Michael Bodson, DTCC President & CEO, talks about securities market infrastructure innovation at Sibos 2015 in Singapore.
Financial market infrastructures (FMIs) are leading the next wave of innovation, according to a panel of experts who spoke during the “Securities Market Infrastructure Innovation: The Next Frontier,” session at Sibos 2015 in Singapore.
During the discussion, Michael Bodson, President and CEO of The Depository Trust & Clearing Corporation (DTCC), and his fellow panelists countered the results of an audience poll that revealed a majority (53%) felt FMIs were behind the market in terms of innovation. Further, only a third of the audience felt FMIs were on par with innovation.
Bodson pointed to DTCC’s role in helping the industry recover from the 2008 financial crisis noting that DTCC could not have met that challenge with antiquated technology.
He added that, in response to the current environmental challenges and potential new risks, DTCC remains focused on evolving its approach to risk management while creating market efficiencies.
Panellists cited collaboration as a catalyst to creating solutions to address industry challenges. Bodson cited recent joint ventures between DTCC and industry partners designed to help the industry solve several very complex challenges it faces.
Related: Why the Future of Fintech (and Financial Services) is Collaborative
The group concluded the discussion by delving into innovation as a general concept. It was described as the ability to successfully seek out new opportunities and adapt them to new market situations. Bodson explained that even as the financial industry landscape continues to be redrawn by new challenges FMIs have remained stable, proving their ability to develop innovative solutions to address the needs of a constantly evolving industry.
Focus on Distributed Ledgers
The session ended with a discussion about blockchain – a hot topic in the industry. Bodson explained that, like any new technology, there are many critical areas that must be examined when trying to leverage a new technology like blockchain on a large scale. Challenges include guaranteeing strong investor protection rules, resiliency of systems, transparency, liquidity and proven capacity for processing very high volumes.
Still Bodson noted that, while the long-term implications of distributed ledgers remain unclear, the technology has many appealing elements that cannot be ignored. The key is leveraging existing and successful market infrastructures and trusted counterparties, rather than building new ones without appropriate risk management, governance or oversight.
Joining Bodson on the panel were Jaehoon Yoo, Chairman and CEO, Korea Securities Depository, Tim Howell, Chief Executive Officer and Chairman of the Management Committee, Euroclear, G.V. Nageswara Rao, Managing Director & CEO, National Securities Depository Limited, and Tom Casteleyn, Head of Product Management for Custody, Cash and Foreign Exchange, BNY Mellon. The session was moderated by Virginie O'Shea, Senior Analyst, Aite Group.