Time is a funny thing. When we were kids, it moved at a snail's pace. Days lasted forever and we even had this concept called boredom.
As we get older, time seems to speed up – especially when looking backwards. For example, I can't believe I have been at FIA nearly 12 years or that I'm approaching 30 years of living in D.C. I'm still a Hoosier at heart, but truth is I'm now a Washingtonian.
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The effects of this "time warp" feel particularly powerful lately. I have likened recent experiences in our industry to living in dog years, given the many market incidents. Remember, it took less than a year between our introduction to FTX and its disruptive leader Sam Bankman-Fried at the 2021 FIA Expo to its catastrophic collapse last November. But as always, the headlines change and time moves on.
There will always be new disruptions and innovations. It's important to reflect on the past, however, to remind ourselves of the core values that drive us forward as well as the areas where we can improve.
So in case you've already forgotten, here are some important developments from the first half of the year – and more importantly, how they will shape FIA's work going forward.
Our Boca conference in March always seems to coincide with big events – from the global economic shutdown from the pandemic to the Russian invasion of Ukraine to this year's collapse of Silicon Valley Bank. I'm not ready to declare a "Boca Curse" but let's just say next year I will be wearing a garlic necklace and conducting a séance at Palm Court.
This year's Boca crisis du jour was a major cyber-attack on a third-party service provider. The good news is our industry showed great resilience. We quickly gathered as a community, shared information and rolled up our sleeves to get all participants back online.
Related: Examining third-party and other emerging risks
FIA drew lessons from this experience and formed a Cyber Risk Taskforce in March. The taskforce plans to release recommendations in the coming weeks on raising standards for cyber-attack prevention and operational recovery and reconnection. Practice makes perfect, and the report will recommend ways our industry can prepare and plan in anticipation of the next disruption.
During the first half of this year, we have seen tangible improvements in the relationship between the UK and EU after several years of post-Brexit tensions. As I noted at IDX, I am not surprised. After all, the EU and UK share a deep common history further driven together by the Russian invasion of Ukraine.
London will certainly continue as a major global financial center. And the EU will remain one of the most important trade blocs in the world. Like peanut butter and chocolate, a close partnership here is a no-brainer.
The biggest evidence of that cooperation comes from the recent EU-UK MOU on regulatory cooperating in financial services. This seemingly simple act represents an improving relationship between parties—a rebuilding of trust, on which other cooperation can be formed.
This is good news for our industry, which relies on access to markets globally. FIA welcomes this strengthening relationship and will continue to advocate for open markets in Europe and beyond.
Playing the standards
As further proof of how fast time flies, it's hard to believe that just last year FIA formed the Derivatives Market Institute for Standards (DMIST). This group was born out of frictions around clearing and settlement that were revealed in the wake of pandemic-era volatility.
We've seen rapid progress from DMIST since its formation to bring different stakeholders together in service of a shared mission – namely, encouraging widespread adoption of industry-led standards in the exchange traded and cleared derivatives industry. The most tangible proof of DMIST's success comes via its first official standard regarding the timing of trade allocations, which was published just a few months ago. DMIST isn't stopping there, with a current consultation open around average pricing.
I'm confident that 2023 will also be known as the tipping point that our industry dedicated needed time and resources to improving our operational infrastructure. I look forward to what's next from DMIST in the second half of the year.
There's a lot more to watch beyond these issues, too, so hang on as we race through a few more key areas FIA is working on:
Digital Assets - Though the "crypto winter" definitely caused a chill for some firms in 2022, things have heated up again in 2023 on the digital asset front. In the US in particular, policymakers are heavily focused on the future of regulation for both spot and derivatives markets. I testified before the US Congress in June about some of the challenges with the current regulatory regime, and policymakers are thinking hard about the right way forward. FIA continues to engage with regulators, lawmakers and market participants about finding the right structure for digital assets that allows for growth and innovation but also continues to protect customers and the broader financial system.
Commodities - This part of the global derivatives markets remains front-and-center at FIA, with a strategic focus on catering to market participants in this sector. In addition to holding a Forum in Leipzig, hosted by EEX, in June – with a focus on the energy crisis and regulation – we are returning to Houston in September for our Commodities Forum, we continue to engage with regulators in the US and EU on the importance of transparent price discovery in these markets, and we're working hard on sustainability such as the future of carbon markets worldwide.
APAC and China - As China progresses with Futures and Derivatives Law implementation, FIA is ready to engage with policymakers as well as our member firms who do business in the region during this time of transition. I will be heading to China in the fall as part of the China Securities Regulatory Commission's International Advisory Council to discuss trends in our markets. And our Singapore office, led by Bill Herder, provides a key touchpoint for our industry as we look to the future of APAC growth. We're also looking forward to connecting with our members at a regional event in Taipai in August, as well as our flagship FIA Asia conference in November, having already hosted forums in Hong Kong and Sydney so far this year.
Whew! Time certainly does pass quickly in this industry. And who knows what new headlines we'll have to add to the mix in the months ahead.
The good news is that there is much to be looking forward to, and we are never bored here at FIA.
May we continue to live in interesting times!
This article was originally published to FIA on July 25, 2023.
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