Mike Bodson, President & CEO, DTCC
Please outline the three most important macro trends that you believe will impact the market infrastructure industry in 2019.
The environment remains extremely dynamic, but I anticipate that the ongoing threat of cyber-attack, the continued emergence of new fintech, and geo-political risks will have the greatest impact on market infrastructure this year. Cyber concerns have grown exponentially to the point where they are considered by many to be the biggest threat to the industry. Planning around prevention and resiliency, along with information sharing, will need to be top priorities for all financial firms to protect against this threat.
Similarly, the geo-political landscape is more uncertain than it’s been in many years, which is creating business challenges across the industry. In particular, Brexit, ongoing trade disputes and economic difficulty in emerging markets have sparked increased volatility in the global markets, which will likely continue throughout 2019.
On a positive note, I expect that fintech will begin to deliver quantifiable results this year as industry initiatives transition from experiments into product innovation and delivery.
In your view, what’s the technology most likely to disrupt global capital markets in the next 12 months?
Fintech has the ability to transform and improve certain areas of post-trade processing. We are already seeing the benefits of artificial intelligence (AI) and machine learning (ML) in the areas of risk management and cybersecurity, among others. For market infrastructures like DTCC, we expect that these technologies will have a significant impact in data analytics, enabling us to glean critical insights to reduce risk, enhance services and solve business challenges. In addition, I expect DLT will continue to mature in 2019 as firms gain a deeper understanding of the areas where it can deliver the greatest client value. Cloud computing should also become even more ubiquitous as providers increase the security and resiliency of their services.
What are the key strategic initiatives you’re working on at the moment?
We’re working on several key initiatives that leverage advanced data capabilities to enhance resilience. For example, we’re finalising a clearing services proposal that could deliver significant margin savings to the industry by allowing government securities and mortgage-backed securities to be margined as a single portfolio. Additionally, we are expanding our Risk Management as a Service, a comprehensive solution we’ve developed to give firms access to a consolidated view of their risk profile as well as advanced analytics regarding their trading activity.
This article was originally published in Focus Magazine by World Federation of Exchanges on January 30, 2019.