details

When

Tuesday, May 10th

1.00pm Registration
1.45pm Event program
5.15pm Cocktail reception

*Registration for this event has closed. We look forward to your participation in future Markit events.

Where

TimesCenter

New York
242 West 41st Street
New York, NY 10036

event summary

Markit held its annual New York customer conference on May 10th, bringing together representatives from across the financial industry.

Speakers at the event exemplified the continued appetite in the industry for change and innovation as well as the value of partnership among market participants, service providers and regulators.

What do you consider to be the biggest disruptive force in the financial markets?

In an audience poll, 60% responded that regulatory changes are the biggest disruptive force in the industry, followed by 27% who pointed to technology.

Compared to 2015, the results indicate an increased focus on technology, and speakers this year took a close look at one potentially disruptive technology, blockchain, and how it could change the way market participants and regulators operate.


In the keynote address, US CFTC Commissioner J. Christopher Giancarlo called for a “do no harm” regulatory approach to distributed ledger technology (DLT), or blockchain, which he says could be “the biggest technological innovation in the financial services industry and financial market regulation in a generation or more.”

DLT could help market participants comply with operational, transactional and capital requirements outlined by regulations while providing regulators the necessary visibility for oversight of the markets. Moving systems of record from the firm level to the market level could reduce centralized systemic risk and improve data quality and governance.

Commissioner Giancarlo recalled the 2008 credit crisis and noted the limited means available to regulators to monitor what was happening in the CDS markets. Access to realtime ledgers, rather than having to assemble disparate data in an attempt to recreate trading portfolios, may have enabled regulators to detect the increased risk of bank failure. He noted the recent successful proof of concept that demonstrated the potential realtime transparency benefits of using DLT to manage post trade lifecycle events for CDS, organized by Markit and conducted in partnership with the DTCC, Bank of America Merrill Lynch, Credit Suisse, J.P. Morgan, Citigroup and Axoni.

As potential applications are explored and development continues, Commissioner Giancarlo emphasized the importance of ensuring that the regulatory framework does not stifle innovation. He called for the CFTC to emulate the collaborative approach adopted by overseas regulators to encourage innovation, such as the UK’s Financial Conduct Authority, which created an Innovation Hub for businesses to test new ideas with the support and involvement of the FCA. His five practical steps for regulators to encourage fintech innovation include:

  • designating tech savvy teams to work with fintech companies
  • allowing fintech businesses room to develop and test solutions without fear of enforcement actions or fines
  • participating in proof of concepts
  • working closely with innovators to understand how to adapt regulations for new technologies and business models
  • collaborating globally to harmonize regulation

With greater collaboration across the industry would come more opportunity for innovation to happen and to be adopted to improve how the markets and market participants operate.




The industry is taking steps towards unlocking the disruptive potential of blockchain as firms start to actively research and test applications of the technology.

Where are you or your organization with blockchain/distributed ledger technology?



Almost a third of the attendees at the conference currently have either blockchain technology in development or pilot programs underway. Panelists explored pragmatic and relevant applications of blockchain technology. For example, commodities markets like precious metals and gold, where there is a decentralized clearing system, could benefit from a distributed database.

When will blockchain/distributed ledger technology make a meaningful impact in capital markets?

Speakers generally agreed with poll respondents that the technology would make a meaningful impact in the industry in about five years.

They noted that while blockchain potentially promises cost efficiency, the cost reductions offered must be more than incremental for widespread adoption, especially given the increasing cost pressures associated with regulatory compliance.

Although development is still in early stages, speakers recognized the benefits of establishing shared standards to avoid fragmentation. One speaker also emphasized the need to design solutions specifically with financial services needs in mind. While bitcoin was designed to be public and open, it cannot be adapted for financial services, which has specific privacy and scalability requirements. Although innovation is valuable, blockchain solutions also need to be able to interface with financial services infrastructure that exist today.

Continued collaboration across the industry is vital, not only to establishing standards, but also to developing solutions that will truly benefit market participants and the market as a whole.



Bond ETF liquidity spiked up during the credit crisis, and panelists and a majority of the audience agreed that increased volumes in ETFs are ultimately helpful to the underlying market.

In times of market stress, do fixed income ETFs increase or decrease liquidity in the bond market?

Speakers noted that the transparency of ETFs supplies information to investors that can boost liquidity. One speaker added that in times of stress, investors seek out liquidity and surges in volumes tend to attract further investors, creating a positive feedback loop.

ETFs can provide a way for fixed income investors to transfer risk away from the OTC market and can help inform the pricing of underlying bonds. Although ETFs trade on exchange, their creation/redemption mechanism keeps them tethered to the underlying bond market.

As the changing dynamics in bond liquidity create a credit liquidity gap, speakers suggested that ETFs can offer part of the solution for filling that gap. Institutional investors can use ETFs in many ways, including risk management, diversification away from OTC markets, cashflow management and inventory management.

Although fixed income ETFs have existed since 2002, institutional adoption is still in its early stages and has only picked up in recent years. There is growing opportunity as money is increasingly flowing out of hedge funds and investors are moving from expensive, underperforming vehicles to passive and lower cost alternatives.

As fixed income ETF AUM grows, speakers called for regulations to be modernized. Many of the rules for exchange traded securities were written before ETFs were created, which are being regulated like equities even when bonds are the underlying instruments. This can also result in artificial constraints being applied to ETFs. For example, smaller ETFs cannot be owned by larger investors because of rules that limit the percentage a single party can own, even though an ETF’s creation/redemption structure would make such a rule less relevant.



In the closing speech of the event, Felix Salmon, senior editor of Fusion, cautioned against what he called “democracy risk”, defined as when democracy starts working.

He is referring to government run by direct democracy, which is different from our technocratic model of democracy in which elites are voted into power and expected to “do the right thing”, even if it is in opposition to populist sentiment.

Do you think Brexit is:



Do you know anybody who thinks Brexit is a good idea?




Salmon questioned why Brexit was even being put up for a vote by referendum when both the ruling and opposition party in the UK are against a UK withdrawal from the EU. He further pointed to existing ruling bodies that are currently run by unelected technocrats, including central banks globally and the International Monetary Fund.

This kind of attenuated democracy works well for supporting capitalism. When there is populist anger against the elite, democracy and capitalism do not work effectively together.

Change and collaboration

At Markit’s customer conferences the concept of embracing change, not simply responding to it, surfaces time and again. Change can only be driven with collaboration among industry participants.

Speakers throughout the event repeatedly returned to this theme of collaboration. Whether it is market participants as design partners with service providers coming together to resolve shared pain points, competing service providers coalescing around standards or regulators being involved with industry participants in proof of concepts, collaboration will be vital to innovation and the future of financial markets.

details

When

Thursday, May 12th

12.30pm Registration
  1.30pm Event programme
  5.45pm Drinks reception

*Registration for this event has closed. We look forward to your participation in future Markit events.

Where

ABN AMRO Bank

Amsterdam
Gustav Mahlerlaan 10
1082 PP Amsterdam, Netherlands

event summary

Thank you for joining us at our annual Amsterdam customer conference, presented in partnership with ABN AMRO.

The fintech industry is growing rapidly and transforming many of the business models and processes we use in the financial markets today. Our agenda explored innovation and data, focusing on the opportunities ahead. Within blockchain, an area where our thinking has evolved considerably, numerous initiatives are underway, aimed at increasing workflow efficiency and reducing costs. The first large scale test of blockchain in the CDS market took place only recently. We explored what the real potential is of this technology in terms of lowering risk, reducing costs and improving access to liquidity.

We also examined how technology and “big data” are changing the way asset management firms engage with and service their clients. We looked at what this means for the broader industry and the implications for those of us here today. We look forward to working with you to build on the opportunities in the market.

Below are the results of audience polls taken on the day.


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When

Wednesday, June 8th

12.15pm Registration and lunch
1.15pm Event programme
5.30pm Drinks reception

*Registration for this event has closed. We look forward to your participation in future Markit events.

Where

8 Northumberland Ave

London
London WC2N 5BY
United Kingdom

event summary

Two weeks out from the Brexit vote, there was plenty to discuss at the 2016 London customer conference.

This year we were proud to welcome Lord King of Lothbury and Labour MP Chuka Umunna as speakers while blockchain, Mifid II and RegTech also informed lively debates on the day.


Chuka Umunna, Labour MP and spokesperson for Britain Stronger in Europe, took to the stage to answer questions about the benefits and drawbacks of EU membership.



While accepting the need for reform, Umunna argued the EU is a powerful mechanism for magnifying the UK’s political and economic influence on the world stage at a time of increased competition from countries such as China and India. Responding to calls for the need to take back power from the EU, he cited the fact that only four of the 121 acts of parliament passed between 2010 and 2015 were designed to implement EU legislation. Umunna also rejected the idea that the City would thrive outside the EU and suggested the UK has a good record of influencing European financial regulation from within.



Lord King of Lothbury’s keynote focussed on the continuing proliferation of regulations.

As the former Governor of the Bank of England, he was one of the key protagonists in the UK’s response to the financial crisis. In his speech, Lord King pointed to the tendency of regulators to address each and every weakness in the banking system. While noting this was a natural human reaction, he suggested it was stifling innovation and leading financial professionals to delegate responsibility for their actions to compliance officers.

Faced with innumerable challenges, Lord King said regulators must focus on increasing the resilience of the system. The use of catastrophe insurance, he said, would enable central banks to lend to the banking system during times of crisis. In order to facilitate this, pre-positioned collateral should serve as an insurance premium during good times.



An audience poll found that over 55% believed the services of RegTech start-ups will be of some use in their regulatory change projects.



Despite the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) supporting RegTech adoption, panellists said RegTech providers face some significant hurdles, including the lack of clarity about regulatory requirements and shifting deadlines. Panellists talked about the need for RegTech solution providers to meet regulators. This would create a clear understanding of what is required and ensure solutions are fit for purpose.



Mifid II was also highlighted as one of the major market reforms in which RegTech will play an important role particularly around unbundling of research payments.





Philippe Morel and Radi Khasawneh of the Boston Consulting Group discussed the findings of a newly published Mifid II report commissioned by Markit.



The team discussed where Mifid II will have a major impact on market structure: from the shift away from sequential trading to adopting new models in which the different steps in the trading process interact with one another; best execution requirements; the need to publish executable quotes on bonds and fixed income analysis – to name a few. The full report can be found here.



Blockchain has become one of the hottest topics in the industry as a way to increase efficiency.



According to the panellists, the focus is now on whittling down potential use cases. Use cases being explored vary significantly, both in terms of their likelihood of success and the rewards on offer. At one end of the spectrum there are use cases in the equity market, where the rewards are likely to be significant. However, a large amount of coordination is required and the existing market infrastructure will take a long time to change.




At the other end of the spectrum are use cases such as improving the management of corporate action notifications. These are easier to implement but offer more modest commercial benefits. One panellist predicted that market participants will target this type of low hanging fruit first before progressing to more ambitious projects.




Innovation and optimism

This year’s conference was marked by a sense of optimism. While blockchain and RegTech provide the potential to do things faster, better and more cheaply, there was a sense that major regulatory changes can be viewed as much-needed opportunities for firms to update and streamline their technology systems. Following a drinks reception at the end of the event, delegates left with many new ideas for tackling the challenges that lie ahead.



Photos by Marc Mordant Photography

details

When

Jeudi 19 mai 2016

13h30 Enregistrements
14h30 Programme de l’évènement
17h30 Cocktail

*Registration for this event has closed. We look forward to your participation in future Markit events.

Where

Shangri-La Hotel

Paris
10 Avenue d'Iéna
75116 Paris, France

event summary

Thank you for joining us at our annual Paris customer conference.

This year we discussed the growth of the fintech industry and transformation to many of the business models and processes we use in the financial markets today. Our agenda explored the industry’s responce to regulatory change and economic uncertainty, leveraging innovation. With the fast-approaching implementation of MiFID II (even with the possibility of a one year delay) the task of putting systems in place to comply with this regulation will be enormous. Radi Khasawneh, Knowledge Expert Team Leader, Capital Markets, BCG, examined what market participants need to do to prepare.

At the time of the conference the uncertainty around Brexit and its potential impact on the global economy was dominating the markets. In our second panel, we assessed the outlook for France and other European countries in a changing economic landscape. To wrap up, we looked at fintech and its application within the financial markets: from big data and blockchain to artificial intelligence, and how these new technologies help financial institutions reduce costs and access new forms of liquidity.

Below are the results of audience polls taken on the day.


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When

Thursday, June 16th

9.30am Registration
10.30am Event programme
2.30pm Conference concludes

*Registration for this event has closed. We look forward to your participation in future Markit events.

Where

Deutsche Bank AG

Frankfurt
Große Gallusstraße 10-14
60311 Frankfurt am Main, Germany

agenda

9.30am – 10.30am

Registration and refreshments

10.30am – 10.45am

Opening remarks


Peter Renner

Head of Sales, Germany, Switzerland and Austria, Markit


10.45am – 11.15am

Macro Economic Outlook


Stefan Schneider

Chief German Economist, Head of German Macroeconomics, Deutsche Bank


11.15am – 12.00pm

A 360° view of operational intelligence

Stricter regulations, evolving tax obligations, heightened security risks and tougher competition are impacting business as usual activities for financial institutions. This session will explore how firms are taking a more holistic view of their operations by moving to a shared utility to address these challenges.


Moderator

Jon May

CEO, KYC.com and Managing Director, Markit


Panellists

Ian Bamber

Global KYC Utilities Programme Manager, Deutsche Bank


Joe Dunphy

Vice President Product Management, Fenergo


Christian Schmaus

Head of Operations Regulatory & Risk, Allianz Global Investors

12.00pm – 1.00pm

Light lunch

1.00pm – 1.30pm

MiFID II – Preparation without delay

Radi Khasawneh, Knowledge Expert Team Leader, Capital Markets, at The Boston Consulting Group provides insight from a newly published paper on MiFID II, the impact and what you need to do to comply.

1.30pm – 2.15pm

Blockchain: Separating fact from fiction

No technology has received more attention than Blockchain. Blockchain is the potential missing link that could transform the global financial services industry. This panel will discuss how Blockchain technology presents the buy side with opportunities to reduce reconciliation and settlement costs, optimize credit risk, and level the playing field for access to new sources of liquidity.


Moderator

Jon Light

Director, Markit


Panellists

Anton Semenov

Senior Business Analyst, Commerzbank


Christopher Schmitz

Partner, FSO Transaction Advisory Services, EY


Mark Whitcroft

Partner, Illuminate Financial

2.15pm – 2.30pm

Closing remarks


Konrad von Habsburg

Head of EMEA Sales, Markit


2.30pm

Conference concludes


Private UEFA football screen at Sullivan Bar

England v Wales KO: 3.00pm


*Registration for this event has closed. We look forward to your participation in future Markit events.


details

When

Thursday, June 16th

12.45pm Registration
1.15pm Event program
5.00pm Cocktail reception

*Registration for this event has closed. We look forward to your participation in future Markit events.

Where

The Langham

Boston
250 Franklin St
Boston, MA 02110

event summary

Changes affecting asset managers were the focus of Markit’s customer conference in Boston.

A profound shift has occurred in the industry as investors pour into passive funds at the expense of actively managed funds. Furthermore, bank regulation has made it more difficult to transact in fixed income markets and new technology is changing the rules of the game for firms of all sizes.

Despite the challenges, fund managers were optimistic about opportunities for the industry. Technology innovation was credited with driving down the cost of product delivery and, in turn, increasing demand. It was stressed that fund managers must be operationally innovative in order to keep up with sophisticated markets, regulation and the need to consume ever greater amounts of data. Fund managers reported that technology and data spend were increasing with data costs being among the fastest growing budget items.


Shifting liquidity tides in fixed income markets

Panelists discussing liquidity in fixed income markets debated how liquidity should be defined. This raised the question of how to best provide shareholders transparency about the liquidity of their funds. The panel noted that even if the lines blurred between price makers and takers it remains to be seen how firms that provide liquidity voluntarily will react during sharp directional swings in the market. There was consensus that more data about liquidity and the behavior of markets would assist participants of all types.


Realities of the fintech revolution

Our panel on technology identified four c’s driving rapid technological change: cost, control, capital and compliance. Yet, it was questioned whether the “fintech revolution” was noise or signal. Blockchain was recognized for its ability to reduce the need for intermediation, improve record keeping and decentralize market infrastructure. Panelists agreed that financial services will become more networked and more digital. It was noted that the volume of data flowing into fund managers is already obscuring the difference between risk and opportunity. With the rise of the Internet of financial things, panelists expected advances in artificial intelligence to result in new tools to help manage information and augment human decision making.