Raising the infrastructure bar

Iain Saville

Perhaps best known for spearheading the launch of the U.K.’s central securities depository (CSD) CREST, Iain Saville has overseen significant improvement to European market infrastructure and continues to push for its advancement

Since getting his doctor of philosophy from Oxford in 1973, Saville has progressed from economic forecaster and policy advisor roles at the Bank of England to later, varied roles such as managing director at share registry Computershare and as head of business process reform at Lloyd’s.

In his early days, Saville says he looked to break down “customs and barriers which protect franchises from competition—at a national level, or established by large service providers, through common standards and by motivating governmental agencies to foster competition.”

Standards have been a key theme throughout Saville’s career. In reflecting on some of his more significant roles as it relates to affecting change in the industry, he points to “sponsoring market standard master agreements in the London markets for margined and collateralized repo and swap markets around 1990, when I ran the U.K. forex reserves at the Bank of England.”

A few years later, of course, Saville set the standard for getting a project done quickly, when he introduced real-time electronic settlement in the U.K. as CEO of CREST, a project that arguably exceeded everyone’s expectations.

In a 1998 Global Custodian article naming CREST the CSD of the year, former editor-in-chief Dominic Hobson wrote: “It is often said of the English that they leave everything to the last minute. Thus, 27 months ago, the London market had no central securities depository. Today, CREST is among the busiest settlement systems in the world, settling 60,000-70,000 stock exchange bargains a day. This is one and half times as many as its designers (and the market) expected only three years ago…CREST is the only real-time settlement system that works, with volumes at this level, anywhere in Europe.”

Apart from CREST, though, Saville does not think infrastructure change has occurred quickly enough.

“It has been slower progress than I had hoped,” he says. “The beneficiaries of protected franchises fought a bonny fight, as we Scots say. Also, I am astonished that so little on the once abundant profits went into modernizing creaking ancient core IT systems—these are a major drag on innovation and competition.”

Yet he has continued to work on bringing both more innovation and competition to the markets. As chairman of the European Central Securities Depositories Association (ECSDA) from 1997-2001, he worked on promoting common standards for inter-CSD links across Europe, and today he has taken this interoperability even further.

For CSDs, he has been working on increasing competition with TARGET2-Securities (T2S), currently as a non-executive director of BNY Mellon CSD, but also from 2009-2012, he served on the European Central Bank’s T2S Programme Board to help design, promote and deliver T2S.

In addition to CSDs, he has also been working on promoting central counterparty (CCP) interoperability, as he also currently serves as a non-executive director of EuroCCP.

His work on advancing Europe’s market infrastructure goes beyond just the bubble of the securities services industry and affects the real economy too.

He sees the industry as “vital for the proper and efficient allocation of capital—which in turn is vital for rebalancing EU economies to attack low productivity growth. We cannot rely on either government or bank lending to finance capital formation in the years ahead,” he says.

Going forward, Saville does have some concerns for Europe, but he sees hope in new platforms.

“I fear further waves of public sector risk mitigation initiatives,” he says. “The authorities need to concentrate on determined implementation by market users: this includes modernizing core systems to make them fit to collect, process and rapidly respond with data using the new standards and central infrastructures such as trading platforms and T2S.”