With the opportunity to maximize value for its clients and the industry, Frank La Salla, DTCC President, CEO and Director, took the stage at SIFMA Ops 2024 to share insights into how DTCC is serving as a strategic partner and leveraging its unique position to steer significant changes to market structure. “We have the opportunity to lead the evolution of the global financial system by creating the market infrastructure of the future,” he said.
As financial markets are witnessing an accelerated pace of change, La Salla highlighted the successful implementation of T+1 in North America, which delivered key benefits including reduced risk, lowered clearing fund requirements and improved capital and liquidity utilization. He also cited the recent T+1 After Action Report, released by SIFMA, ICI and DTCC, which shares key milestones and positive outcomes of T+1.
But as firms want and need market infrastructures to do more, La Salla said DTCC is well positioned to be the industry’s strategic partner and navigate market participants through dynamic change while helping to make the market safer, more efficient and more resilient.
As DTCC commits to building stronger and more enduring relationships, La Salla noted the firm is pursuing opportunities to deliver increased value and improve client centricity by creating innovative solutions and solving operational challenges that can hinder a firm’s success.
What’s Next?
Following T+1, the expanded rules of U.S. Treasury clearing will represent one of the most significant changes to market structure in decades, requiring substantial operational and technology adjustments for a broad section of industry players. To help clients and the industry prepare for this change, DTCC is providing cross-margining opportunities that allow firms to increase capital efficiencies and optimize their collateral usage. DTCC is committed to working with other clearinghouses to extend these benefits to their customer accounts. In addition, DTCC has made available two public calculators as part of its broader plan to provide more transparency in its risk management calculations.
La Salla then turned to the current state of digital assets, noting the obstacles to progress in adoption and utilization. He emphasized that siloed efforts have led to highly disparate tokenized assets and a lack of clarity on how to comply with regulations. But La Salla remains optimistic that the tide is finally shifting, given firms’ increased interest to experiment and co-create. “DTCC intends to be the digital market infrastructure of the future,” said La Salla. “We’re committed to standing at the intersection of these efforts, as we have the technology, know-how and desire to play a vital role in this space.”
When it comes to digital assets, the sky’s the limit on how DTCC can help shape the industry’s digital journey.
DTCC is committed to providing the same level of support and service for digital assets as it does now for traditional assets. The firm is taking the lead in creating building blocks for standardizing data, controls and policies. A recent partnership with Clearstream and Euroclear provided a framework for establishing digital assets standards and the resulting report was downloaded more than 40,000 times, indicating the intense interest from the industry for leadership and support.
La Salla announced that the firm will be launching a DTCC-governed and commissioned sandbox for firms to collaborate using industry digital technology. DTCC’s sandbox differs from others in that it will offer the infrastructure to advance adoption and provide the tools and technology to facilitate processes. The firm plans to roll out powerful new digital asset capabilities for securities and fund tokenization, collateral management and more effective use of smart contracts, with the goal of establishing a larger ecosystem. When it comes to digital assets, the sky’s the limit on how DTCC can help shape the industry’s digital journey,
said La Salla.
On the Horizon
As DTCC explores new ways to automate processes, harnessing the power of AI is at the top of the agenda given its immense power and potential to innovate all stages of the trade lifecycle. DTCC is preparing to roll out risk management chatbots and use AI to analyze historical data.
Continuing its modernization journey, DTCC remains focused on three core goals:
- Improving the client experience with DTCC’s systems.
- Strengthening resiliency and functionality of its platform and applications.
- Delivering flexible systems that adapt easily to market structure changes and opportunities.
La Salla concluded by saying, “These actions, along with others, are all part of our transformation into a growth enabler and strategic partner. We are here to listen to our clients’ feedback and translate it into actionable steps to help them meet their business objectives and regulatory commitments.”
After his presentation, La Salla accepted SIFMA’s Operations Industry Excellence Award from Ken Bentsen, SIFMA President and CEO, in recognition of DTCC’s significant work and stewardship in leading the industry through the successful conversion to T+1.