by Karen Gregory
DTCC's fourth annual Global Relations Exchange and Training (GREAT) workshop brought together 51 industry executives from 19 stock exchanges, central securities depositories (CSDs) and central counterparties (CCPs). The five-day gathering of industry executives from around the world took place at DTCC's New York headquarters in July.
I truly believe in the value of programs like this one," said Robert Druskin, DTCC executive chairman, in his welcoming remarks. Collaborations and discussions like we are having this week with peers from around the world are critical because we all share a common perspective, a common set of goals. This is an opportunity for all of us to ask questions, debate the issues and learn about the ways our organizations operate and are navigating through this very critical time in our industry."
Managing risk – operational, systemic and market/credit/liquidity – was at the top of the GREAT agenda for the second year in a row. Throughout the conference, delegates offered insights into how their organizations are managing in an environment characterized by volatile markets; cross-border regulatory reforms; new global standards for market infrastructures; the need for transparent trade repositories; and the push for a more standard system to identify trading entities.
New products and the value of data
In addition to a roundtable exchange highlighting key developments and 2011 priorities, the conference included two new sessions devoted to how different market infrastructures expand products and leverage the vast amounts of data they collect and process.
Jing Luo, business manager, China Central Depository & Clearing Co., gave insight into factors that drove the generation of Chinabond Pricing Products, a tool that supports managing bond investments at various points including internal risk control, accounting measurement, performance evaluation and trade pricing.
K-evote, a service offered by Korea Securities Depository, is an electronic, web-based platform for shareholders to exercise their voting rights. Most general meetings are held in Seoul on two specific days in March, which makes it difficult for shareholders to attend," explained Shinkyu Kang, assistant manager, Deposit & Settlement Services. K-evote is safe and secure; companies don't have to build a new system; and it facilitates communications with investors."
In his remarks on leveraging data, Ron Jordan, DTCC managing director and chief data officer, described DTCC's methodology. While data can be recycled to add value to the company, members, regulators and commercial clients, the challenge is in knowing how to balance what is proprietary and what can be released," he said. We need to be very clear about our rights and responsibilities over data. We need defined strategies and business plans, as well as data governance and reporting capabilities."
Settlement models and CPSS-IOSCO
Delegates had a spirited discussion about the different settlement models that have developed around the world, moderated by Froukelien Wendt of The World Bank.
A related session on CPSS-IOSCO's consultative report, Principles for Financial Market Infrastructures, brought together the initiative's co-chair, Jeffrey Mooney of the U.S. Securities and Exchange Commission, and Kirsten Harlow of the Federal Reserve Bank of New York, who outlined the 24 benchmarks for CCPs, CSDs, payment systems and trade repositories globally. (CPSS-IOSCO is a joint working group comprising the Bank for International Settlement's Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions.)
Several panelists discussed their organizations' strategies to strengthen regional collaboration.
Depositories CAVALI in Peru, Depósito Central de Valores in Chile and Deceval in Colombia are members of the Mercado Integrado Latinamericano (MILA), a new project that cross-lists all Peruvian, Chilean and Colombian stocks and enables investors to trade and settle through an interfaced process.
The Barbados Central Securities Depository is a member of the Caribbean Exchange Network, which gives investors, traders and brokers direct access to the financial products listed on the Barbados, Jamaica and Trinidad & Tobago exchanges.
The Vietnam Securities Depository, as part of the 19-country Asia-Pacific Central Securities Depository Group, is helping to promote the exchange of information and assistance among the group's 30 member organizations.
Trading and market trends
Larry Tabb, CEO of the TABB Group, the financial markets advisory and research firm, shared his views on trends remaking the global market structure. "Speed has become increasingly critical as trading is becoming more technologically advanced," he said. "Cost pressures are forcing exchanges to consolidate, with multi-asset and multi-geographic capabilities pushing together global alliances. And regulation is threatening to change the landscape again as regulators try to reshape the markets to become more robust."
'A challenging environment'
Addressing the delegates, Donald F. Donahue, DTCC president and CEO, noted the accomplishments of depositories and clearing houses against the backdrop of markets still recovering from the financial crisis.
"It's a very challenging environment in which to do business while simultaneously working to ratchet down risk wherever we can...by expanding transparency for market and infrastructure activity; creating widely accepted international securities industry standards; improving resiliency through cooperative agreements among depositories and clearing houses; providing reliable data on a global basis for crossborder transactions to reduce settlement times; and improving internal risk monitoring, even as regulators have been grappling with rules for global derivatives.
"Beyond the challenges, infrastructure organizations have continued to move ahead with a long list of projects benefiting investors and issuers," he concluded. "This week's panel discussions and breakout sessions reflect steady progress on those initiatives."@