On June 24, FIA hosted more than two hours of virtual presentations exploring how recent volatility has impacted the trading and post-trade processing of cleared derivatives, and how the industry has continued to function in a world in lockdown. The panel discussions took place as part of the second day of FIA's IDX-V conference.
Christopher Smith, head of clearing and post-trade operations at LME Group, pointed to industry preparedness and business continuity planning as key factors in the resilience of cleared derivatives markets amid 2020’s extraordinary conditions. "If this had happened 10 or even five years ago, it would have been a different story," he said. "I think raising the bar across the industry really, really helped."
Despite the optimism about the industry's resiliency, the participants were honest about the challenges created by the COVID-19 pandemic and record volume, and engaged in frank discussions about operational challenges faced by central counterparties, clearing firms and other market participants.
Program highlights included:
· Daniel Maguire, CEO of LCH Group and group director, post trade division at the London Stock Exchange Group, and Hester Serafini, president of ICE Clear Europe, provided their perspectives on how their clearinghouses worked as they processed record volumes of transactions during the pandemic. In an in-depth discussion with FIA's Jackie Mesa, the two CCP heads talked about the changes to margin they had to make to reflect market conditions and the challenges that were exposed by extreme volatility. Both agreed that the financial market infrastructure generally functioned well, however.
· Experts in operations, market structure and clearing expressed a shared view that the global derivatives industry performed remarkably well despite extraordinary pressures over the last several months. However, they did identify specific challenges around trade backlogs, give-ups and post-trade processing. The panelists also stressed the importance of business continuity planning and a deeper exploration of "lessons learned" to assist in the next crisis.
· Mike Wittner, head of oil market research at ICE, led a discussion on understanding the role of global benchmarks amid oil market volatility in 2020.
FIA's IDX-V conference will run from June 23 to 25. The virtual programming replaced FIA's annual International Derivatives Expo conference which was cancelled because of public health concerns. Registration for IDX-V is closed, but recordings of all IDX-V panels as well as analysis and commentary from FIA staff will be available early next week at FIA.org/idx. IDX-V registered attendees automatically have access for one month. For non-attendees, order access to the recordings for FIA Members: £35 / Non-Members: £75.