Market infrastructures have been criticised for failing to innovate, but speakers at this year’s Sibos conference said they believe the sector has seen a quiet revolution.
An audience poll revealed 53.4% felt that market infrastructures are less innovative than other parts of the financial sector, but panelists disagreed with this outlook.
Michael Bodson, CEO of the Depository Trust and Clearing Corporation (DTCC), said simply dealing with the heavy regulatory burden currently facing market infrastructure firms was seeing the industry innovate.
“We keep up with all these regulatory demands while still running a viable business, so I would ask, who is ahead of us in developing so much new technology to cope with this unprecedented pace of change?”
Euroclear CEO Tim Howell agreed, and added that the kind of innovation seen in market infrastructure is often not the same as innovation in other sectors.
“We’ve been innovating more in the sense of continuously improving ourselves, rather than the sort of disruptive innovation that people typically think of,” he explained.
He added that the nature of market infrastructure and the high barrier to entry meant it is unlikely to ever see seriously disruptive innovators, but that does not mean the sector is standing still.
GV Nageswara Rao, managing director and CEO of the National Securities Depository of India, added that market infrastructures were actually often the key to fostering innovation in front office organisations.
“The whole market can only innovate when market infrastructure gets involved,” he said, “When market infrastructure innovates it pushes everyone to develop new products and services that they can now offer based on the improved infrastructure.”
The panelists said it’s unlikely there will be any great disruptive developments in market infrastructure, but by constantly developing new technologies and ways of interacting with market participants, infrastructures are having a major influence on how the rest of the market can innovate for the benefit of investors.