DTCC Makes a Strong Showing at Sibos 2007
Donald F. Donahue
On the surface, there is a strong current pushing the markets towards global convergence, but it’s important that we realize that other trends can pull us away from convergence, like a strong undertow that drags us away from shore,” was the seascape metaphor Donald F. Donahue, DTCC chairman and CEO, used to describe global trends shaping the future of the securities market. Donahue was speaking at a Sibos 2007 panel titled “The 2013 Securities Landscape: Will You Still Be Part of It?”
Sibos is the annual industry conference on market connectivity, message standardization and interoperability in the global financial industry organized by SWIFT, the industryowned organization that provides messaging services and interface software to more than 8,100 financial institutions globally.
This year, approximately 7,500 executives from financial institutions, central clearing organizations, system integrators, application and middleware providers, and consultants from all over the world attended Sibos. They shared ideas on how to bring greater market efficiency and security to global capital markets. The event was held in Boston the first week of October.
Global Trends
At the opening-day session, Donahue said, “It is absolutely essential that the industry speak with one voice in support of initiatives – like the SEC’s consideration of ‘mutual recognition’ between regulators overseeing components of the global market system – that promote and accelerate market convergence toward common standards, common operating methodologies and a fully interoperable global interconnected clearing and settlement system.” He cited regulatory initiatives such as MiFID and Reg NMS as strong forces moving global markets in the right direction, promoting competition and change among participants.
MiFID, the European Commission’s Markets in Financial Instruments Directive, creates a new legal framework for the provision of investment services in the European Union that is intended to foster competition and a level playing field between Europe’s trading venues. MiFID’s provisions will apply from November 1, 2007. Reg NMS refers to the Securities and Exchange Commission’s Regulation National Market System, scheduled for full implementation later this year and designed to modernize regulations governing U.S. equity trading.
How global markets will come together was a focal point of the discussion among the speakers, who also included Jan Bart de Boer, global director commerce, Global Brokerage, Clearing and Custody, Fortis; Adrian Farnham, chief operating officer, Turquoise (the new pan-European trading platform being created by a consortium of investment banks); Chris Foskett, managing director and global head, Financial Institutions Group, Citigroup; Till Guldimann, vice chairman, SunGard; and Anders Reveman, senior advisor to the European Central Bank on the Target 2 Securities project.
Donahue noted that while global mergers between exchanges are pushing markets towards similar approaches for technology and governance, not all trends are moving toward commonality. He pointed to regulators in Europe and North America as having different approaches when it comes to rules-based versus principles-based regulation, and noted there was a danger that movement toward common accounting standards could be negated through regional differences in implementation. Donahue called on the attendees to show their strong support for efforts to bring market regulations towards consistent, harmonized standards.
DTCC’s presence
Other DTCC executives who participated in sessions at Sibos were Jill Considine, senior advisor to DTCC and former DTCC chairman and CEO, who moderated the panel “Securities Market Harmonisation: Can we Learn from the Payments Business?”
Bill Hodgson, DTCC first vice president, Business Development, DTCC Deriv/SERV, served as a panelist at the session “The Evolving Role of Market Infrastructures in Supporting OTC Derivatives Post-Trade Processes.” DTCC Deriv/SERV, which provides automated services for the over-the-counter derivatives industry, recently signed its 1,000th customer (see page 1).
Michael Bodson, DTCC executive managing director, Business Management, Strategy and Marketing, was among several leading figures from the industry invited to comment on areas of momentum in financial services for the conference’s daily publication, Financial News at Sibos (10/02/07).
“The development and strong industry take-up of automated post-trade processing solutions have generated tremendous positive change in the over-thecounter derivatives market over the past few years,” said Bodson. “Not only have the new electronic infrastructure platforms enabled the OTC derivatives market to sustain its rapid growth, they also provided an essential structure for managing the volume surge during the recent turmoil in global credit markets.”
In addition to the three panelists, DTCC was in full force at the conference, with another 20 delegates participating to dialogue with industry peers and colleagues about issues including market infrastructure, processing efficiency, risk reduction and globalization.
DTCC also participated in the Market Infrastructures Forum, a meeting for securities market infrastructure participants organized by SWIFT, as well as the Global Securities Market Practice Group’s standards meetings, which are aimed at unifying standards and best market practices through the collaboration of national market practice groups globally.
On to CCP 12
DTCC closed out the week as a participant at the annual meeting for the CCP 12, an association of the world’s principal clearing organizations dedicated to improving clearing, netting and central counterparty (CCP) services. Donahue was a featured speaker at the meeting, where he and other panelists from Japan Securities Clearing Corporation and the European Association of CCP Clearing Houses addressed the current trends and challenges for CCPs. @