Good day post-trade was thrust into the limelight during the initial global spread of the COVID 19 virus last spring. Unprecedented volumes put unprecedented pressure on back office technology across the market, while the industry performed admirably well in dealing with the high volumes, frailties and faults in the system were inevitably exposed, with back office operations widely seen as the major point of weakness for many firms. This has led to a reevaluation of post-trade investment as operational resilience in the back office has become a top priority across the sell side. In Q4, Acuity conducted a widespread study of how COVID-19 exposed weaknesses and changed attitudes to investment in post-trade operations across the south side. To discuss the survey and the major trends in sell side post-trade operations, I'm joined by Patrick Taci, the founder of Lincoln House Consulting and former CEO of Cinnober Minium Business, and prior to that, the global head of futures on OTC clearing at Citi. Stuart Bailey. Stuart Bailey, vice president of clearing operations at the FIA and a former director of Risk Ice Clear Europe, and Justin Llewellyn-Jones, head of capital markets for North America, a Broadridge and formerly CFO and global head of derivatives Fiddessa. Gentlemen, welcome. At the end of this discussion, there will be a link to download the survey and the white paper, but we're going to kick off with a brief review of the core findings of the Acuity study, which was sponsored by Broadridge and written in consultation with Patrick Tessier. Yet I'm not going to hand over to Patrick to take us through some of the key findings over to Patrick.

Thank you, Will. Well, we had the survey conducted in Q4 2020, which allowed for the lessons learned from the volatility and record volumes seen in Q1 2020 to sink in and all the postmortems to take place inside each company and also inside the industry at large. So we had a really good cross-section of all the constituents of the clear derivatives industry, as you can see from the slides. And also we had an excellent split on the regional basis across the globe and on the functional basis, from front office to back office to technology and also the support functions in compliance and finance. So we were really pleased with the results and we had an expectation that, yes, the COVID crisis had changed the perception and from that perspective, we weren't disappointed. So if you see the next slide, you see that among the categories of participants, there's been a realization that more spend and changes and transformation of the post strength change needed to happen. And you have 40 percent of of the banks you have, you know, 30 percent of the brokers. And these numbers are impressive in themselves because it does show the realization taking place. But if you overlay these numbers with those respondents that said that they actually had already decided prior to the crisis to invest in transforming their back office technology, you end up with staggering numbers. Three quarters of banks and over 50 percent of brokers and independent schemes are planning to invest in the next two years. So that is really a welcome change from a background of operations management to see that all firms across the market are looking to invest right now at this moment in time. How much? Well, it depends, of course, with the different categories of participants. And no surprise with the Tier one banks having the larger budgets on account of their their size. But it's very interesting to see that among the all the banks and the independent FCM and brokers that a lot of them and are looking to spend a significant amount of money and some of them well over five million in the next coming years. So there will be a lot of sponsorship for innovation and technology to put all these plans into action. We asked as well, you know, what are the main drivers if you are looking to invest? What are your main drivers? So we all know that listed derivatives is these standardized products a very high volume but low margin, sadly, and also a heavily regulated product. So we classify the main decision drivers into four categories. The perennial category is no points for guessing is the concern around costs, you know, the interest of investing into new technology to achieve a lower running cost in the future, as well as, of course, the desire to continue to comply with an ever evolving set of technology and rules that force you to change your change, your reporting mechanisms. The topical side of the equation is, of course, the reaction to the spike in volumes and volatility. And of course, a lot of the participants want to be able to respond to the sudden, unexpected changes in their day to day processing volumes and the need for speed as well. I think it's worth noting that not so much on trade dates, where people tend to clear that transactions in real time, but a lot of legacy systems rely on batch technology and to an exchange. To an extent, so do the exchanges. So we see, in fact, that there is definitely a reckoning that new technology needs to be put to bear onto the daily processing of the products. On the competitive side, I mentioned that this is a very standardized product. So of course, you'd expect the businesses to want to create some kind of unique offering and certainly be able to have the flexibility to respond quickly to new products and new launches to be ideally the first one to offer that to their clients. Technology is, of course, a standout driver. I think people realize that there's so much potential with the new technologies and are concern that their own processing chain might become obsolete and they might be overtaken. So to that effect, you could say that in fact, technology is a driver that underpins your your hope to lower your costs. You hope to be able to have speed and scalability at the request of at the touch of a button, or even so have the flexibility to launch new products more quickly. Interesting to note that concerns around the management of vendors, et cetera, do not seem to appear to be a major major concern. So what are what are the pain points in more detail? So I don't suggest that we go into each and every one of them because as we'll say, do you have the link to go and see the survey? We actually asked participants to rate 14 different steps in the form to back processing of listed derivatives. And interestingly enough, different categories of participants saw the pain at different, different points of their own infrastructure. It is a common theme, though, that no one is overly enamored with the quality of their processes. In fact, the best scores you can hope to see on that surveys 80 percent. But all in all, it's fair to say that there are lots of unhappy people out there, people who are rating their systems and the quality of their processes on the scale to you want to turn more around this sort of six to seven, maybe, but certainly no 10s out there, and luckily no zero percent. So the the larger, FCMs that the obviously concerns around that trade, the processing around the batch reporting this goes as well with the the banks, they had concerns with their trade they're processing on the broker side and the FCMs more focused on the Treasury and the management of margin calls and a theme around any way their interaction, the standardization of the reporting with the the exchanges as a perennial problem in the industry and there's no one to see and no points for guessing that brokerage collections and also the associated function of keeping up with the static data for fees and commission rates has been the consistently lowest rated process across the survey. And this is really as been the one of the pain points in the industry for many, many years. So you might ask which technology are people or which process change are people looking to implement or hoping to leverage to be able to improve those pain points? That's really an interesting question, because we we saw through our survey that there is a lot of optimism in the market about new technologies. First of which augmented intelligence test scores higher than 70 percent with the relatively distant second DLT at 50 per cent. I guess people are waiting to see if DLT finds its sweet spot as a technology, but definitely some hope that genuinely across the market that these new technologies can be put to bear to resolve the pain points. Now, who might deliver these new technologies? Another set of interesting insights? So there is more confidence that these new solutions are going to be delivered either by existing vendors present in the space bringing. New technology today offering, or, of course, the self-development by the banks or brokers themselves developing new components that have this new technology embedded. There is less hope that a newcomer will come in offering all the solutions with their new technology in terms of operating model, which is another way that people can transform their operations alongside technology. We've seen some probably less enthusiasm for the model of utility. It was a big conversation utility four years ago. We see that there's a relative doubt that this is maybe the solution, and we will look at this in in the next slide. The offshoring solution, which has been, of course, leverage for many, many years since the financial crisis of 2008, seems to be still a lever lever that people want to operate, but they don't expect that there will be a major change. One point that might be very topical for a conversation today is the realization that the interaction inside the ecosystem between the clearing members or FCMs and the clearinghouses on the one hand, and also the brokers and clearing members and their clients on the buy side. These seem to be areas where people have come to the realization that things need to move and everything needs to be more standardized so that people can manage exceptions in particular or the management of funding. And we will see this probably in other debates later on. So going back to the conversation about the utilities and what are the reluctance for people to consider the wholesale outsourcing of their back office process? Well, we asked some questions, and I think it's mostly about control. Two thirds of the respondents have said that they're concerned about the loss of quality control as far as their clients suffering their loss of control. As far as compliance is concerned, in particular, banks are very, very worried about potential leakage of data. And then it is interesting to see the last slide, which 22 percent of the of the respondents said that they might actually consider this new model, but only on condition that they would be more participant vendors to offer the service. And this number is even higher among the independent FCM community, where 40 percent, which we were quite surprised with, said that they would consider the old sale outsourcing of their operation. So definitely a main change when it comes to these solutions. So in conclusion, we've seen definitely that there's been a realization that crisis like COVID that suddenly spike your volumes of volatility are in fact a constant in the futures business and that the current infrastructure's due to their age. I'm not able to leverage the new technology. So there's a big rallying cry in the industry to stop bringing new technology to bear on the back office chain and not to also minimize that aspect. I think there's also a big realization that the industry must work as a collective to be able to work on cooperative models, collaborative models between the FCMs and the clearinghouses, and between the sell side and the buy side in order to further alleviate the pain that was generated by the COVID volatility back over to you, Will.

Well, thanks. Patrick has a great run through the cool findings. So, Stuart, if we could start with you, if you could take you back, if you don't mind to February, March 2020 a time, I think no nobody wants to be taken back to. I do apologize, but as Covid spread and the realization of the severity of the impact it was going to have across the world became clear volumes spike to unprecedented levels. From your perspective, from looking at the FIA membership, what did you see? What were the main? How did how did firms respond to that sudden burst of volatility?

Hi, Will. And yes, I maybe if you take it back to that period, what did we see that so did during March 2020? We had a long period of extreme volatility and I try to record daily volumes. And that persisted over multiple days across multiple asset classes and everything from equities, energy and matter across multiple regions. And yet many asset classes were impacted at the same time. We had a staff. The office environment. And again, across clearing firms, clear numbers, clients. So it's a home working and I don't think, you know, we don't think we'd ever seen a move out of the office. People tested the ESG, but not in this extent. And so, teams, went from working entirely coordinated open office environments to to working remotely and. And that the combination of this high volume, high volatility working from home that is an unprecedented situation will add some extreme backlog retreat base that breaks my allocated trade settlement accounts. And I think it's worth mentioning client behavior and particularly the practice of allocating average trades late in the day, and that will certainly impact on trade breaks for so and in general on a single day, a single event. You know, firms will catch up on any trade breaks in the post trade window or indeed on 2+1 the multi-day nature of this Covid crisis back in March. And that led to these backlogs building often snowballing as one. Well, it's all very late into the next volatile day. That is the next. And it wasn't giving firms the opportunity to get back to. you know, with all trace and reconciled in the correct homes, et cetera. And and in extreme cases, that also lets the trades expire and the wrong accounts as well. And then then then you have to deal with things like like cash transfers and make manual adjustments. So and again, everyone's work from home, so they're not in the usual environments. Information flows slower. So there's all this impacts on firms and these companies. And so. Obviously, as part of our. The FIA's role, we helped coordinate the industry's response since we set up multiple calls across the back office operations teams in Europe and North America and. Yes, I helped coordinate efforts to resolve this, and some of the things we did was as simple as this, compiling a contact list of top clearing contacts to close contacts, escalation contacts and essentially just so phones could get through to the right person to start to start resolving some of these trade break issues. And that's one is that we also reached out to all the major exchanges and we asked them, you know, so to help help us self-isolate essentially and other things, like improve processing on trade dates. So extending post trade clearing windows. The Firm's strong preference was to be as clean as they possibly could at top day and not have to do with trades at 2+. And so, you know, we have really good engagement from all the major exchanges and CCPs, they extended their clearing windows and allow us to do trade allocations as far as possible on trade dates, rather than having to clear things on two plus one or two plus. We know that this there's a inevitability about in the current environment now some of the some trades will need to be. cleaned up will need to allocated, etc. in trade day plus one. So we also ask for improvements on price on trades like C Plus, increasing the ability to extend trade transfer and adjustment functionality via specific areas, so to trade day plus five so people can use folks, can use the CCP guis to start allocating trades within the guis rathering than having to sit outside the gui manually. And again, related to that retaining sort unaccepted trades within the gui an. So up +5. Now again, the same thing allows firms to reconcile and to resolve its trade breaks within the gui, and which is a lot easier, always doing it manually and outside the gui and the ability to trade files. A quick rundown of. But what we saw last March and comments and questions as well. Obviously, a lot of work will be taking off on to implement those improvements. And sort of drive the industry forward.

So Justin, from a technology perspective and in terms of your view into your clients and your and your extensive contact based cost the market. What were you hearing where with a major pressure points that you saw?

I think Stewart captured it perfectly. It was simply a matter of keeping up with the volatility in the volumes. So yeah, there is. I mean, we're all very familiar with the sort of technology ecosystem that exists in the listed derivatives world. As Patrick mentioned, a lot of it is that's batch based not just on the FCM side, but also on the CCP side. So naturally, you have some choke points in terms of what the technology is capable of doing in the throughputs that you're going to see. Now when you when you have these high volume days and we've actually seen some recent in recent recent past, not just back in March, we've seen some in November, we saw some actually a couple of weeks ago. What you see is that kind of influx of activity. As Stuart mentioned you've got that sort of application ecosystem where some of the activity is still being done, either off system or manually. There's a lot of manual intervention that goes on. No, I think as an industry, we have performed remarkably in this work from home environment, especially back in March, when we rapidly moved to we PCP in DR and we we all started working from home. But unfortunately, that underlying technology has hasn't evolved in the same kind of way, which means that when we see these large spikes in volume over a sustained period, you get this backlog of manual activity and you get this kind of backlog of my manual intervention that is required. And that then just snowballs to just trying to keep up with that snowballs. And that's why, you know, I think, yes, the survey results show there's this no peak interest in modernization and you're actually investing back in that technology stack to try to remove some of these bottlenecks and remove some of those manual interventions.

And then I guess if you look at it, it was a problem we perhaps know about for some time when you simply look at the relative levels of investment that have gone into into the front office versus the back office front office trades that can execute tens of thousands of second, the clearing into the time times go 20 30 year old technology, some financial institutions. So why do you think historically there has been that lag in investing in post-trade versus the front office and and has it has Covid the do you think the only factor that caused the change of approach that we picked up in the study Justin?

So, so I think when you get industry change or large scale industry change, it's typically not a binary event, right? There's a confluence of factors that come together the kind of influence people to actually making the change. Sometimes there is a trigger, usually sort of talks about the investment that went on in the front office world. That was really a factor of coming out of 2000. In 2008, the regulatory environment that was being driven and you saw you did see quite a massive investment into the front office world, especially in areas like rag tag surveillance and so on. But that too had been building up. There had been a of momentum behind that change for quite some time in 2008 2007 sort of triggered it in terms of, okay, here is the investment that we have to do. I think you see you've seen the same in the post-trade world that Stuart talked about the ecosystem, that we've existed in. And I think that the survey that Patrick was talking to kind of highlighted some of the issues that we've been living with for quite some time. So the lack of standardization that exists within the ecosystem and it's a very interdependent ecosystem, you know, it's not just internal to the FCMs, the fact that we really don't have a real time environment. There's also been problematic. So that when you get these, these sudden periods of high volatility at high, high volumes, it just exacerbates some of the weaknesses that already existed. Now when I when I look about if I do a little bit of a history lesson, I sort of look back over the last 10 or 15 years. What I saw coming out of 2007 2008 was this huge investment into the front office will be a new new vendors coming into the market. A lot of investment in execution services and order management systems. What we didn't really see was investment in the post-trade world. You know, what we actually saw was quite a lot of work arounds and short term fixes, sort of Band-Aids and sticky sticky plasters and that that served us OK for a period of time until we started seeing volumes start starting to pick up. We started to see these these peaks and troughs. I think the vendor community also saw this happening, and that meant that they people saw that there was an opportunity. So I thought one of the interesting points of the survey was you've seen a rise in vendors. Yet typically the listed derivatives world was served by a small number of vendors who kind of own the whole trade lifecycle. But over the last 10, 15 years, you've seen new vendors like Broadridge enter the market, bring new solutions to bear, and those solutions are shaped differently. They're not the sort of monoliths, you know, the 20 year old monolith that you sort of made reference to that component based solutions, the modular, you know, they are using modern technology stocks are being delivered using modern software development life cycles and that that, I think, gives the first driver for change. Suddenly, the FCMs aims to find themselves with a much richer vendor landscape than they've had previously, and that vendor landscape is providing solutions in a much more component based manner, which means that the schemes have optionality around transformation. And they no longer have to go for these large, big impact, big cost changes that they actually dissect that trade lifecycle and look for the business needs or the business problems that they have and solve for them. And I think the other thing that Patrick alluded to was the fact that when you look at the people tend to think of FCMs as a block, but they're not very different. They have very different business drivers. And the survey results actually highlight that you saw non-bank FCMs complaining about different things than the regional banks were complaining about. You saw the Tier one banks, you know, highlighting issues that some of the players further down that foodchain were not experienced. And I think everyone always complains around brokerage fees and commissions that that's a perennial problem for the industry, but that that new solution said that the vendor community was providing gives banks that optionality. And I think that's that's the next biggest driver for why change is suddenly happening now is because it's much more available and much more accessible. And then the final point that I'll make Will is, if Patrick mentioned things like artificial intelligence. So yeah, there is a lot of emerging technologies that the FCMs can't avail themselves of when they're stuck on these legacy platforms. Well, what they can do is they can attempt to avail themselves, but it tends to be peripheral to what they do, it's peripheral to that their whole trading post. So so when you think about something like the cloud and you with Amazon launched eight of us back in the early 2000s, while the financial services community back then really wasn't taking much advantage of the cloud. You know, you fast forward to 2021, and there's a tremendous amount of use of the public cloud and cloud based environments. Same thing. The same with blockchain in the Apache blockchain, but blockchain as a concept at least was created in 1991, and so it's a long time since at least it was thought of. And yes, bitcoin as a thing didn't exist until sort of mid 2000s. But again, I think we've seen much more application of that technology into the environment and recently than we had, say, 10 years ago. And I can go on if you think about machine learning and think about artificial intelligence. I mean, think of things like RPA. Each one of these new technologies is coming to market through this new set of vendors. So this component based architecture, so this sort of technology modernization that is occurring and the banks want to take advantage of that, they see that helping them move to a more real time environment. They see that helping them get that business agility. They want to see that they see that and helping them in terms of being able to demonstrate competitive advantage of differentiation. They have to invest in the ecosystems in their applications to be able to take advantage of some of those technologies. I think that's the final drive. I think that confluence of drivers, coupled with that kind of volatility that we've seen over the last sort of 12 months. That is why FCMs and listed derivatives segment in general is now beginning to invest more in post trade.

Thanks, Justin. And Patrick, obviously you ran clearing operations at a major Tier one bank for some time when you were that we were obviously without direct reference to any state secrets. But what was what do you think it was holding back investment in post-trade prior to prior to 2020?

It's very interesting, and I recall with Justin was just saying I, if I can borrow an analog to the world of artificial intelligence, there is something that people refer to as winter AI, which is these long periods between the concept surfacing with the first computing capabilities in the 60s, then having a resurgence in the late 80s early 90s with expert systems. And then that disappointed people because they couldn't do much than just linear replication of of decision trees. And then now the cloud enables the proper boom with fantastic explosion of new capabilities around the modern intelligence and decision making. And in fact, I'd say the back office has been equally in the city as winter. And over that period, you would have seen individual companies making asynchronous updates, usually around some business change, and they want it to, in a way, buy back into into the business by adopting exactly the same tools as their competitors just to rejoin the pack. And the last time that we saw, like a collective horizontal effort to upgrade across the marketplace was after the 2007 2008 financial financial crisis. So where, you know, all the banks collectively had to upgrade to be able to cope with the demands of monetary clearing and the expected expected surge of business activity? Now what is interesting with what's happening as a result of this is that the big word in in back office technology budget is mandatory because of course, the front office, the businesses there will give priority to client facing applications to trading technology, to low latency technology, etc. which means by the time you look at your post-trade, if it's not broken, you don't need to fix it. So the mandatory piece is mandatory regulations, Mandatory upgrades by clearinghouses because let's not forget the clearinghouses have performed extremely well in this crisis. And the reason for that is that they have been introducing real time technology modular technology throughout the year since 2008, but that meant that the FCMs rather than welcome their own processing platforms. I've been working on keeping up with all the upgrades from each and every CCP and exchange out there trying to fulfill their mandatory obligations. And we've seen the result by and large. The the exchanges and clearinghouses have been extremely resilient. In fact, some of them were explaining that their daily dilemma was, you know, do they please half of their members by leaving trade, declaring open later. Whereas the other half of members were worried that if the batch was delayed, their systems would not be able to reopen on time. So they were caught between two opposing demands the rock and the proverbial hard place. So I think now is the time when given the new technology is the time when the industry needs to start investing for itself, as opposed to mandatory upgrades from exchanges or regulators, or even mandatory upgrades by vendors who have end of life bits in their applications, et cetera. And Justin is right, by the way, that it's not a single application that you're looking to to modernize. In fact, you have a whole suite of applications that cater to each and every processing step in the back office processing chains for this derivatives. And what is really exciting is the power of the new technologies. And if we can leverage that at this point, I think it would be time for the banks to really try to innovate in the post trade that could be excused some of the head of businesses for being extremely surprised during the crisis. As to all the problems that they had were for probably many, many years and being told that there were ninety nine point nine SDP, well, SDP. It's only a measurement sometimes of the most standardized flow of business going through without hitting those sites. But what this crisis has highlighted is that the point one percent or 0.5 percent of one percent of exceptions, they actually have very hard to deal with when the clearinghouses, the clients and the FCMs and sales have not devoted any time or money to create some automation or some scalable process, some APIs, et cetera, and people have to revert to basically keying transfer demands on menu screens. So it's really an important thing for the industry as a whole to to collectively decide that now is the time to leverage new technology and really scale up.

Thanks. Patrick and I guess Justin there's a risk sometimes to say, well, you know, we lived through COVID. Truly unprecedented times. The chance of another pandemic is unlikely. Let's hope. And in the near future, perhaps you can be reluctant to invest because the black swan event has passed and people survived well. What would you say the risks are of FCMs not taking a good look at their investment in post trade right now?

So I actually think Patrick just highlighted one of the biggest risks. So you have firms who are already investing. So you have firms who who have taken stock of what the clearinghouses have paid and exchanges have been able to do in terms of real time processing. And they are already investing. They're already moving towards a real time environment. And as Patrick mentioned there, they are agitating for further industry change around the manner in which the FCMs are interacting with these utilities, the manner in which they trade processes is actually occurring. I think the second thing that you're seeing is those FCMs that are already investing are getting benefits out of it, which aren't just efficiency. Typically, I think the post-trade rule is sort of seen as a cost. It's not a driver of alpha that people don't think that it's going to result in business growth. That is patently not true. I think the FMCs that I work with you are already investing in that post-trade well. I've seen some great benefits about being able to utilize this, these new ecosystems and these new components because deriving from them not just costs benefits, but business agility and business growth benefit. And one of the things I wanted to highlight well was just the access of access to data. So I think for the most part, these sort of large legacy systems is sort of a monolith that people have been working in very difficult to extract data from and the value of that post trade data is therefore be quite minimized. If you don't get access to it in real time, you don't get access to it in a transparent manner. Typically, what we have been seeing is FCMs pulling data out of that post-trade system to manipulate other other systems that then drives the lag and latency as data ages, so does its value. But the immediacy around data is very important. So what are the biggest benefits I'm seeing is that that access to that real time environment, coupled with the access to data is allowing FCMs to drive agility and drive growth in multiple areas. I mean, one is the just operational risk. You know, the immediacy of data access gives you a lot of power in terms of the manner that you're managing risk and the visibility of your risk profiles. The second thing that's driving is actually client engagement that the FCM is looking for actionable data items within that dataset. They're using it to drive client engagements in terms of pursuing additional businesses or even pursuing new business lines entirely. And I think the the flip side of that actually is examining that data and finding those clients that actually aren't particularly profitable for you or are the ones that are driving the most exceptional, driving the most at risk in your operational activities. And then being able to have a fact-based conversation with that clients about how you need to change their activities or how you need to and work with you better to have a more effective relationship. So, so I think what I'm getting at, WIll is you've already started seeing the FCMs move faster and not just the tier one as you're seeing it up and down, up and down that segment you're seeing at non-bank FCMs invest, you're seeing regional banks, FCMs invest in the Tier one invest. So people have already started on that evolution. And what you really don't want to do is be left behind. You don't want to be that person saying to the exchange, No, I need you to close out early because I have to have X number of hours to process my batch. You really want to be the person who is driving the innovation within that within the industry. I mean, you know, being from the front of the pack when it comes to this type of change.

Thanks Justin. Stuart, From your perspective, I guess. Do you concur with that? Are you seeing a wholesale move to investment among FIA members?

Yes, I mean, I see, you know, when I view this as a risk manager at CCP and, you know, I think. So that notion of upside risk and, you know, if you don't keep up with your competitors serving clients as well, et cetera, and there's opportunity there as well, are you getting from? But you know, I will say, see, and I think we saw this during March last year through the lens of a risk management. If you've got trades that are not allocated correctly. Obviously, when client does not know what their position is big problem for that client and we saw we saw some client defaults, that's also an issue for you as a cleaner member trying to manage client default position. So there's those issues and so it's talk about it from there and that the negative aspects, but it's a minimal risk. And so problems need to take this into account. Now it's okay. You don't see it, you know, from one day to the next on a regular basis. But when let me see what issues do you have? You've got trace in right account, you've got a whole series of problems. So this is the client not knowing the true position that's unacceptable to the client. Now those unallocated trades, what the clearing house is allocated into some account of your house account. Clearing funds then have to manage that themselves, and that has margin on it. So maybe that's why don't you see trades is not an issue for you if you've got a substantial amount of trade that's built off your house account you need to fund that margin. And then you also need to fund any trade calls that come off the back of it and lines, as well as an implication for your capital. Yes, hold capital gains that which trades on house account . So it has, as you know, has all these different risk implications for these funds. And and I completely agree with all the you need to get on the front of it, why you should want to invest. But there's also an aspect of it if you do not do this, which is that all indications for you, for your clients and for you as a clearing house member and think you know, the industry is. The industry went through last March, obviously all clearing members are very well aware of the issues they faced and to start on addressing that the FIA board has formed in new Operations and Standards Board Committee and the their job is to help try to improve operational issues and include transactions, make the whole process efficient, more standardized and more resilient and more cost effective, and that nobody is looking at areas like trade and margin, standard deficiencies, different risk controls, standardization of reference data and also overhauling the post trade message systems as well. And that's what I think will touch on. The next point as well is that is going to be an ongoing piece of work where we'll be engaging across the industry to try to change in those areas. And that's a long term effort. It's a marathon, not a sprint.

Yeah, indeed. And there's still lots to do. Just bring us to the final point. So in the last last couple of minutes, if I could just ask each of you what trends you think are going to drive drive change in the derivatives industry over the next few years? Just a very quick overview. A snapshot each, Patrick, starting with you.

OK, well, I have to say I'm extremely optimistic and also excited because there's so much good technology out there. Everyone thinks of cloud like his old news, but it's barely begun to bear on the clearing derivatives post-trade, so I'm really positive about the changes that are going to come. It needs to be led, so I will stress as a functional initiative, not just a technology initiative, because reproducing the same workflows with a different, better, faster, scalable technology is only half the battle. I think that the expectations of the people that worked on it 10 years ago in the industry were much different from the new generation of back office colleagues that are used to having everything really intuitive based on their smartphone technology. And I think at the minute, thinking about it smart linkage between modules. Smarts, workflows will really attract and retain new talent to this industry, and that's really, really important for me. And if we can capitalize on a more collaborative way of working, bringing effectively standards that will also help the whole industry to move forwards and be able to cope with any uncertainty in the future. Because let's face it, listed derivatives will always be the go to product in any crisis. So there's only one certainty is that there will be further spikes in volumes and transactions. Only the industry would be better equipped.

And thanks and Sturat, your your key predictions for the year ahead.

And I mean, I think get the point I would like to make, as I've just been really encouraged by the willingness of the industry to come together and collaborate on, we will look what that looks like in terms of the standards and those efficiencies we have. We look at for me that that collaboration year with the clearing members, with the vendors and with the CCPs themselves. And I think it really encouraged me last year was how the industry came together to resolve these issues. And I think we mentioned it before is an ecosystem role in dependent will rely on each other. So I think I would like I very much hope to see that that spirit of collaboration continue to start strong. Some of these longer term changes.

Thank you. And Justin the final word.

I couldn't agree more with both Patrick and Stuart. Well, I think what you will see is simplification, modernization, consolidation, standardization. I think there's a real appetite for for change. But I can't remember who mentioned it. You know, it's a it's a marathon, not a sprint. These sort of industry wide changes take take time, but I think you've got some great catalysts right now for that change. And I think the technology advancements in the adoption of these technologies in the modern way of doing things that component based architecture, these are all fantastic catalysts to keep the momentum going. And I agree with Stuart. I think the collaboration that we're seeing right now, especially around standards, I think I think listed derivatives is absolutely a segment of our wider capital markets that could do with some standards being applied in the participants within the landscape adapting to or adopting those standards. So I think you're going to see a real digital wave over the next two to 10 years, similar to what we saw in the front office, say, 10, 15 15 years ago, where the adoption of these technologies is really going to drive change and the introduction of things like real time processing will change the workflows. As Patrick said, This isn't a case of us doing what we are doing today, just in the cloud. It truly is going to start changing operational activity and that will drive organizational change as well.

Thank you. Never let a good crisis go to waste, as I say, well, that does bring our this webinar to a close. So I want to thank the guest today, Justin, Stuart and Patrick, as mentioned throughout, the the acuity study, will be available to download shortly. But thank you very much. Thank you to Broadridge for hosting us and thank you to you for listening. Thank you.