Remote & Rearranged: Securities Finance and The Future
By CJ Emson & Brittany Milove
Amidst the dust that settles from COVID-19-instigated market volatility emerges a finance industry seeking to evolve into its new business scenescape. The public health response demanded of COVID-19 forced a wide spectrum of business practice changes so to enable a social distancing-confined world. Just a few short months ago, remote working on a massive scale was inconceivable. Now, most of us are conducting business from the comfort of our own homes.
Change. For Better or Worse.
From the time of its debut late last year, COVID-19 has prevailed as nothing short of a wrecking ball, compromising those in its path physically, financially and/or emotionally, leaving few unscathed.
What is compelling is that COVID-19 has indiscriminately catalyzed change, most times giving way to hardship, but in some cases, it has brought about more positive change.
For some, those for whom the move away from traditional 9-to-5 clock punching is a relief, daily life devoid of commuting has led to an improved sense of work-life balance. Others have found the rhythm of remote work to be stagnating and uncomfortable, alien even – living and working in isolation has been a great challenge.
The workforce arguably most impaired by COVID-19, however, are professionals unable to work while observing social distancing, such as those in retail, hospitality and entertainment industries. Remote work is a luxury they are not afforded. With the world on pause and all but essential businesses closed, millions upon millions have been either furloughed or terminated, and subsequently financially compromised. For the furloughed, optimism for a better tomorrow is dampened by speculation of yet another global recession and scant reassurance for a job to return to.
Regulating the Remote
Financial markets were far from spared of COVID-19’s systemic change-inducing powers. The industry was awestruck when the New York Stok Exchange trading floor was shuttered and moved fully digital for the first time in Wall Street’s 228-year history following two positive cases in the building. It was temporary, but historic nonetheless.
There are great benefits to living in a time where technology is varied, sophisticated and available at our literal fingertips. Technology was in fact what enabled some forms of business to go nearly uninterrupted while they transitioned to remote working. Despite market turbulence, financial market infrastructures specifically rode out the storm admirably.
Some areas of the market may not be so easily untouched. As many regulations are written now, an in-person, in-office supervisory configuration is a precondition for achieving compliance (think barriers between departments, mobile phone prohibitions, etc.). With more permanent remote working also comes a new chance to reimagine regulation.
So how are firms expected to meet regulatory obligations while also supplying a safe working environment? The current pandemic has highlighted the need for regulatory reworks and collaboration between regulators and their member firms in the wake of exceptional circumstances such as these.
The Office of the Future
For some traders, a return to the floor has been made possible by precise prescribed safety measures, including face coverings, plexiglass divides and a ban on handshaking. While the move to reopen offices is in pursuit, few firms seem to desire being first-movers back to physical offices—and the headline risk that such a move may bring. Banks are weighing concerns such as how to implement social distancing in the standard open office plan, and asking: Who truly needs to work from the office?
Equally, regulators have a heavy task at hand. In order to futureproof the markets from potential crushing volatility and liquidity threats, the industry must consider the creeping crisis in respect to the one from which it so recently came. The welfare of global economies is dependent on a robust financial market, so each territory and currency should be carefully considered, including jurisdiction-specific nuances.
The Price of Change
The world over, governments and central banks have responded uniquely to these unprecedented times. Government lending from the purse of taxpayers might have buoyed economies for the time being, but this is a far cry from a permanent resolve. Protection from the virus is not guaranteed, but market participants should take this time to see that protection for markets is. Globally, the cost of the virus is mounting, but the ultimate market cost has yet to be ascertained.
We’ll discuss these dynamics, the future of the industry and much more this Thursday, June 4 (10 a.m. EST / 3 p.m. BST), when Grant Davies, Head of Sales EMEA at EquiLend, will welcome representatives from ICMA, ISLA, RMA and CASLA in a lively discussion on these topics and more. Register now to hear from Godfried De Vidts of the International Capital Market Association (ICMA), Andrew Dyson of the International Securities Lending Association (ISLA), Fran Garritt of The Risk Management Association (RMA) and Rob Ferguson of CIBC Mellon.
EquiLend Presents "Securities Lending: The Future"
Who We Are
EquiLend is a global financial technology firm offering trading, post-trade, market data, regulatory and clearing services for the securities finance, collateral and swaps industries. EquiLend has offices in New York, Boston, Toronto, London, Dublin, Hong Kong and Tokyo.