After months of planning, over 30 leading industry figures covering the critical topics shaping the post trade landscape and with over 250 delegates registered, on the 20 November we held the ISLA Annual 15th Post Trade Conference in London, kindly hosted by Bank of America.
The post trade landscape has evolved rapidly since ISLA’s last Post Trade Conference with tokenisation, automation and T+1 reshaping the fundamentals of our industry. Coupled with the opening of new markets and the progression of competitively minded regulation, today we will explore the commercial wins available to firms willing to embrace the power of post trade.
The morning’s key message was – ‘Collaboration through Fragmentation’.
With Europe’s fragmented ecosystem under the spotlight, driven by the transition towards T+1, emerging European regulation looks to address many shortcomings under the guise of competitiveness and competition. From the consolidation of financial oversight to the streamlining of post trade venues, the current regulatory cycle offers potential relief and clarity to stretched operations across the EU. However, with fragmentation across clearing, settlement, and technological infrastructure, the regulatory journey will be rife with many twists and turns.
While the industry awaits regulatory evolution, the need for industry collaboration is clear. With 60% of delegates sighting development costs as a key T+1 challenge, firm level fragmentation across technological maturity and operational processes can further drain resources. Given the interconnectedness of T+1 (and SFTR), the sector will need to come together to address these challenges and ensure that budgets are spent in the most cost effective manner.
ISLA’s working groups offer the market an ideal venue for this collaboration to take place – through open dialogue, these groups help shape best practices, inform the regulatory agenda and shape the Association’s advocacy efforts. With recent T+1 wins highlighting the power of these groups and the important role they play, the call to action for market participants to actively participate, has never been clearer.
The challenges and opportunities facing the industry from the perspective of new markets, new regulation, new technology and…old legacy systems!
As we move from established markets to emerging ones, particularly in the Middle East, market participants have the opportunity to embrace and build out new technologies and systems into their operations, leveraging lessons learnt in other markets.
With new markets in the Middle East shifting trading days and with 24/7 trading becoming further into scope – tokenisation is moving from the ‘shiny new thing’ to having real operational benefit. However, although the benefits are clear, adoption remains stunted due to legacy issues, capabilities, and other capital constraints.
Moving from the future to the now, it wouldn’t be a Post Trade Conference without mentioning legacy systems and SSIs! As a persistent source of failures, the lack of standardisation, reliance on manual processes and slow uptake of innovation have meant that SSIs remain a sticking point on our conference agendas.
The ‘new’ developments in our industry mean that we are now at an inflection point. Investing in Post Trade now will offer benefits for years to come. However, given the deep rooted nature of many legacy systems, ‘Building for Resilience’ should be prioritised with incremental developments favoured over a ‘Big-Bang’ approach, and the operational risks which come with it.
Collateral mobilisation, tokenised collateral and a view of of how the infrastructure ecosystem is preparing for the opportunities of tomorrow.
The ValueExchange today published the results of their industry wide tokenised collateral survey. With the headline that up to USD 340 million in annual savings for Tier 1 firms are available through the adoption of tokenisation of collateral – the potential is vast and the pace of change rapid – with 52% of firms planning to be live by 2026.
Click here more information, including full survey results.
While the data tells one story, our next panel explored the practical considerations for the adoption of new technologies to unlock liquidity and mobilise an ever increasing number of asset classes as collateral. While the technologies exist and the proof of concepts tested, internal approvals and budget constraints remain an ever-present hurdle. Teams needs conviction and ‘cheerleaders’ to communicate the ROI and drive forward solutions – its vital however to ‘look beyond the technology and focus on the legal and operational implications of adoption!’
Our final panel looked under the hood of the industry and explored the challenges and transformative possibilities facing infrastructure today. With technologies constantly evolving, identifying true business cases is imperative to ensure resources are effectively utilised and adoption is successful.
ISLA’s Chair of the Board, Alessandro Cozzani, closed the day’s proceedings by commenting that, given its evolving nature, there’s never been a better time to be in the industry – new trading strategies need new ideas.
Given their integral nature, post trade processes should not be viewed in silo and need to be thought of as part of the broader trade platform – only then, can the industry fully capitalise on the opportunities at hand.
Thank you to all of our speakers, panellists and guests for their support in delivering a fantastic conference and delivering the ISLA Connects Networking Reception!
Thank you again to our hosts Bank of America as well as our sponsors EquiLend, Eurex, Euronext, OSTTRA, Pirum, State Street and Tokenovate.
