Lisbon Forum 2022: Old world new – post-trade in uncharted territory

Market Trends

Interoperability between established post-trade players and new entrants. Balance between efficiency, new technology and the expectations of a changing talent pool. Key takeaways from the event.

Bruno Campenon

Bruno Campenon

Head of Financial Intermediaries and Corporates Client Line

Graham Ray

Global Head of Sales and Relationship Management, Financial Intermediaries

Bruno Campenon

Bruno Campenon

Head of Financial Intermediaries and Corporates Client Line

Graham Ray

Global Head of Sales and Relationship Management, Financial Intermediaries

There was notable excitement at the launch of the 2022 Lisbon Forum, which returned to the agenda as an in-person event this year. Following a period of travel restrictions, where remote communication had been the norm, it was clearly a pleasure for our clients to meet again in the flesh and to exchange on the challenges facing our industry.

Taking place in Portugal, the forum provided a window into the strategic development of our International Operations Centre (IOC) in Lisbon and Porto. Since its establishment, the Portugal IOC has expanded the range of services delivered, supporting the resilience of our business. Today, it is home to competence centers for not only the Securities Services business, but also for the wider BNP Paribas Group.  Our panelists discussed how best practices are exchanged between the Portugal IOC, and our IOCs in Poland and India, in order to continually improve our services. In addition, the managers of the teams shaping the future of our operations in Portugal and beyond were present to exchange first hand with our guests.

Our theme this year was “Old world new – post-trade in uncharted territory”. Through panel discussions and expert workshops, participants exchanged on industry efforts to ensure interoperability between established post-trade players and new entrants. They also reflected on how we can balance the need for operational and cost efficiency with the agility of new technology and the expectations of a changing talent pool.

The following is a summary of some of the key themes that emerged from this year’s event.

Business models: change is not the only constant

According to our panelists, we are moving into a digital era both in terms of digital processing and digital asset classes. In the future, we may be digitalising not only existing assets but also bringing new assets to the market that have never been traded or settled before. Indeed, we are likely to see more technological change in the next decade than we have seen in previous decades. However, despite the relentless changes we see in the industry and in operating models, there remains a constant – the need for people. As one panelist said “We talk about new technologies and new systems, but the people are the artists and engineers that bring everything together”. By looking at age-old problems and bringing digital effect to them, we can release resources allowing people to become artists again.

The quest for efficiency: liquidity is key

The search for efficiency gains within the industry is never ending. We are seeing the shortening of settlement cycles in different markets across the globe, including in the US and APAC. However, in moving to T+1, the major challenge to overcome is not only that market participants may lose a business day; they may lose the only business day between trade date and settlement date. In the US, the move to T+1 has partly been a market-driven initiative and is an example of the industry getting in front of the regulators and being proactive in their approach. However, the conversation is a little further behind in Europe, which faces the challenge of harmonizing 27 markets. Our panelists agreed that technology has a role to play in solving the operational challenges associated with reduced settlement cycles. In the search for efficiency, custodians can also contribute value by bringing liquidity to the market. Funding pressures, and the technology requirements needed for real-time liquidity, will shape the desire for progress.

Strength in unity: proactively shaping the future

Since the financial crisis, the focus of our industry had been on rebuilding trust in the financial system and dealing with the ensuing waves of regulation. We now seem to be reaching the end of this reactionary regulatory era and, as an industry, we have a window of opportunity to make our enterprise more efficient. In order to do this successfully, the industry will need to evolve in a collaborative and proactive way, to identify the ideal solution together before regulators decide what that vision should be. To maintain the aforementioned trust in the financial system, effective change will be incremental rather than disruptive.  In terms of interoperability, industry participants will be called on to come together to develop common standards. The old world will also need to work in harmony with the new, as established players build sensible and rational relationships with fintech entrants, as they strive together to solve common problems.

You cannot navigate a new world with an old map

In the past two years, we have witnessed an accelerated rate of change: people have changed, technology has changed and the nature of work has changed. To prepare for the future, companies and their workforces need the curiosity to learn new skills and the courage to unlearn old ways that no longer serve their objectives. According to our guest speaker, the future of work will be human-led, technology-enabled, intentionally diverse, and built for speed. More and more, firms will move from a bureaucratic mindset to an iterative growth mindset and from talent hoarding to talent creation and talent enablement. Indeed, when it comes to attracting talent, work/life blend, authenticity and purpose are the aspects that appeal to the workforce of tomorrow.

 We would like to sincerely thank our panelists and participants for the enriching and engaging discussion at this year’s event. We look forward to continuing the conversation with the community at the upcoming Network Forum and Sibos industry events, and at future editions of the Lisbon Forum.