Amy Caruso, Director, Business Development and Strategy – North America, DTCC-Euroclear GlobalCollateral
While the U.S. futures markets in Chicago and New York were getting hit with ‘Ol Man Winter in the middle of March, more than 1,000 industry leaders from around the world met for the 43rd time at the FIA annual international meeting in sunny Boca Raton, Florida.
Keynote speakers included authors Walter Isaacson and Michael Casey. During his keynote lunch presentation, sponsored by DTCC, Isaacson shared insights from his recent book, Leonardo da Vinci. In the book, Isaacson details da Vinci’s contributions to the creation of the first debit/credit accounting system, which is the basis for our financial transactions today. In his introduction of Isaacson, DTCC President and CEO Michael Bodson noted there are lessons to learn from his writings, particularly how collaboration and an open mind drive innovation. In contrast, Casey, Co-Author of The Truth Machine: The Blockchain and the Future of Everything, and Senior Advisor, Digital Currency Initiative, focused squarely on the future of financials services and fintech. Casey updated the audience about the social architecture collaboration driving innovation with distributed ledger and standards development.
Regulations, Fintech, and Resiliency: Highpoints of the Conference
Bodson also joined the opening panel with industry leaders from the buyside, clearing members, and infrastructure providers to share their views regarding topics that will shape the future of the derivatives industry, including fintech, the regulatory environment, and risk management such as CCP resiliency. Commenting on the future of fintech and the importance of DLT, Bodson noted that DLT along with other innovative technologies including AI and cloud computing are perched to revolutionize financial services.
Panel discussions throughout the conference provided the opportunity for industry thought leaders to share their perspectives in greater depth. Here’s a few insights I gleaned from the discussions:
- Regulation continues to evolve and to be a contentious issue. During his keynote speech, CFTC Chairman Giancarlo reviewed the agency’s effort to simplify and make its rules and regulations less complex, less costly, less burdensome – known as the KISS initiative – with the goal to ‘right-size’ Dodd Frank related requirements. CFTC Commissioner Quintenz focused on the recent European Commission legislation and how it conflicts with the 2016 agreement for CCP equivalency. And in the panel following Commissioner Quintez’s remarks, the topic was further discussed and the audience contributed via a poll - 78% said they expect the 2016 agreement to remain valid.
- Fintech discussions centered on Bitcoin and blockchain/distributed ledger. How to regulate Initial Coin Offerings, how to achieve transparency in a cryptocurrency market, and how to identify the opportunities for distributed ledger technology were among the hottest points of debate during the fintech-related panels.
- Although there is a difference of opinion by some about the details as to how to achieve the goals and objectives of “Skin in the Game” – or CCP risk management - there is agreement that there is work to be done regarding the level of capital derivatives clearing CCPs must hold and the variety of risks for which they are responsible.
Growth in the Future
In contrast to past FIA Boca conferences, I noticed that at this year’s conference, market participants are starting to talk about growing their business again. We heard more firms talking about building their business rather than rationalizing or ‘re-prioritizing’ clients due to increased capital requirements. Capital constraints and expense control are still a challenge, but this year more firms were looking to the future with a much more upbeat forecast and with opportunity.
And with solutions like DTCC-Euroclear GlobalCollateral’s Collateral Management Utility and Margin Transit Utility, we shared how our services can help reduce capital constraints with FCM to CCP posting of collateral with DTC-eligible collateral while also providing cost effective STP of intraday margin substitutions and FCM to client margin processing and reporting as well.
If you weren’t able to make it to FIA Boca and you would like to discuss how DTCC-Euroclear GlobalCollateral can help your firm better manage to collateral-related capital constraints, margin settlement STP between clearing members and end users, or collateral substitution processing with CCPs, clearing members, and end users, contact Gareth Jones at [email protected] or Amy Caruso at [email protected].
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