CEO Letter – May 2021
Welcome to May.
This edition of Focus is dedicated to the themes arising from our annual Clearing & Derivatives conference, the 37th edition of the meeting. Our first virtual conference only seemed to set fire to the animated conversations we have when we meet in person, and in 2021 we welcomed a record 500+ delegates over 5 days.
We started where we should always start, with a reminder of the importance of CCPs for financial stability. We followed with a day focused on structures and incentives in clearing, and spent the third session dealing with events at the end of the tail... and beyond. The final two themes were mitigating risk in the system, and innovation & risk in the industry.
This edition of Focus features some of the excellent speakers from the conference, starting with WFE Chairman Urs Rüegsegger, who highlights the key challenges and opportunities the clearing & derivatives industry faces as we emerge from the crisis.
Chris Edmonds (Global Head of Clearing & Risk) and Ashwini Panse (Chief Risk Officer, North American Clearing Houses) of ICE discuss some of the current hot topics in the CCP universe – particularly around the calibration of Skin-in-the-Game.
Adding to our focus on Skin-in-the-Game, John McPartland, Director of Research at Hidden Road LP, questions whether a higher level of Skin in the Game contributes to model risk in CCPs. Ultimately, he thinks not. Professionalism and best practice are already conditioned into the system. He explains why and how.
Then, in a wide-ranging article, Dawn DeBerry Stump, Commissioner of the Commodity Futures Trading Commission encourages the industry to get back to basics in addressing some fundamental public misconceptions about the function of derivatives markets. She stresses the need for greater global collaboration and innovation as the industry looks to emerge stronger from the pandemic.
Elsewhere, we pick up on new avenues of collaboration and their impact on the post-trade industry. One leading practitioner keen to encourage better collaboration among CCP practitioners and academic finance and economic faculty is John P. Davidson, President and Chief Operating Officer of the Options Clearing Corporation (OCC), who offers his perspectives on the economics of central clearing.
To close, we have Dr Pedro Gurrola-Perez, the WFE’s Head of Research, the driving force behind the conference, who talks about the impact of the introduction of a series of nine academic research papers into the mainstream agenda of the conference. Academics, regulators and market practitioners have much to learn from each other through dialogue and the challenging of assumptions to the betterment of the post-trade segment.
We hope you enjoy this edition and hope it brings you some of the flavour of a superb conference. We hope to see you all there in person next year, in Malta, on April 27-29, 2022.
Stay safe and healthy.