Opening remarks of FIA President and CEO Walt Lukken at IDX-V

23 June 2020

Hello everyone. I’m Walt Lukken from FIA and I want to welcome you to IDX-Virtual.

Today’s audience is tuning in from Europe, Asia, and the Americas so I begin by wishing everyone a hearty Good Afternoon, Good Evening and Good Morning.

I am saddened that we could not gather in-person in London this year, but the next three days of virtual programming promise to bring an especially engaging discussion with industry leaders about the state of our markets during these volatile times.

While the format may have changed, FIA’s commitment to high quality content remains steadfast and unsurpassed.

We also know that working remotely requires a change in our approach to programming. That is why we have adjusted our format and added new features, including:

  • Shortened program times that allow content to be more easily consumed;
  • Program start times that allow audience members in different time zones to participate;
  • Pricing that broadens the reach and appeal of our program for all levels of members; and
  • The recording of our program that allows registrants to enjoy the content live or on-demand at their convenience when the conference ends.

Our conferences are what brings FIA members together as a community. While this may be the year of the Boca That Wasn’t, it will also be known as the year we overcame challenges to have the IDX That Was. The next three days will allow you to learn and connect with others in our industry and show our resilience to the world.

We gather today at a time of great anxiety, uncertainty and passions around the globe.

  • The health crisis of the Covid-19 pandemic continues to grip the global economy as local and national authorities assess the economic carnage and slowly begin to re-open.
  • We also are witnessing extreme political risk in the world with the UK beginning its independence outside the E.U., tensions between the U.S. and China rising, and growing populism and radicalism around the globe.
  • And of course, the death of George Floyd in the U.S., and the ensuing protests, have exposed in undeniable terms the problem of racial inequality that can and must be addressed in a meaningful way.

Many of us feel overwhelmed right now by the uncertain world around us. It’s understandable. You wouldn’t be human if you didn’t. But if you only focus on the negative, you will inevitably lose sight of opportunities that can change these circumstances for the better.

Resilient industries learn from times of crisis and pivot quickly to make improvements. That will be the focus of the next 3 days of IDX-Virtual: What are the lessons learned from recent market volatility and how do we adjust as an industry to make us stronger?

Overall, I believe our markets have worked remarkably well during this volatile time and a recent survey of FIA members confirms this.

When asked to rank the performance of the listed and cleared derivatives markets on a scale of 1-5, members rated our industry a 4.3. 

Despite the strain of the pandemic, our markets have thrived in discovering prices and allowing businesses to manage risk. Liquidity in the marketplace has remained strong. And the clearing system successfully mitigated counterparty risk.

That said, the pandemic exposed areas where improvements can and should be considered.

  • Did margin models work as anticipated by CPMI-IOSCO standards or are further calibrations necessary? Seventy-six percent of those surveyed identified margin volatility as a concern that needs addressing.
  • Did the enormous number of trades cause stress on the technology, clearing and back-office systems? Forty percent of those surveyed experienced issues with clearing operations and systems and another thirty percent identified trade breaks as a concern.

This is an opportune moment for all stakeholders in our industry to consider what lessons we can learn from the pandemic.

And that brings me to this year’s conference, where panelists throughout the program will be discussing just that: where our markets worked and where improvements are necessary. Today, after our keynote interview with ESMA’s Verena Ross, we will hear from global exchange leaders to understand firsthand how their companies and customers have fared during this time.

Tomorrow, on Day 2, clearinghouse executives and experts will explore how clearing and back-offices have performed during the volatility of the crisis. And on Thursday, Day 3, we will hear from CME Chief Economist Blu Putnam and examine the commodities markets, tackling issues from MIFID to the extreme contango in the gold markets to negative pricing in the crude oil markets.

I would also like to take a moment to thank our sponsors for this event. Their ongoing support helps make these events happen. Thank you so much.

It is times like these that test the character of an industry. In the past, when faced with adversity, our community has pulled together, rolled up its sleeves and gone to work. Community is what gets us through difficult stretches in business and our lives. When people are connected and care for each other, they can do amazing things. 

I pray our community can, not only tackle the business issues facing our industry, but also self-reflect on its own record around racial diversity. FIA’s recent statement pledges our support for meaningful change on racial inequality and recommits to open a dialogue with the industry and work with diverse members of our community to find ways to address this problem. Our community will be strengthened and richer because of these efforts.  

With that, I will end by thanking you for your continued support of FIA and for joining us over the next three days of discussions. It is now my pleasure to introduce Verena Ross, the Executive Director of ESMA, who will provide a keynote interview on ESMA’s evolving priorities.

Enjoy the conference.

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