JLN interviewed Arne Staal, the head of FTSE Russell, who was at his first FIA Boca conference and in the Miami, Florida area for the first time, about crypto markets (a hot topic in Boca and Miami) and other popular topics at the conference.
Staal said the digital transformation of crypto assets is multiple things. First, they are investments, i.e. a developing asset class. He said the role of FTSE Russell in crypto is to drive transparency and look at how the company can introduce the good aspects of crypto into traditional finance. FTSE Russell also looks at the pricing or index opportunities from the digital assets. And, he said, they are looking into uses of the underlying technology.
Staal owns a digital wallet, though he has not been able to bring himself to pay the high transaction fees associated with crypto transactions as compared to traditional financial ones, and thus has not bought any cryptocurrencies yet, he said.
ESG is a big issue for FTSE Russell clients, and some 80% of his conversations with clients relate to sustainability. But ESG means different things to different clients, regions, and regulators, Staal said. He said he believes there will be more standards around regulation and how data is collected and he expects crypto to mature quickly.
Retail trading is a big subject for everyone and FTSE Russell is no different. The company works with the exchanges on smaller contracts and develops new indices of particular interest to retail traders. Specifically, Staal mentioned indexes that capture certain themes smaller investors might like, for example cloud computing or cyber security or artificial intelligence instead of small cap or country indexes.
He also mentioned hyper indexing or customization of indexes – very tailored indexes capturing individual investors’ preferences.
The move from active to passive investing continues and Staal says the industry looks very healthy. “There is a lot of competition there,” he said.
Climate is a key issue for Staal. He called it a “big existential risk to humanity.” To deal with climate risk, capital markets need to drive capital to greener solutions, he said.