Congratulations on your new role. How are you adjusting?
I took over mid-January with a transition period in place with Jerry Friedhoff who has decided to retire, so I鈥檓 several months into the role now and things have been going well. Obviously, it鈥檚 been pretty challenging taking over during this terrible period of the COVID-19 pandemic, given what it means to our own business and client鈥檚 business. At the same time, our Securities Financing Transactions Regulation (SFTR) projects have been coming to an end. It鈥檚 been good fun, lots of good interaction with the clients and the staff.
With Jerry seeming to retire at just the right time, what words of wisdom did he leave you with?
Jerry鈥檚 words of wisdom are probably the same words we have been communicating to our management team for a while, which is that client service is the key to success. So, keep living this story, keep doing the things to make the clients happy, to make the client want to continue to use our services, ensuring the client wants to grow with us as a business. Coming from a client service background, I鈥檓 very keen on those principles that we focus on the client鈥檚 happiness levels, and we really try to make the best of the relationship.
What is the main focus for Broadbridge鈥檚 securities finance and collateral management business for the next 12 months?
Probably three months ago I would have given you a different story. But, our focus has changed because of COVID. Whereas before we were a natural growing business, we were bringing on new clients, new products, etc. The impact of COVID is terrible in what it鈥檚 done to society, causing problems and pain. For our clients we are just trying to help them through it, Broadridge and the securities finance division had a very strong business continuity plan (BCP) in place, we were able to move to that along quite quickly.
So now, our three-month focus is helping the clients through the challenges they have, then I would say the next three months will be moving back towards business as usual i.e: SFTR second wave, the Central Securities Depositories Regulation (CSDR) product build-out and working with clients on how we can help them with the next stage of their BCP process. Undoubtedly, there will be things that need to change, in regards to their operations and applications, and technology in the coming months.
After that, I would probably say, moving forward with supporting clients, building great products, interacting with all the other market utilities to make it as straight-through-processing-friendly and seamless as possible from the trade execution all the way through.
How are your clients dealing with the current crisis?
There were a lot of challenges in the first few weeks but then things are now better. I think for everyone it was a big shock to move to home working, which has definitely been the biggest challenge that all the organisations have faced. It鈥檚 not specific application problems, it鈥檚 more infrastructure, networking and facilitating the staff, and specifically the trading staff to be able to work from home and being able to work in the same way they were before. Broadridge has a global footprint and we moved to BCP in Asia much earlier, and we learnt lessons from that on how to do that well for the clients. Those lessons have been passed on as we moved around the globe, through Europe and the US. Our BCP and the clients鈥� BCPs that we have worked with have been pretty good.
Is regulation still a core focus for your group at the moment?
SFTR has been the core focus mainly because of the major impact it has had. There have been a lot of connectivity point changes, and we have had to work closely with a lot of other organisations and vendors, which has been great because it has bought the utility space together. We can talk more and discuss how better interactions can be done.
Moving forward with CSDR, regulatory changes will happen, but it鈥檚 more of an operational change. Partial settlement is going to see a big change for the marketplace and how that impacts things and how the settlement cycle works.
What lessons have you learned so far from testing your SFTR solution with clients?
A key lesson is to get started early. For example, we have discussions with the International Securities Lending Association very early on about how it鈥檚 all going to work. We also made an effort to contribute to forums and groups like many of our clients were. Making a decision on the way forward early on how we are going to do it, how things are going to be implemented and how things are going to look.
Lessons that have not been learnt from previous regulatory changes have led to a misunderstanding and a disagreement around what the actual requirements are. So, we have had to be quite flexible in the way we have built the solution and we knew that not everybody was going to agree with how it would be reported at the beginning, so we have had to maintain flexibility. Unfortunately, the lesson of getting it nailed down from the start hasn鈥檛 exactly been heard on that side, so we are being flexible and working with our clients to get them ready for production.
The delay hasn鈥檛 caused us a problem. It鈥檚 allowed us the opportunity to review with the clients on what we have done in more detail and make sure it鈥檚 going to work for the business, so it鈥檚 given us that opportunity to make it even better than it was before.
With the upcoming CSDR regulatory changes coming up in the next 12 months, what advice would you give your clients?
I would probably say similar to the story that we talked about with clients around SFTR, think about it now and look at your operational process and how it鈥檚 going to have to change. Work with Broadbridge if you are our client, if not work with your utilities and vendors to make sure you understand the implications of CSDR because it鈥檚 going to be wide reaching. There are going to be a lot of changes that will be required for the operating model and systems to meet CSDR鈥檚 requirements. You need to be ready so get the work done upfront and get an understanding of the level of detail you need.
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