FIA (Futures Industry Association) announced on November 2, 2021 that it has released a report calling on participants in the futures and options sector to work cooperatively on an initiative to enhance the overall efficiency of the trading and clearing process for exchange-traded derivatives.
The report, titled “Modernizing the Listed Derivatives Workflow: A Blueprint for Change,” addresses the challenge of “achieving industry-wide improvements by establishing a framework for building consensus and collaboration among all segments of the industry, including clearing firms, executing brokers, exchanges, clearinghouses, customers and technology vendors.”
Walt Lukken, FIA President and CEO, stated:
“When Covid abruptly shut down the world economy in March 2020, the global futures and options markets experienced record trading activity and extreme volatility. This period of stress exposed several long-standing bottlenecks in the trading and clearing infrastructure that cause costly delays in the processing of trades.”
Efforts to enhance the workflow in the trading and clearing process have been “limited by bespoke processes and the lack of interoperability of systems,” the announcement noted.
The report “recommends that the industry overcomes these challenges by forming an independent standards body,” the update added while noting that to encourage the work of this standards body to be widely accepted and adopted, the report “recommends that it have a governance structure that represents a broad cross-section of industry stakeholders, and that its deliberations be open and transparent to the marketplace.”
The Blueprint also recommends “developing a consensus agenda supported by the industry that will provide a foundation for greater standardization.”
The report was prepared by JDX Consulting, a consulting company with “expertise in post-trade operations, based on input from 25 firms and 60 individuals representing a cross-section of the industry.”
“FIA embarked on this open standards initiative to understand how we can make the ecosystem for trading and clearing more efficient through the adoption of standards and best practices. Today’s Blueprint gives us a pathway for success, but more work needs to be done. FIA looks forward to beginning that dialogue and education with our industry.”
FIA intends to work with its Taskforce and other market stakeholders in the coming weeks and months to “consider the report’s recommendations and to build support for this initiative,” the update confirmed.