Onto the next chapter: DTCC’s Mike Bodson on retirement, achievements and the future of market infrastructures

After a decade at the helm of the largest market infrastructure in the US, Michael Bodson announced in April this year that he would be stepping away. Here he discusses exclusively with Global Custodian his career at the DTCC which has seen him navigate multiple crises and future-proof the business while “loving every minute of it”.

By Jonathan Watkins

Why was this the right time to step away from the role and hand over the reins to someone new? 
As I look back at DTCC’s progress over the past decade, I’m very proud that we’ve accomplished so many of the goals the board and I had established when I was first appointed CEO. We’ve transformed virtually every part of DTCC and, importantly, we’re financially and operationally stronger than at any point in our history.  

We’re also a more client-oriented and commercially focused firm, and we have taken greater responsibility for providing leadership on some of the most important global issues facing the industry. At the same time, we’ve evolved our culture to remain competitive in a highly dynamic environment while maintaining the qualities and core values that make DTCC such a special organisation. We’ve also strengthened our working relationships throughout the global regulatory community. 
Serving as CEO has been the most challenging and rewarding experience of my professional career—I’ve loved every minute of it—and I’m confident that we’ve built a solid foundation for Frank La Salla and the management team to continue growing the firm. And, as I move to the next chapter of my life, I’m looking forward to spending more time with my wife, children and grandchildren. 

What are your proudest achievements during your time at DTCC?   

As a critical market infrastructure, DTCC’s primary responsibility is to seamlessly clear and settle hundreds of billions of dollars in financial transactions every day. I take great pride in knowing we always hit that mark during my tenure, providing certainty and stability to the markets, especially when a crisis or shock sparked record volume and volatility.   

DTCC always rises to the occasion and does its best work when the markets need us most, whether it was the Knight Capital market event on my very first day as CEO, Superstorm Sandy, the Covid-19 pandemic or other crises. I really admire how we managed during these situations. 

Another source of pride is the work we’ve done with our board, clients and others to refresh our corporate strategy. One of our most significant achievements was fully acquiring Omgeo in 2013, which expanded our global footprint and enabled us to better serve the industry by delivering innovative new solutions faster and in smaller components to increase greater client value.  

In fact, we’ve focused on enhancing our innovation culture within DTCC by empowering every employee to “own” innovation and encouraging them to drive positive change across all areas of our business. I’m incredibly proud of that work. 

What have been the biggest changes during your time at DTCC in the organisation and the industry? 

In the wake of the 2008 financial crisis, we saw one of the most significant re-regulation of financial markets in history. New laws and policies prompted fundamental changes in the operation of the global financial system, which required firms to prioritise risk mitigation and compliance.  

For DTCC, our three clearing agency subsidiaries were designated Systemically Important Financial Market Utilities (SIFMUs) in the United States, which led to heightened regulatory oversight and new requirements and sparked significant changes to all areas of our firm.  
How has your innovation work over the past couple of years positioned DTCC for the future? 

Market infrastructures don’t get nearly enough credit for innovating, but the reality is DTCC has been at the forefront of the digital revolution, dating back to our founding nearly 50 years ago. The impact of fintech, competition from start-ups and the rise of decentralised finance (DeFi) will alter market structure in the next decade, and DTCC is primed to remain a significant player in shaping the future of the marketplace.  

For example, if you look at the work we’ve done with distributed ledger technology in recent years, specifically Project Ion, we’re building a next generation digital platform to support accelerated settlement. Similarly, our Digital Securities Management service has the potential to transform processing in the private markets and opens the door to countless new opportunities to support a broader array of asset classes in the coming years.  

What is the future for market infrastructures worldwide? 
Our roles likely will evolve but I believe trusted intermediaries will have greater responsibilities for market safety and soundness as we re-imagine our value proposition. Throughout my time as CEO, I’ve pushed the organisation to identify ways to disintermediate ourselves so that we can control our destiny rather than have others do it for us.   

I envision market infrastructures will transform from the traditional “securities-for-cash” model to digital “asset transfer facilitators” handling asset-for-asset transactions. They also will also need to offer expanded capabilities to support a much wider range of securities, such as physical, dematerialised, tokenised and natively issued, and methods of payment, which will include, among other things, cash, cryptocurrency and possibly Central Bank Digital Currencies.  

Market infrastructures also will play a significant role in creating the right environment for these new digital markets to grow by providing the rules and mechanisms to ensure resilience, reliability, certainty of ownership, transaction completion, dispute resolution, transparency and fairness. 

What made a good day during your time as CEO of DTCC?  

One of the things that makes DTCC unique occurs every day at 4:30 pm when I receive a message confirming that settlement is complete. Those words capture the heart and soul of our firm because they affirm that we have carried out our responsibilities to protect the safety and security of the global financial markets.  

In 2021, that meant processing $2.37 quadrillion in transactions. All the credit for that work goes to my colleagues across the firm. They are among the most dedicated and committed people I’ve had the pleasure to work alongside in my career. Their partnership and support have always been a source of strength and pride, and their friendship will be the thing I miss most when I retire.