Justin Lawson:

Hi Bill, many thanks for taking time out to speak to us today. We'll get straight into talking about that the recent post trade survey and white paper. What are the key strategic drivers affecting a firm's decision to modernize and digitize their platforms? And how are S&P Global helping to address these challenges?

Bill Meeneghan:

Cheers Justin, nice to speak to you. I think operational efficiency is a key driver. Having a modern technology stack is needed to allow real time market updates to be fed through to operational staff. This enables them to focus on the most pressing issues. We've heard from a lot of firms that they still receive fail files from the custodians at the start the day. So as that information is received it's out of date as soon as you get it. You may start to investigate an issue early to find out that it's settled in the interim while you're looking into it. IMSecurities can process all those messages real time, be they MT54X messages or custodian proprietary files to help keep operational staff apprised of the latest statuses for all of their transactions. I think another key driver from a regulatory point of view, with the penalty component of CSTR settlement discipline regime now confirmed to go live on February 1, 2022 an infrastructure setup that helps resolve fails sooner and can also handle the new industry penalty messaging will become paramount to help minimize the impact of the penalties in that regulation.

Justin Lawson:

What are you seeing as the greatest challenges that institutions encounter while they look to retire legacy technology?

Bill Meeneghan:

I think business case quantification and understanding from senior leadership of the benefits of the projects are often cited as the main challenges. Some terminology migrations can take years to implement, especially if the infrastructure is very old. There can be a focus on short term goals rather than considering the long term benefits that migration would help with that if you do automate processes. And other challenges - budget allocations - they often get redirected due to competing priorities, and they're often regulatory in nature and have to take precedence, allowing age technology to just get older, though, will come back and bite you at some stage.

Justin Lawson:

And do you feel that the move to T+1 in the US and Canada will increase the urgency?

Bill Meeneghan:

Yeah, I think it's very likely that it will increase the urgency. And we've got seven disciplinary teams starting next February. So following on from that this is another market change that will stress legacy systems. So clients should be looking at their technology stack now and considering real time cloud-based solutions rather than an overnight batch process. The move to T+1 will mean that some systems’ batch processes just simply will not work in an efficient way, firms will be running their batch cycles too late into the process. S&P Global is able to take care of real time technology needs and we have experience with transitioning large and small processes to IMSecurities to fully automated trade lifecycle, for example, and that would include real time updates. We've also got a very sophisticated translation layer, which can handle multiple different file formats, including ISO 1502 to 2002 to XML, proprietary files, whatever it is, and that's something that we've been using for many years.

Justin Lawson:

How well do you think the financial services industry has coped with the global pandemic that's been going on for the past 18 months from a volumes perspective, and also from a working from home point of view?

Bill Meeneghan:

I think from a volume perspective, the industry seemed to fare okay, but it wasn't an amazing performance, there was a sharp increase in sales in the first quarter of 2020. So for me, this does point to a prevalence of legacy infrastructure or manual processing issues. And it seems that any increase in volume is still causing problems for firms that haven't fully automated their trade lifecycle yet. T+1 in the US will stress these processes even more due to a 50% reduction in the settlement cycle, firms should be looking back to see how they coped with the increase in volume in Q1 2020. And if it didn't go very well, then they should be looking to migrate to a system like IMSecurities to make sure that when the next market event happens, because there will always be another market event, that they're in the best position possible to cope with increased volumes.

From a work from home point of view, the industry seems to cope pretty well actually. We heard from several clients that the switch from office space to home-base working from a personal technology point of view went well, home access and the move to collaboration tools is something that a lot of firms had enabled before the pandemic, and these practices increased significantly in very successfully. The processes that are still manual loaded mean that some firms did have to have staff on premise all the way through the various lockdowns and that's obviously not ideal for those staff. The other comment we heard was that processes which do need oversight seem to be an issue. So tools like IMConnecting or IMAnalytics would allow managers to see exactly where their transactions are in the trade lifecycle. That is something that is needed to limit risks.

Justin Lawson:

Bill, you've touched on some really key points here in our brief conversation, and it sounds like S&P Global have definitely got solutions to help in many different areas of the market. Thanks very much for talking to us, and we look forward to speaking again soon.