Derivatives

executive vice president, post-trade derivatives, SunGard's capital markets business

THE FUTURE OF POST-TRADE DERIVATIVES PROCESSING

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This blog post originally appeared on FTF News.

In the derivatives industry, significant, year-over-year transaction volume growth has become the norm. With high-frequency trading driving up the volumes of trades to hundreds of thousands or even millions per day, derivatives market participants must be able to manage these higher volumes. Moreover, due to market volatility, the peaks in volume must be managed within shorter time intervals, and this is driving the need for scalability.

A key factor to meeting the challenge is the ability to reduce the length of end-of-day processing and complete tasks more quickly. However, increased volumes can present difficulties for the monolithic back-office systems that firms have invested in and tailored to their business over many years. These systems must be enhanced to scale and perform optimally in an unpredictable and high volume trading environment. But enhancing the scalability of an entire back-office system in order to manage one specific task ramps up the cost of hardware, software and staffing.

So what is the recommended approach?

Component-based processing can help to address these challenges by focusing on improving scalability only for targeted functions or specific tasks. This technology approach means that firms are enabled to manage high volumes while continuing to leverage their current back-office systems without increasing their total cost of ownership (TCO).

This approach helps to increase flexibility by extracting system functionalities to optimize back-office processes. It also helps firms to improve the scheduling of these tasks. This is especially useful for time zone processing and scaling to new business requirements.

For example, let’s imagine that a large global clearing firm wants to ensure its processing in Asia, Europe and the U.S. is successful according to the requirements of each regional timeframe. A component-based approach gives the firm the ability to launch global end-of-day processing that covers all regions with the flexibility to run each one individually according to time zone.

Components also help to increase scalability while controlling TCO. Based on a firm’s specific requirements, they can make technology choices regarding which processes to externalize to improve processing. This eliminates the cost and pain of a switch-over to new platforms or the need for additional hardware.

With the right system strategies, the back office can provide better returns in the long run, especially given the explosion of information and trade volumes. Firms must take steps to strategically leverage technology to be more agile and efficient while still properly managing operational risk. The future of post-trade derivatives processing is here.

 

While you’re here…

head of Valdi Options US, SunGard's capital markets business

3 KEY AREAS TO WATCH IN OPTIONS TRADING IN 2012

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This blog post originally appeared on TabbFORUM.

The last several months have been crazy for financial exchanges. We had anxiously waited for the Deutsche Bourse–New York Stock Exchange deal to close — a merger that would have fundamentally changed the global exchange landscape for derivatives trading — and watched the deal get blocked by the European Commission. Now, as we eagerly anticipate the implementation of Dodd-Frank legislation and the Volcker rule in the U.S. in the coming months, we should consider how the final implementation will affect trading volumes, trading strategies and compliance needs for those engaged in derivatives trading.

One thing is certain: activity in the financial arena isn’t likely to settle down any time soon.  Within the listed options space in particular, here are three key trends worth tracking as we continue to make our way through 2012:

1. More U.S. options exchanges ARE coming.

Even though there are already nine options exchanges up and running in the U.S. today, I expect one-two more exchanges to be up and running by year-end.  NASDAQ has stated its intent to launch a third exchange (to complement its existing PHLX and NOM options markets). A new entity, the MIAX options exchange based in Miami, plans to launch during 2012. While competition is generally a good thing in the marketplace, is there sufficient U.S. options trading activity to justify 11 exchanges? And if 11 U.S. options exchanges can be supported, what is the additional cost to trading firms, brokers, vendors and others who now have to run lines and build out additional infrastructure to these new exchanges? Each options exchange will have to serve well-defined customer niches within the industry in order to sustain ongoing business.

2. Options exchanges WILL continue to roll out new products.

It shouldn’t come as a surprise that options exchanges need products that participants want to trade. Will the exchanges be able to create products that are reasonably easy to use and understand and that actually serve a useful trading / hedging purpose for the trader? Absolutely! The difficulty will be figuring out which new products will have long-run staying power in the options space. For example, VIX options and some ETF options have been quite successful over the past few years in terms of trading volume – some lesser-known contracts, not as much. Although they are going through approval stages right now, I am quite curious to see if either “Super-LEAP” options (contracts with 4-5 year expiration dates) or “mini-options” (contracts on high priced stocks that deliver 10 shares instead of the typical 100 shares) generate consistent trading interest across the industry. The introduction of new option contracts becomes even more important in a U.S. options market with up to 11 exchanges – as each exchange seeks to differentiate itself from its competitors.

3. Foreign options exchanges WILL draw more interest and activity.

Foreign options exchanges like Brazil’s BM&FBOVESPA and Korea’s KRX already possess significant trading volume, so they are certainly in a position to command attention in the options industry. Since both markets are derivatives hubs in their respective regions of South America and Asia, they can more readily leverage their prior successes into the next two or three years of options trading. In many trading circles, existing volume and liquidity begets MORE volume and liquidity, so both Brazil and Korea are well positioned in that way. Lastly, given that Brazil and Korea serve accelerating regional economies in South America and Asia, these markets are primed to draw increasing options trading interest from the likes of hedgers and speculators across their own regions. Moreover, I predict each of these exchanges will reach out to and work with their neighbors (like Chile or Hong Kong) to promote additional regional strength. Since full exchange mergers are tough to accomplish these days, I also see strong, targeted partnerships taking place between selected U.S. options exchanges and some of their foreign exchange counterparts in the months ahead.

These three trends in the options markets form an interesting foundation for derivatives trading on both a national and international level. Stay tuned to see what develops.

While you’re here…

senior managing director, SunGard's brokerage business

WHAT BROKERAGES MUST DO TO SUCCEED IN 2012

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This blog post also appears on ATMonitor.

With 2012 underway, it’s clear that caution is at an all-time high among investors. This is reflected in shrinking trading volumes and tighter brokerage commissions—a sharp contrast to years past, according to major media reports.

To stay ahead, brokerages across the globe will likely have to redouble their efforts to attract and keep more investors this year. Luckily, trading firms will have an array of regulatory reforms and directives, electronic trading and connectivity tools, emerging standards and some cutting-edge options at their disposal to help them attract more investors and bolster their fortunes.

Better Transparency

The market reforms come as securities firms face an evolving trading landscape that is becoming ever more fragmented, creating challenges for those in the race for liquidity. The call for greater transparency eerily echoes the struggles of U.S. presidential candidates that want to know more about the money that secretly flows to the super-political action committees (super-PACs). The good news is that for investors and market players, transparency is coming via the regulators. The U.S. electorate will not be so fortunate.

Major players in the bilateral, over-the-counter (OTC) derivatives market such as ABN Amro, Citigroup, Credit Suisse and Citadel Securities will be part of a tamer market as regulations for increased transparency begin to take effect in 2012. This will drive OTC derivatives trading into an increasingly more electronic phase as established OTC processes and technologies will converge with those used for listed market trading.

In the U.S., the Dodd-Frank Act reforms are intended to create safer opportunities for those investors willing to take on OTC instruments that were not previously traded via traditional exchanges. Contract markets and new transaction platforms called “swap execution facilities” or SEFs will be the brave new venues for OTC transactions. Many existing and new players are readying systems and staffs for the next chapter of this new world for OTC instruments.

The OTC reforms will yield another protection for investors—clearinghouses for OTC instruments. CME Group, LCH Clearnet and the Intercontinental Exchange (ICE) have all been making major strides to provide OTC services.

European Reforms Aid Investors

Other reforms to ease investor concerns are underway in Europe and underscore the trend among regulators to heighten their focus on investors’ rights.

In particular, a key part of the European Commission’s Markets in Financial Instruments Directive, also known as MiFID II, will help trading participants view and analyze the same data after a trade has been transacted, thereby increasing transparency for investors across Europe and leveling the playing field.

A follow-up to a previous directive, MiFID II is intended to improve investment services for consumers and protect them from inappropriate financial products. The updated directive is also intended to make providers adhere to a new clarity for investors as they consider more complex financial arrangements.

The move to MiFID II could also facilitate closer coordination between regulators in the US and the European Union as they smooth out approaches to regulation, facilitate market stability and ensure that investors have similar protections regardless of where they decide to trade.

Streamlining Trading Engines

On the home front, trading firms will have to streamline their front-end systems. This will get easier as the Financial Information eXchange (FIX) electronic messaging standard gains more ground. FIX is becoming the market standard across not only execution data but market data, allocations and other asset classes. Investment firms will increasingly adopt FIX in order to help reduce their integration costs.

Along the same lines, broker-dealers will need greater automation for their clients’ orders and streamlined trading processes to help drive down costs as brokerage commissions continue to be under severe pressure.

Up and coming brokers will also need consolidated links to exchanges, which will reduce the number of technologies required to access liquidity. This will make it less expensive to maintain additional connections to more trading venues. Smaller trading firms will also need to stay competitive by focusing on geography or market sectors (such technology or global mid-cap stocks), which will attract buy-side firms that are looking for specialized expertise.

However, the challenge for finding new opportunities is different for the largest of the sell-side firms. They will need to offer a broad, global network of connectivity to major exchanges such as Nasdaq OMX and NYSE Euronext and to compelling new markets such as Brazil’s BM&FBOVESPA, which has a partnership with CME Group to enable the trading of contracts via both exchanges in real time. Not only will the big brokers have to provide direct market access and services to these venues, they will have to support multiple asset classes.

Tighter Connections to Trading Venues

Yet trading firms will have to do more than secure the network link. They also have to help ensure that orders arrive at different exchange venues at the same time. To help with this demanding situation, firms will need to adopt complex event processing (CEP) techniques.

CEP refers to a kind of technology that takes into account the multiple details of an event, such as detecting credit card fraud via multiple transactions or the ways a company can suffer a security breach. Using CEP, trading firms can take into account the parameters that their clients specify on orders and simultaneously assess the validity of the order, the exposure and the potential market impact.

Like many other business sectors, brokerages large and small will also have to consider reducing upfront and ongoing technology maintenance costs. One of the most effective ways to do this is via outsourcing and hosted applications on a Software-as-a-Service (SaaS) basis. These are the first steps toward a cautious embrace of cloud computing, which is giving trading firms pause because of security concerns.

Some firms may also want to revisit their advanced trading strategies to make sure that investors are still being well served by them.

For instance, formulas that guide specific operations in computing, known as algorithms, have recently caught on with a variety of businesses, from dating services to search engines. However, algorithms have been an important part of electronic trading for almost a decade. But algorithms for trading have become commoditized for many brokerage firms. To leapfrog the competition in 2012, firms will be buying more sophisticated algorithms—or purchasing the tools to build them—to help maintain the profitability of their algorithmic trading operations.

Like the U.S. auto industry, brokerages have been pulled in many directions over the past decade. But if trading firms can streamline their offerings and provide more assurances to their clients, they should be able to offer far more attractive investment vehicles in 2012.

While you’re here…

deputy head of strategy, SunGard’s capital markets business

Q&A: TRANSFORMING POST-TRADE PROCESSING

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I recently participated in another Twitterview with DerivSource, who asked me several questions about transformations happening in the post-trade processing space. Within the context of regulatory reform, firms are recognizing the need to make changes to meet new rules, both those that have been identified and those still to be determined.

In the Q&A, we talked about data management, collateral management, approaches to regulatory compliance, and more. One of the most important ideas that came across is the concern that firms may be planning to respond to regulations one by one rather than equipping themselves with the ability to address multiple regulations in a flexible way.

If you missed the Twitterview, you can see the full back-and-forth with DerivSource here or you can search the #PTderiv hashtag on Twitter to find the full Q&A and add your own comments to the conversation.

TWITTERVIEW: TRANSFORMING POST-TRADE PROCESSING

DERIVSOURCE: With regulatory reform still in flux, how can firms start transforming post-trade processes to participate in the new OTC space? #PTderiv

TONY SCIANNA: Firms should take long-term view of regulatory reqs & impact on middle & back office, not just one-off challenges… Invest in #posttrade processes based on the big picture of increasing transparency & reducing systemic risk #PTderiv

DERIVSOURCE: What is the one post-trade ops area firms can start making changes to now to meet new regulatory rules and why? #PTderiv

TONY SCIANNA: No surprises from me: improving #datamanagement is the key to supporting regulatory demands. #PTderiv

DERIVSOURCE: What post-trade ops function faces the most significant transformation and why? #PTderiv

TONY SCIANNA: Hard to pick just one – data mgmt, #collateralmanagement, credit / risk mgmt, connectivity… New market structures, regulations, clearing of OTC #derivatives, etc. all require new approaches to #posttrade #PTderiv

DERIVSOURCE: Focusing on some specific post-trade processes, how can firms improve data mgmt in light of reg reform & new market structures? #PTderiv

TONY SCIANNA: Firms should be investing in capturing real time transactions across their disparate enterprise, standardize the data & … ensure the data can be readily accessible 24/7 for management reporting & any future regulatory demands #PTderiv

DERIVSOURCE: What about connectivity to new market structures like #SEFs #OTFs #SDRs & #CCPs? How can firms cope w/ connectivity complexity? #PTderiv

TONY SCIANNA: Ability to connect to new market structures, like data capture, must be flexible so firms can adapt to new requirements #PTderiv

DERIVSOURCE: Can firms process clearable #swaps and bilateral #derivatives in tandem efficiently? What are the challenges? #PTderiv

TONY SCIANNA: This is a challenge for back office ops. Firms will likely keep bilateral contracts & clearable swaps on separate apps… And all these applications will need added functionality for execution, matching &reporting #PTderiv

DERIVSOURCE: Collateral mgmt will transform in the new OTC #posttrade space. What is your customers’ biggest concern re: collateral mgmt? #PTderiv

TONY SCIANNA: A big focus on enterprise-wide collateral management &optimization will be crucial for market participants going forward… Firms will need a solution that allows them to select most efficient type of collateral to meet its collateral obligations #PTderiv

DERIVSOURCE: How can the CCPs help firms manage collateral when clearing various products across multiple jurisdictions? #PTderiv

TONY SCIANNA: The market requires additional clarification on what type of collateral will be eligible for use… by various CCPs before optimization strategies can be firmly established #PTderiv

DERIVSOURCE: Are you concerned about a ‘rush’ for technology from firms waiting for regulatory clarification before preparing post-trade ops? #PTderiv

TONY SCIANNA: Concerned about firms trying to respond to regulatory change 1 requirement at a time instead of preparing for the big picture… Firms must try to prepare for not just 1 rule but for ability to address multiple rules that will be introduced over time …#PTderiv

DERIVSOURCE: What is the biggest opportunity for the post-trade space in light of the regulatory change? #PTderiv

TONY SCIANNA: Reporting on transactions will be a necessity not just for bilateral contracts & clearable swaps but for all asset classes…#PTderiv

While you’re here…

head of Valdi Options US, SunGard's capital markets business

WHERE DO EXCHANGES GO FROM HERE?

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This blog post also appeared on TabbFORUM.

When was the last time a significant exchange merger came to fruition? Over the past year, all we’ve seen is the dissolution or outright rejection of prominent merger plans by regulatory bodies.  The Australian government effectively denied a proposal to merge the Australian Securities Exchange and Singapore Exchange.  Plans for the Toronto Stock Exchange (TSX) to unite with the London Stock Exchange (LSE) were scuttled when nationalistic feeling seemingly dissuaded the necessary two-thirds of voters from approving the deal.  The most noteworthy by far – the highly anticipated cross-Atlantic “super-merger” between the New York Stock Exchange (NYSE) and Deutsche Börse – reached its own end when European regulators raised significant objections to the merged entity’s likely stranglehold on derivatives market share in Europe.

So we will see any mergers or “shake-ups” across the exchange landscape anytime soon? At this point, I don’t see evidence pointing towards much activity – and I can’t really blame most exchanges for wanting to focus on other strategic initiatives for the next 18-24 months.  When an exchange (or any company for that matter) puts that much energy, preparation and money into a potential deal only to see it rejected by a regulatory body, it doesn’t exactly inspire the exchange to pick itself up off the floor and pursue similar opportunities.  Why go after international mergers at great expense?  Your strategic fate is in the hands of regulators and governmental bodies.  Instead, pursuing targeted business activities and partnerships makes much more sense and, frankly, causes a lot less grief.  If you’re the Singapore Exchange or NYSE in February 2012, I don’t think you want to go through the hassle of a merger again for quite some time.

I also believe exchanges have been forced into the role of inflated national symbols of their home countries, fairly or unfairly, with somewhat unrealistic expectations around these exchanges’ business activities.  It is significant that the Maple Group’s offer to buy TSX came after the TSX-LSE merger plans were digested by the masses.  In one sense, the Maple Group’s type of offer seemed protective of the Canadian exchange, as if the Maple Group were saying, “Another country is NOT going to take ownership of OUR exchange.”  Similarly, Americans from Main Street to Wall Street were not comfortable with the New York Stock Exchange changing its name and relinquishing its “identity” to the German Deutsch Börse when the deal was announced in 2011.  Nationalism can and should run deep in any country.  However, over the past several months, it has proven to be more of an impediment than an aid in finalizing exchange mergers, not to mention global business as a whole.

Does this mean that exchanges should aggressively avoid mergers for the time being? The short answer is no – exchanges, like any value-creating business, need to explore combinations and structures that make sense to serve their customer needs.  That said, given the far-reaching regulatory vibe that spans international borders in 2012, more than ever, exchanges must plan for political, nationalistic and regulatory influences on their business activities.  In the near term, exchanges that desire to extend their global influence will be relegated to developing strategic partnerships with other businesses in a more targeted fashion.  This will force exchanges to truly focus on their core competencies and be more creative in engaging the wider financial marketplace. Perhaps this is not a bad thing – but instead, the impetus for the creation of adaptable exchanges that can better compete in the global arena.

While you’re here…

deputy head of strategy, SunGard’s capital markets business

A SHIFTING FOCUS FOR OTC DERIVATIVES

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This blog post originally appeared on FTF News.

In recent years, we have seen many developments in getting the industry to light speed in the front office, but now the focus appears to be shifting to real-time data management and post-trade processing applications, especially in the OTC derivatives space. As the CCP landscape continues to evolve in the midst of unprecedented regulatory reform around the globe, firms now face the daunting task of adapting their post-trade processes to meet their current requirements and to prepare for the future.

While finalizing new rules for regulatory reform may be taking longer than anticipated, the impact of these changes is already being felt everywhere, from the movement of OTC derivatives transactions to central clearing to the myriad new reporting requirements that have begun to crop up globally. Even though we don’t know what the exact rules will be, firms participating in the OTC derivatives markets do know the general reasons behind the rules – increasing transparency and reducing systemic risk. And achieving this requires a focus on and investment in the back office.

At this point, firms have a choice: deal with the one-off regulatory requirements as they are announced or equip themselves with an enterprise-wide approach to tackling current and future rules. Of course, the choice should be clear; investing in flexible, enterprise-wide back-office capabilities today will allow firms to better adapt to any new regulatory demands on the horizon.

As firms consider this, they must determine how they will actually capture data from disparate applications, cross-reference and standardize that data, and then store it in an environment that is available on demand 24 hours a day, seven days a week. When it comes to post-trade processes, firms should ask: how can we report on any or all transactions globally across the enterprise in as close to real time as possible? Answering this question is the root to dealing with any new requests from a regulator, auditor, CEO or risk manager.

With many more changes to face in the months and years to come, this will allow firms to meet whatever new challenges the industry requires.

While you’re here…

deputy head of strategy, SunGard’s capital markets business

TRENDS IN OTC DERIVATIVES: TWITTERVIEW WITH DERIVSOURCE, TABB GROUP AND SUNGARD

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With trends in OTC derivatives in mind, we recently held a Twitterview with DerivSource and Kevin McPartland of TABB Group to delve into the topic a bit more. We discussed the rising cost of participation in the OTC space, the data management imperative, and balancing IT budgets given the continued uncertainty around new rules.

I’ve included the full panel-style Twitter discussion below. If you have your own questions, leave a comment or send a tweet to me, Kevin McPartland or DerivSource.

- – - – -

DERIVSOURCE:
Cost of participation in OTC markets will rise; how will firms evaluate if they should exit this space due to higher cost? #TENfs

KMCPARTLAND: For most it’s simple ROI analysis – will upfront costs yield substantial profits? For others it’s cost of staying in the game at all #TENfs

TONYSCIANNA: Firms will need to do cost & risk analysis to determine whether or not it’s still cost-effective to be in markets they’re in #TENfs

DERIVSOURCE:
With electronic trading landscape still in flux, what challenges does industry face to reduce costs and improve returns? #TENfs

KMCPARTLAND: Many on the buy side will rely on their brokers to do the legwork –technology, compliance, etc. … For the dealers, it’s about designing the right business model based on what we know now #TENfs

TONYSCIANNA: It’s about creating transparency and liquidity. If you can get these things right, you will automatically reduce costs #TENfs

DERIVSOURCE:
How will firms cope w/ margin & liquidity squeeze clearing will introduce? What should firms change now to prepare? #TENfs

KMCPARTLAND: Margin financing, collateral optimization and other similar services are in high demand, and their use will grow. This will help reduce buy-side margin needs and help dealers make money around clearing #TENfs

TONYSCIANNA: Firms should work on collateral optimization for clearinghouses with major banks to provide their clients with optimized CM #TENfs

DERIVSOURCE:
Why should firms focus on enterprise data management now? How can firms improve agg of data across silos in cost efficient way? #TENfs

TONYSCIANNA: It’s a must. Firms will need to capture, standardize & have access to data across enterprise in real time http://ow.ly/6wt4q #TENfs

KMCPARTLAND: @tabbgroup sees transaction volume could grow 20 fold – related data even more. Waiting to deal with this is not an option #TENfs

DERIVSOURCE:
How will firms balance tight IT budget w/ onslaught of new reg requirements & uncertain timeframe for implementation? #TENfs

TONYSCIANNA: A lot of firms will seek point solutions as reqs are issued. We see larger firms taking a more enterprise-wide approach #TENfs

KMCPARTLAND: Some firms are deciding not to offer client clearing. The payback was not seen as justifying the cost… Others in the 2nd tier will take a wait-and-see approach to limit unnecessary work #TENfs

DERIVSOURCE:
Is there a silver lining to the transformation taking place in the OTC space for firms & the industry at large? #TENfs

KMCPARTLAND: OTC #derivatives reform will ultimately be good for the industry. The rules overreach in some parts, but … more automation and open access will ultimately improve liquidity and pricing #TENfs

TONYSCIANNA: Clearly the intent of transparency & reduction of systemic risk will benefit the industry, though will take awhile to get there… Industry coming together to create standards & reduce systemic risk is ultimately a good thing #TENfs

global head of strategy, SunGard's capital markets business

10 TRENDS IN OTC DERIVATIVES

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It is clear that regulatory changes are transforming the OTC derivatives space, from execution to settlement. There are many challenges at play here. As we head into 2012, market participants will need to manage large volumes of data in order to clear and process trades, and we will see new pressures on the cost and the more effective use of capital. In response to this industry transformation, my team and I have identified 10 key trends shaping OTC derivatives today.

I have posted the full list below. How is your firm approaching these 10 trends in OTC derivatives?

  1. Regulations such as Basel III, Dodd-Frank, EMIR and MiFID II are spurring financial services firms to improve their return on capital rather than simply focus on top line revenues.
  2. Shrinking profit margins may drive existing players to exit certain asset classes, such as structured equity, rates or credit markets.
  3. Competition will increase as greater transparency into OTC derivatives pricing and lower barriers to entry attract new players to the market.
  4. Firms will leverage new electronic trading capabilities for OTC derivatives to help reduce running costs and improve returns, particularly in their flow trading and market-making businesses.
  5. The cost of participating in OTC derivatives trading will rise, with the introduction of central counterparties altering the risk profile and margin requirements of OTC derivatives portfolios.
  6. Clearinghouses and market participants will require a consolidated view of collateral assets and margin movements to manage new pressures on margin and liquidity as well as new regulatory requirements for collateral.
  7. The need to optimize collateral and leverage every margin offset opportunity will become more pressing as the new capital charges take hold.
  8. Real-time risk analytics will become a necessity, with market best practice moving towards the incorporation of Credit Value Adjustment on a pre-deal basis.
  9. Firms will need to aggregate data from across asset classes and business silos as regulatory agencies shift the burden of reporting position limits and large trades from exchanges or clearing houses to firms.
  10. Firms will demand agility and adaptability from their technology given the uncertainty about the exact details and timelines for the new rules.

head of Valdi Options US, SunGard's capital markets business

EXCHANGES HAVE A LOT TO BE THANKFUL FOR

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It’s hard for me to believe that Thanksgiving has come and gone—the kick-off to the holiday season of 2011. Thanksgiving often gets trampled or left behind in retailers’ race to get to the lucrative finish line of Christmas. However, I think we should reflect on this past Thanksgiving, and take time to stop and take inventory of the many blessings we have as individuals and as a nation. Let’s look at some of the key exchanges across the globe – and lay out what each of these exchanges can be thankful. Read more»

global head of strategy, SunGard's capital markets business

TABB GROUP’S KEVIN MCPARTLAND ON REGULATORY REFORM [PODCAST]

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We recently recorded several podcasts with industry analysts to discuss current trends and challenges facing the capital markets. One was with Kevin McPartland, principal and director of fixed income research at TABB Group, who spoke about regulatory reform and its impact on capital markets.

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DOWNLOAD: KEVIN MCPARTLAND ON REGULATORY REFORM

SunGard’s own Brenda Mickiewicz, senior manager of analyst relations, sat down with Kevin to ask him about his views on data management, risk strategies, OTC derivatives, and the benefits of regulatory reform developments. Kevin mentioned several points that echo my own sentiments:

  • One of the biggest goals of financial regulatory reform is transparency, and a significant part of that is data. Kevin says that where you get it, who you get it from, and what you do with data are all important. I agree. The need for accessible, enterprise-wide data is key; however, the quality of the information is the most critical factor to satisfying new regulatory demands on a global scale.
  • To say that regulatory reform is incredibly complex would be an understatement. Reading about it in the news only conveys a surface understanding of its complexity; when you speak with the person responsible for one specific area at a firm and hear about his or her unique challenges, then talk to another person in another area, you begin to see how complicated the regulatory changes are going to be since they span so many previously separate departments. Implementation simply cannot be rushed – the changes are too all-encompassing.
  • Regulatory compliance projects will lead to many innovations. With sweeping changes on the horizon, capital markets firms will seek new ways to gain a competitive edge. As Kevin says, this will open up opportunities to innovate across all aspects of financial technology. Our automation and processing expertise in listed instruments is already being utilized in the OTC area. Some of our customers are even leveraging geographical advantages. We are committed to being a part of this industry innovation partnering with our customers who are leveraging our expertise across the globe.

With the road to regulatory reform continuing to be an uncertain one, speaking to industry experts like Kevin can help you understand how best to capitalize on change. Listen to this podcast on regulatory reform and respond with your own questions about the challenges and opportunities that lie ahead.

While you’re here…