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FIA 2020: Operations and Technology: Lessons learned from the pandemic

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Matt Raebel

Matt Raebel

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Amid the COVID-19 pandemic, the financial industry has largely shifted to working from home this year. On day two of FIA Expo-V, executives from major institutions throughout the financial industry shared what they had learned from shifting to remote and work-from-home (WFH) business models, as well as coping with wild volatility, unprecedented trade volumes, and regulatory obstacles. Scott Andersen, the director and head of listed derivatives clearing at Societe Generale, led the discussion.

Though challenging, the transition to a WFH work model was fairly smooth, the panelists said. Brian Sayers, executive director of post-trade services and risk at the CME Group, said that some at the CME Group had an “old fashioned” attitude, and found it difficult to adapt to a WFH lifestyle at first.  But despite some initial difficulties, he said, the process of transitioning to working from home went smoothly. “We all accepted that [the pandemic] was serious and focused on doing what needed to be done.” 

Diane Sherman, securities director at Bank of America, said that when the orders to self-quarantine came out in March, she and her colleagues believed they would be back in the office by April. When it became clear that wouldn’t be the case, she said that technology became essential for adapting to change. Working from home meant that phone and video conversations, which often need to be scheduled ahead of time, replaced interpersonal chats. “Our calendars were getting triple-booked with meetings, where before you could walk over and talk to a person,” she said.

The panelists also discussed how adjusting to WFH meant re-evaluating how to set personal boundaries in the workplace. Sherman said Bank of America discovered that balancing WFH with a personal life was a “juggling act.” Laurent Partouche, vice president of fixed income sales at Eurex, said that since the exchange has offices all over the world, its tech teams had to work 24/7 to keep people connected and ensure minimal interruptions with the exchange’s workflow. Anderson seemed to concur. “That’s a new one for all of us,” he said. Later in the talk, Anderson said he learned to have a lock on his office door, “so my three-year old doesn’t come in here during conference calls.”

Technology may have been the savior of the pandemic, but as is so often the case with technology, its limitations created problems, especially during weeks of heightened trade volumes. Though the technical infrastructure of the industry held fast for the most part, logistical and regulatory hurdles that come with high volume days were made more complicated with most of the industry working from home. Sherman described the challenges of working with central counterparty clearing houses (CCPs) to discuss concentration limits and expand collateral. “Margin became important,” Sherman said. “Transparency became important.”

Kyle Tobolik, J.P. Morgan Chase’s Clearing Manager for North America, said that the investment bank’s automated systems worked well at the top of the day, but around T Plus (settlement date for securities), it became hard to keep a lid on all the data coming through. “The backlog builds and builds and builds and builds,” he said. “It’s very difficult to catch up.”

Partouche said the transition from a technical perspective was “seamless,” and despite high volumes during the pandemic, Eurex’s technical infrastructure held fast. “We had ten of our largest volume days in three weeks,” he said. “Our matching engine and existing systems held resilient.” Again, the problems he encountered weren’t due to a failure of technology. “The short-selling bans that went into effect over the first two months of the WFH transition…created another dimension of pressure and stress,” he said, as Eurex had to act fast to maintain market quality. “Our technology team deserves heck of a lot of credit for sustaining it over that period of time.” 

When Anderson asked the panelists what potential improvements they thought would best serve the industry in future crises like the coronavirus pandemic, everyone seemed to have similar views. Sayers suggested altering regulations to give market participants “a little bit of relief,” like extending giveup windows from five days to ten. Partouche said that one of the biggest lessons Eurex has learned over the past year, especially when almost everyone is working from home – is “communication, communication communication. Whether it was the short sell ban or market closures, we had to make sure we were communicating with everyone.” Tobolik said that he felt confident that the industry would continue to adapt effectively using whatever means were necessary. “We’re using new tech like blockchain…major participants are using these systems so it matches instantly. I strongly believe with all competing projects out there that we’ll get there in 5 to 10 years time; as Laurent said, we need to keep collaborating. We’re all in this together.”

As the panel closed, Anderson asked if anyone had anything further to add. Tobolik said, “Buy more toilet paper!” 

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