Capitalizing on Change: The CIO Lens on Leading Tomorrow’s Markets

Change is constant. All businesses must plan for it, but doing so requires a careful balance from market operators who must ensure the resilience of core systems while also innovating and pushing the industry forward.

Market operators, including exchanges, central counterparty clearing houses (CCPs) and central securities depositories (CSDs), are in a unique and pivotal position to lead this change. Feeling the pressures of digitalization, competition and participant demands, these institutions must be intentional in how they future-proof, differentiate and modernize for the benefit of their businesses, members and the larger market ecosystem.

In the leadership room where this all happens, the change management imperative boils down to a few crucial factors: culture, regulator relationships and aligning strategy with technology. Hear from chief executives at leading market operators on how they’re sizing up the opportunity and the tactics needed to take to capitalize on change.

Change is a catalyst

Change no doubt brings disruption. Through the tectonic shifts, however, new opportunities can emerge, whether new asset classes, client services or data analytics. That’s why it’s important for market operators to be proactive with change, or at least be constantly thinking and strategizing about it: Change offers them a chance to get ahead of the pack.

Resistance to change, on the other hand, threatens to drag them down. Such an approach is commonly borne out of risk aversion but may realistically only increase the operational and competitive dangers. Standing still while the world changes around them puts operators in a precarious situation as members and markets evolve and they don’t keep pace.

“Change is inevitable, so evolving with it is crucial. If we don't, there's the potential for immediate business impact to all of our market participants. If we stifle innovation, it can become a worst-case scenario for our industry. There's also an internal cost of not evolving as well, including stagnation, lack of investment, and lack of growth. As a result, risk actually increases even though the rationale behind not evolving is to lower risk.” — Dave Hoag, CIO, Options Clearing Corporation (OCC)

Regulation and resilience

Resilience is at the foundation of market operations. Any amount of change naturally has implications for highly regulated institutions. But regulators themselves are also dealing with upheaval. Having a collaborative relationship can help soften the landing for change.

The more market operators talk with their regulators about resilience, security posture, technologies and implementation, the better positioned institutions, participants and jurisdictions are to embrace and capitalize on change.

“I think that it is highly important to have an active dialogue with regulators and to gain their support around strategy for the future and adopting new technology, which is all really critical to proceeding with the business.” — Yokoyama Ryusuke, CEO, Osaka Exchange, JPX Group

This is especially important given the general transition toward modernized, and in many cases, cloud-enabled, infrastructure. Such widescale change will require a close and open relationship with regulators to pave the way for the introduction of new technologies and realization of new revenue opportunities.

As Nasdaq Chair and CEO Adena Friedman said at ToF 2024: “Resilience is the precursor to growth. If you don’t have resilient infrastructure, or a resilient business model or resilient technology, then you frankly aren’t given the latitude to grow. Resilience [is what gives participants] confidence in you to drive that efficient growth.”

Tech stack in focus

Technology has been one of the major drivers of change, whether cutting-edge innovation like AI or the more functional advances in cloud, connectivity, APIs and data. The adoption of new and emerging technologies is preceded, however, by adoption of modern infrastructure.

“[Market operators] are facing the need for moving to the cloud, but also confronted with the aging of our legacy platforms at the same time as we are facing also a big rotation of technical systems. Technology is changing every day and there will be significant change in preparing architecture to be much more flexible. It’s about how we can change the attention, effort, money and talent invested in keeping the lights on and [focus on] developing new architectures that will allow us to do different things and be more agile in introducing new products or ways of delivering services.” ​— Claudio Vivian, CIO, Bolsa Mexicana de Valores

With planning, the operational benefits of change can be harnessed through cloud-enablement and modernization that drives agility and growth, while also unlocking innovation and scale.

“We have made a big push toward moving to the cloud to enhance our operational resiliency. It has brought new capabilities that weren't available to us previously. And given how important resiliency is to what OCC does every day, we have to look at how technology's enabling these new capabilities.” — Dave Hoag, CIO, Options Clearing Corporation (OCC)

Culture at the center

So, you’re prepared for change and ready to work with partners, but what comes next? How can leadership translate this into real-world results? The answer will be multifaceted, but culture will be an important lever to pull regardless. Market operators need to cultivate change agents and an organizational mindset of transformation.

“In the end, all of this change is performed by people. Employees and stakeholders make this happen and it’s a matter of not only maximizing the organization’s talent but also transforming the culture of the business and having the whole organization move in one direction. And by the way, it's much easier to implement technical choices than it is to change minds.” ​— Claudio Vivian, CIO, Bolsa Mexicana de Valores

On a practical level, this means fostering spaces for innovation and leveraging collaboration to guide and inform change management.

“Culture is important to organizational agility. From the leadership perspective, strategy and technology can sometimes diverge into two paths, but here we need a very cross-functional way of thinking about [the alignment of] business and technology. Ideally, staff concentrating on innovation or new technology can learn and hopefully influence operations staff [focused on resilience]. If we do that we can prepare for if the market will change in an unexpected way, and we can quickly move in an agile manner.” — Yokoyama Ryusuke, CEO, Osaka Exchange, JPX Group

Driving real change

While the news driving today’s headlines may vary, from gen AI to volatility, the themes behind change are enduring. The real takeaway for market operators is that innovation, resilience, culture and agility are core to future-proofing and differentiation. To capitalize on change is to be in a continually ready position to onboard and realize transformation. The role of technology cannot be underscored in this process, as it can provide the needed agility, flexibility and capabilities.

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