“Global Exchange Leaders on Markets: Trends” was a session during FIA Boca-V that was stacked with top-level executives from some of the biggest exchanges in the industry. Appropriately, it was one of the first sessions that took place on Day One of the virtual conference — it’s always good to start these things off with a bang.
The leaders gave their respective takes on some of the biggest issues facing the financial markets in 2021: the ongoing COVID-19 pandemic, political upheaval in the U.S. and beyond, the growing influence that retail traders have on the markets — especially the stock market and derivatives markets — and the looming threat of climate change. As Michael Peters, chief executive officer of Eurex Frankfurt AG said, “We live in a time of great change. Politically, technologically, socially, and not to mention even the [sic] climate change.”
Loh Boon Chye, Singapore Exchange CEO, said that the risks associated with climate change were a primary concern of his company in 2021. “Global markets have spent a big part of 2020 battling the impact of COVID-19,” he said. “In 2021 we believe the climate challenge will be the next reckoning.” He called for exchange operators and their clients to work together to help standardize and build out the infrastructure for creating climate-sensitive investment products.
“I think it will be important for exchanges to come together with investors to gain their insights and support them to the creation of climate-based solutions so that we can all build a strong ecosystem around products from both a demand and supply perspective,” Loh Boon Chye said.
Of course, COVID-19 was on everyone’s mind. Besides the ongoing lockdown, FIA Boca-V happened less than a week after the one-year anniversary of the CDC’s pandemic declaration on March 11, 2020. “It’s been a terrible event for many people around the world, disrupting — of course, our economies and the markets — but also, more importantly, peoples’ lives,” said David Schwimmer, CEO of the London Stock Exchange Group.
He said that the exchange group prioritized the safety of its employees during the crises that took place over the course of 2020. “This has been a time period when we have been focused on the health and safety and well-being of our people … as well as the continuity of service to our customers,” Schwimmer said. “It’s gone remarkably well, given that we have the vast majority of our people working remotely.”
The speakers each shared their thoughts on the importance of market resiliency, which was tested like never before in 2020 as the markets weathered unprecedented volatility — all while the majority of the staff keeping the markets running adapted on the fly to working from home.
“Resiliency is the biggest focus of the global markets today,” said Adena Friedman, president and CEO at Nasdaq. “Not only in terms of the infrastructure of the markets and the technology that underpins them, but also thinking about it from a fairness and transparency perspective, in terms of protecting the markets…whether that’s from an IT security perspective, but also from an anti-financial crime perspective.” Friedman said that Nasdaq’s partners in markets all over the world are currently prioritizing cybersecurity and technological resilience.
“There are so many issues facing the global markets, and obviously the pandemic being the biggest one,” said Terry Duffy, chairman and CEO of CME Group. He mentioned a number of sociopolitical events causing disruptions in the markets, including the recent change in the U.S. presidency, Brexit, the increasing impact of fintech innovations like retail trading apps and cryptocurrency, and social media’s input into market activity. “The markets are, I think, cautionary right now, globally,” Duffy said.
Facing these challenges, the speakers expressed a sense of solidarity. Ed Tilly, chairman and CEO at Cboe Global Markets, said he felt that the past year has created opportunities for exchange operators and regulators to work more closely and harmoniously than before. “We’ve come out of just the most turbulent time in 2020,” he said. “I think there’s opportunity to grow our relationship with our regulators.”
Jeffrey Sprecher, chairman and CEO at Intercontinental Exchange and chairman of the New York Stock Exchange, said his short-term priority was getting through the pandemic. In the long term, he said, he’s wary of less obvious threats. “It’s the thing you don’t know, you know? It’s the black swan.”