in our infrastructure so that in a time of crises we can continue to operate and keep the market safe.”
Dyson adds that the securities financing transaction regulation (SFTR) and central securities depositories regulation (CSDR) are changing markets “beyond recognition” but that the industry needs to look past that and “see what the benefits could be”.
Lee Braine, chief technology and innovation officer at Barclays, talked up ISDA’s common domain model (CMD) and standardisation as a way for the industry to cope with changes and take up new innovations.
“Some people talk about changing tires while the car is moving when it’s more like switching from propeller to jet engine while flying a plane,” he says of technology change without guidelines. “Each bank needs to argue resources [for complying with common standards]. We also need the standards bodies and market infrastructure firms to do the same. We’re all trying to gain critical mass.”
Braine adds that firms need to have the motivation and the people to kick off wholesale technology change in capital markets. “We’re getting to a stage where we need to strip things out. You look at the difference between pre-trade and post-trade costs – its becoming unacceptable. These are issues that need to be raised with higher management to stop them focusing on their profit and loss for the next year.”
