DTCC Connection

Jul 06, 2017 • DTCC Connection

DTCC’s Systemic Risk Roundtable Focuses on Geopolitical Risk, T+2 and the Systemic Risk Barometer Survey Results

By Madiha Arsalan

DTCC Systemic Risk RoundtableMore than 30 senior-level risk and operations executives from across the financial services industry examined current and developing systemic risks impacting financial services institutions at The Depository Trust & Clearing Corporation’s (DTCC) Q2 Systemic Risk Roundtable.

The Q2 Systemic Risk Roundtable, hosted at DTCC’s Jersey City Office on Monday June 19th, discussed challenges shaping the geopolitical risk landscape, the industry-wide effort to shorten the settlement cycle to T+2 and the results of the Q1 2017 DTCC Systemic Risk Barometer Survey.

“The participation of Congressman Keating allows us to enhance the Systemic Risk Roundtable Series, by incorporating external perspectives to supplement DTCC’s thought leadership capabilities.” stated Michael Leibrock, DTCC’s Chief Systemic Risk Officer. “I appreciated Congressman Keating spending time with our team discussing some of the key geopolitical threats that have emerged across the globe.  A number of the concerns and risks identified and prioritized by the Congressman are consistent with the risks that are impacting financial services professionals.”    

Issues, Trends and Challenges Shaping the Geopolitical Risk Landscape

Mark Wetjen, DTCC Managing Director and Head of Global Public Policy, started the program by facilitating a Q&A dialogue with U.S. Congressman William (Bill) Keating, a Democrat representing the 9th District of Massachusetts, on a broad collection of geopolitical risks and global concerns.

The pair discussed the results of recent elections in Europe and previewed some of the upcoming elections which may have global implications. Discussion also focused on some of the political uncertainties that have emerged from the Brexit decision, as well as some of the risks presented by North Korea, Russia, China and the Middle East. Lastly, this exchange touched upon the current U.S. political landscape and highlighted some of the challenges associated with bipartisan collaboration in the current environment.

Congressman Keating provided insights into some of the intelligence that he receives as a member of both the House Foreign Affairs and Homeland Security Committees, and some of the techniques employed to assess and evaluate existing and emerging threats. Understaffing levels, including the number of vacant positions across the federal government and regulatory agencies within the current administration, was one item that Congressman Keating identified as a risk to the U.S., due to resource limitations on our monitoring capabilities.

T+2 Settlement Cycle

John Abel, DTCC Executive Director and T+2 Program Manager, provided an update on the current testing efforts that are ongoing across the financial services community ahead of the scheduled conversion over Labor Day Weekend in September 2017. The session provided a high level walkthrough of the conversion, including what support firms and market professionals can expect over the conversion weekend, a brief preview of the conversion schedule (detailed schedule to be published shortly and posted on T+2 webpage) and what market practitioners can expect on Tuesday September 5, 2017, immediately following the conversion weekend.

Lastly, Abel reinforced some of the benefits that a shorter settlement cycle provides across the financial system, such as a reduction in overall clearing fund requirements, a reduction of counterparty and credit risk as well as increased harmonization with data standards across the globe.

DTCC Systemic Risk Barometer Survey Results

To conclude the the program, Paul Jordan, DTCC Director, Systemic Risk Office (SRO), delivered a walk-through and analysis of the most recent results of DTCC’s semi-annual Systemic Risk Barometer Survey.

Jordan utilized this platform to detail the top risks identified by respondents as well as link the survey results to ongoing DTCC initiatives, highlighting DTCC’s depth of capabilities across each of the top risks. Jordan also highlighted inclusion of the survey results within DTCC’s thought leadership campaigns and member outreach initiatives to drive towards collective solutions to reduce the potential impact of these risks.  

Drilling deeper into the survey data, Jordan provided analysis into some of the functional and geographic differences that emerged among survey respondents. Lastly, Jordan provided a historical look back on some of the broader trends and the overall evolution of the Systemic Risk Barometer Survey since the survey was launched in 2013. 

“This interactive session engaged roundtable attendees on their prioritization and ranking of top risks impacting the financial services industry, highlighting the techniques and capabilities being employed within their respective firms to mitigate these risks” stated Jordan. “There continues to be strong interest among attendees to learn what best practices and techniques are being employed by their colleagues across the financial services industry, as well as understand the investments that have been made within DTCC and their impact across the broader financial services community.” 

Upcoming Systemic Risk Events

Invitations for the Q3 and Q4 2017 DTCC Systemic Risk Roundtables, which will be hosted at DTCC’s office in Jersey City, NJ, are scheduled to be circulated shortly.

For more information, including requests to attend, please contact Paul Jordan, DTCC Director, Systemic Risk Office, at pjordan@dtcc.com.

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