The industry hasn’t made the level of innovation that it should have done, which is why the regulators started to get involved, according to one panellist during a panel at SIX’s Post Trade conference.
The panellist continued: “We are at a cusp at the moment with Brexit where Europe might move back to being protectionist in its approach and maybe innovation will happen somewhere else in the globe and we will adapt to it.”
Meanwhile, the moderator asked the panellists why is post-trade exciting? and suggested that the industry has gained particular interest and excitement in recent years.
In response to this, one speaker said: “It has always been exciting but more people pay attention to it now. Why is it gaining attention? That goes back to the financial crisis and the credit crunch.”
Agreeing on this point, another speaker added: “I would echo that when you look at the second Markets in Financial Instruments Directive (MiFID II) and the Financial Conduct Authority they make sure that the trade is settled in a way that it wasn’t in the past.”
“This is starting to creep into our investment strategies. I can remember traders signing off reports that were 3 weeks old without understanding the cost of that to the investment but hedge funds have changed this process now. Across the globe, especially Australia, there is more of a focus on the back office, not just the front office.”
Another speaker commented: “The Financial Crisis caused more interest in this post-trade space; people from outside of the industry started to understand the impact that this industry has on the markets. This is a change because if you mentioned post-trade in a bank ten years ago few people would know what it was.”
“Change is exciting in itself”, another panellist cited, “We are progressing at a great speed, and maybe it is time to ditch the term ‘post trade’. Regulators discovered the post-trade world at the same time as the front office post the crisis.”
The moderator then put forward the following question to the panel, “Is there anything else besides a Brexit that is a mega uncertainty in the next years?”
“We live in ever-changing times. There are so many possibilities—we could go in any direction. The rise in costs within any element of the organisation is going to become more important, which means a huge reliance on technology and innovation”, one panellist replied.
“Technology is going to be a huge differentiator. My hope is that bigger organisations will become more fluid and will allow for a much more flexible and agile approach, which is what we need to get the best out of the potential.”
Another speaker said: “There has never been a debt of this size in the past in both government and personal debt. This is going to cause huge conflict and the debt question is the biggest economic question in my eyes.”
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