This years Sibos presents a packed schedule for securities industry practitioners, with several key sessions that will shape discussions, mindsets and businesses for the years ahead. Here, Global Custodian looks at the must-attend sessions for the securities services industry on day one.
The Securities Market Infrastructures Forums One and Two (9:30 10:40 a.m., 11 a.m. 12:15 p.m.)
Whether it is an evolution or a revolution, the key issues facing securities services providers are very much to do with making the business work in constrained conditions. These conditions are made more challenging by moves toward a T+2 settlement timeframe, central securities depository (CSD) regulations and TARGET2-Securities. With these regulations looking set to will become de facto between 2013 and 2015, attending the two Securities Market Infrastructures Forums on Monday morning of Sibos should provide insight into how securities services providers can adapt their businesses to the new infrastructure landscape.
This years securities market infrastructure sessions are a culmination of years of efforts to restructure the post-trade landscape to make it safer and more efficient. Market infrastructures are at a pivotal point in their development, not just in Europe but also in Asia.
The Securities Market Infrastructures Forums begin with a useful scene-setting introduction titled Post Crisis, Regulation and Current Initiatives A View of the Future, moderated by Global Custodian Editor-in-Chief Dominic Hobson. That will be followed by a panel titled Evolution orRevolution for Securities Market Infrastructures, featuring Hobson,
Diana Chan, CEO of EuroCCP; and Tim Howell, CEO of Euroclear. The second session will see Hobson on a panel with Yoshinobu Takeuchi, chairman of the Japan Securities Depository Center; Christopher Flanagan, co-chief administrative officer for Asia ex-Japan at Nomura; and Gran Fors, global head of GTS banks at SEB. They will debate the cost and revenue equation for trading, clearing and settlement.
Questions to ask:
– How are securities market infrastructures changing their business models and reducing costs?
– How are infrastructures managing risks?
SWIFT Institute Colloquium: Making OTC Derivatives Safe – A Fresh Look (11 a.m. 12 p.m.)
In this session, Manmohan Singh, senior economist at the International Monetary Fund, discuss his working paper titled Making OTC Derivatives Safe A Fresh Look. Singhs paper looks at the possibility that central counterparty clearing houses (CCPs) may be too-big-to-fail entities in the making. The report notes that present regulatory and reform efforts may not remove the systemic risk from OTC derivatives but rather shift them from banks to CCPs. In addition, the report finds that under the present regulatory overhaul, the OTC derivative market could become more fragmented. In this Colloquium session we will also hear Godfried De Vidts, director of European Affairs at ICAP, give his response to Singhs paper. The discussion will also be opened up to the wider audience to participate in.
Industry sources say moving OTC derivatives transactions onto a CCP is one example of a good intention that may not fare as well in execution. Resources have had to be refocused since the crisis to cope with technology build in the mandatory regulatory areas (OTC derivatives, Dodd-Frank and the Markets in Financial Instruments Directive) along with market infrastructure changes such as TARGET2-Securities. As a result, there is very little left to invest in new products.
In addition to the likelihood of recouping their investments in systems and platforms to prepare for mandatory regulation, the securities services industry may well benefit from hearing about a what-if scenario during the session should these new CCPs fail and their business models need further rejigging.
Questions to ask:
– What is the latest expected date for OTC derivatives regulation?
– What investment will be required of the securities services industry to comply? Who, out of the buy and sell side, would need to be part of the CCP infrastructures?
– What is the likelihood of even more systemic risk occuring from the failure of one these CCPs?
Trade Repositories Tackling New Regulatory Requirements for OTCDerivatives (5 5:45 p.m.)
This panel will provide a useful insight into the industrys readiness for OTC derivatives regulation. In addition were going to be seeing a lot of interest in the general securities post-trade environment and how do businesses achieve efficiency, cost reduction, risk mitigation and compliance in the post trade environment.
Questions to ask:
– What impact will regulation have on the securities services industry as providers balance the cost of compliance with increasing pressure to reduce costs?
– How can technology be used to this end?
Janet Du Chenne