TCS Capital Markets Forum | Introduction Introduction Michael Mathias, Head of Capital Markets UK and Europe, TCS.
TCS is developing into a growing force in the European Capital Markets. This is reflected in success of the 4th TCS Capital Markets Forum, which was held in partnership with the London Stock Exchange and the journal Best Execution. As usual, the forum concentrated on a controversial topic of up-to-the-minute market concern. In this case we were making sense of the deluge of overlapping regulation and, importantly, how to obtain competitive advantage from compliance. We presented a line-up of respected market professionals that brought different perspectives to topic. The forum considered the variety and complexity of the alphabet soup of upcoming regulation – MiFID II, Basel III, CRD IV, EMIR, MAD (Market Abuse Directive) to name a few. Some of the practical implications of compliance include the need for a continuously updated awareness of changing deadlines, similarities and differences, and penalties for non-compliance. It was recognised that despite the comprehensive change agenda, one constant feature is the regulation of OTCs – greater transparency, better standardisation and the use of central clearing. The forum used this as a basis to consider how the buy- and sellside should respond in order to obtain competitive advantage in these circumstances – how to create a virtue from necessity. The speakers covered a number of areas that
are important to the development of competitive market edge. The new requirements for OTC derivatives mean that banks must now consider how to re-balance their business between OTC and exchange traded asset classes. Under the new regime there is a necessity for the increased use of collateral in a formal context at the clearing houses. Therefore, competitive advantage can be obtained by optimising, transforming and segregating the use of enterprise-wide collateral
Best Execution | Spring 2013
and also by reducing collateral requirements through efficient netting. The speakers recognised that the new business requirements will necessitate improved standardisation and aggregation of data. The improved data will need improved business processes in order to transcend existing asset class silos. Additionally, some specific issues were also covered by the speakers, e.g. complexity of reporting requirements and cost of compliance were key issues.
As usual, the final Q and A session provided some of the key areas of interest. One of the conundrums that was considered by speakers and audience alike was whether the new governance model would result in increased consolidation (e.g. consolidated data repositories, consolidation of clearing houses and futures exchanges), or fragmentation á là Swap Execution Facilities and the move against creation of monopolies (e.g. the rejection of the merger of NYSE and Deutsche Börse), ....or perhaps a new market model where collaboration is required at many levels (interoperability, single messaging protocols etc.). In conclusion this was an interesting, authoritative and relevant event – I hope you enjoy reading the précis of speaker presentations. ■
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