At DTCC’s annual 2022 APAC Executive Council meeting in Singapore, Marie Chinnici-Everitt, DTCC Managing Director and Chief Marketing Officer, spoke with Tim Keady, DTCC Managing Director, President of DTCC Solutions and Chief Client Officer (CCO), about helping our clients navigate the changing business environment while achieving operational resilience.
Related: Navigating Shifting Capital Market Landscapes
MC: Considering that the financial services industry is facing ongoing headwinds, what do you believe will be the greatest near- and long-term opportunities for DTCC and our clients?
TK: Against a backdrop of inflationary pressures and cost of doing business, firms are moving their systems and applications to the cloud to achieve scalable growth while exploring the future of digital platforms. Aside from challenging the status quo and changing the way firms operate to improve operational efficiency, they need to ensure the smooth functioning of their day-to-day operations even while they implement digital initiatives.
Gaps and inefficiencies are often due to error-prone manual processing. For example, we recently completed a six-week consulting project for a broker-dealer firm to ensure operational readiness for T+1 in the U.S. and found that 33% of the firm’s failed trades were caused by inaccurate standing settlement instructions (SSIs). This issue can be resolved by automating and standardizing the post-trade trade matching process and linking matched trades with up-to-date standing SSIs from DTCC’s ALERT® database – mitigating the need for call backs and sharing SSIs manually.
It’s all about leveraging technology and data to build digital experiences to meet changing business needs and comply with the onslaught of approaching regulatory obligations like shorter settlement cycles.
MC: There will be upstream and downstream impacts as markets shift to shorter settlement cycles. What should firms consider as they prepare for the move to T+1 settlement in the US and in other markets?
TK: It boils down to understanding one’s business processes and utilizing technology to streamline workflows and mitigate operational risk. DTCC’s CTM® provides a common platform across the globe for market participants to automate their post-trade confirmation process. CTM is part of DTCC’s Institutional Trade Processing (ITP) platform, an open post-trade infrastructure consisting of an integrated suite of services that eliminates redundancies and manual interventions using a no-touch processing workflow. With our no-touch processing, we are seeing 99.6% same day affirmation for US domestic trades – enabling firms to seamlessly manage T+1 settlement cycles.
Here in APAC, we have collaborated with the Hong Kong Exchanges and Clearing to link DTCC’s ITP platform with HKEX Synapse, a pioneering platform using DAML SMART contracts to accelerate the processing and settlement of trades on Northbound Stock Connect. Following the launch of Synapse, we plan to offer a similar solution to other central counterparty clearing houses and securities depositories to bring the benefits to other APAC markets.
Related: Faster Settlement Processing for Stock Connect
MC: What are you hearing from the regulatory perspective?
TK: While regulatory reforms are headed in the right direction with global derivatives jurisdictions rolling out rules rewrites in the next few years, in-scope firms will need to enhance or replace existing processes and systems to meet the revised requirements of the regulatory changes. And we are focused on supporting our clients as they prepare.
In fact, we launched DTCC Consulting Services based on our clients’ demand – they recognize the significance of these rule changes and want our guidance to manage the complexities of managing evolving regulatory demands, while optimizing operations and driving down costs. When it comes to regulatory change, we can help our clients review their reporting control framework, conduct regulatory change impact assessment, identify gaps in processes, and recommend and implement solutions in time for day one readiness.
To prepare our own infrastructure for the upcoming rules rewrites, DTCC embarked on an upgrade for our trade repository platform and migrated our data storage to Snowflake – a cloud-based storage environment that is powered by Amazon Web Services (AWS) – to handle data more effectively and at scale.
MC: With many firms adopting a cloud-first strategy by 2024, what do you anticipate will happen in the cloud space?
TK: DTCC has adopted a cloud enablement strategy for several years now – most of our tier-two applications for our ITP and Repository and Derivatives Services are already on the cloud; our internal applications are also cloud-based. Our goal is to leverage the cloud to bring our data products to the market faster. To put our data in the cloud to good use, we have created a set of practices to optimize and improve the quality of data that we have collected.
Related: Preparing for a Cloud-Enabled, Data Driven World
MC: How is DTCC improving the client experience and why is it important?
TK: Because we are user-owned and industry governed, providing a positive client experience is part of who we are. We are focused on developing solutions that are first and foremost driven by the changing needs of our clients. We have adopted a three-step approach to do this right.
First, we need to listen to our clients, and build close client relationships to understand their pain points. This is our sweet spot – our Relationship Managers partner with our experts from DTCC Consulting Services to solve our clients’ issues. Second, we need to ensure the best possible client experience and instill this mindset enterprise-wide to promote client loyalty. Third, we need to obtain 360-degree feedback from our clients on our service level, product releases, and our offerings to continually deliver products and services that meet our clients’ requirements.
MC: With challenging business conditions on the horizon, are you optimistic about DTCC’s future in the next few years?
TK: Every challenge provides an opportunity for us to innovate and solve a thorny issue that could otherwise turn into a crisis. It is about flipping the switch in our favor. The opportunity for us is to build upon the success of our products and services and spearhead innovation by reimagining processes to enhance efficiencies, mitigate risk, lower costs, and reduce fragmentation in the financial ecosystem.