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Market Infrastructures 2020 and Beyond

By DTCC Connection Staff | Feb 03, 2020

Rachel Tyler, DTCC Executive Director, Business Resiliency - Resilience – What Does It Mean?
Mike Bodson, DTCC President and CEO

DTCC President & CEO, Mike Bodson, shares his viewpoints on the key trends that lie ahead for the market infrastructure industry.

Q. As we kick off the year 2020, please can you look further into the future, and shares your predictions on what the US market infrastructure industry might look and feel like by 2025?

MB: The pace of change in our industry is so rapid and dramatic that it’s difficult to accurately predict what the US market infrastructure will look like in two years, let alone five. It’s clear, however, that market structure and post-trade processing will evolve dramatically as new technologies like distributed ledgers, the cloud, artificial intelligence and machine learning begin to replace legacy systems. Whether it’s complementing or replacing them, fintech will spark transformative change. As part of this evolution, I’m very confident that digital platforms and application programming interfaces (APIs) will become ubiquitous across financial services, which will enhance the client experience by giving firms unprecedented flexibility to tailor services to meet their unique needs. In addition, markets will continue to evolve to allow trading of all forms of assets, including tokenized assets. As this trend grows, the industry and regulators will have to prioritize developing rules to govern the post-trade processing of these digital assets to protect market stability. An overriding goal for all market participants in the coming years is to make sure that new technologies are adopted in a thoughtful manner and that they increase client value. Often, the best solution isn’t always the newest technology. Sometimes, improving existing infrastructure and optimizing processes can deliver equal or better results

Q. And how is your firm getting ready for the changes you’ve outlined above?

MB: At DTCC, we’ve been leading the digital transformation of post-trade processing since our founding more than 40 years ago, and we’re building on that legacy by actively shaping the future of our industry. We’ve already started that work by launching innovative, new products and services, creating an API marketplace similar to the App Store for our clients and advancing fintech use cases to further enhance efficiencies and strengthen market safety. We’ve also sharpened our focus to make the biggest impact in areas where our clients face significant challenges, such as helping them reduce costs and risks, improve capital efficiency and liquidity, meet regulatory reporting requirements in a timely manner and address operational efficiencies.

Most firms today face tremendous cost pressures and revenue compression, and the expectation is this trend will become even more acute in the future. The industry has been very clear that it needs greater support from market infrastructures like DTCC, and we are responding by advancing initiatives that will completely reimagine the back office as a common set of services and communication protocols. Our goal is to commoditize even more post-trade functions to reduce the total costs of processing—their costs and our costs combined—and help our clients drive organic growth and higher levels of profitability.

Q. Entering a new decade is not just about looking ahead; it’s also a good time for reflecting on the past. What’s the top lesson you’ve personally learned from the past 10 years?

MB: There have been many lessons, but the one that stands out—especially today—is firms that fail to adapt to change will be quickly displaced. Our clients are looking to us to help solve their problems more than ever, and we take that responsibility very seriously. We must be creative and thoughtful, more agile and responsive to their needs and always provide a superb client experience. The industry is straddling a line between an old world and new world, and we are helping to build a bridge that will enable them to achieve their business goals and objectives. However, while the industry is moving quickly, our core mission remains unchanged: Our clients expect seamless, flawless execution, and we are committed to delivering that every day.

This article first appeared in WEF In Focus, January 2020 issue.


 

 

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