Recapping ASIFMA Tech & Ops 2023 and AWS Exchanges Cloud Forum

Capital markets today are at a pivotal point from an infrastructure perspective. Not only does mandated change from regulators continue to reshape the landscape, but market participants and financial market infrastructures (FMIs) are also in a critical phase of modernization as legacy systems approach end-of-life and new technologies see increasing adoption.

I had the opportunity to talk on these topics and more at the Asia Securities Industry & Financial Markets Association (ASIFMA) Tech & Ops Conference 2023, as well as the AWS Exchanges Cloud Forum, both held in Singapore earlier this October. Here are some of my top takeaways coming out of these events and engaging with attendees through panel discussions and other conversations.

Transforming Asian markets

The theme for this year’s ASIFMA annual conference was “Future-proofing Asia’s capital markets.” The event gathered market participants, banks and broker-dealers, regulators and global FMIs for a packed one-day agenda with a focus on the region’s opportunities and challenges.

I was honored to speak at the “View from the Top: A C-suite discussion” panel, which covered infrastructure, operating models and systems investment from a leadership and management perspective. Over the course of this discussion and others, three clear themes emerged.

Regulation

The vast scope of regulatory change is challenging capital market participants globally, forcing them to assess their entire operations in a regulatory context—especially in the post-trade value chain, which is particularly reliant on aging legacy technology. A recent report from Nasdaq and The ValueExchange found that 64% of market participants and FMIs said increased regulation was their top external pressure. The report also found that more than 50% of custody, asset servicing, shareholder registry and settlement systems are 10 years or older. This reliance creates an urgent need for change and modernization amid evolving regulation, something that’s felt across banks, clearing members, custodians, CCPs and CSDs alike.

The move to T+1 settlement in U.S. and Canadian markets is an example of this and was a recurring topic as the May 2024 implementation date grows nearer. Time zones and currency effects create extra challenges to accelerated settlement times for Asian market participants active in those markets. This challenge is exacerbated by aging post-trade infrastructures and manual processes; removing a full day from the settlement process may cause some platforms to reach a breaking point. The solution will require greater market ecosystem collaboration to agree on joint standards, as well as automation across the full settlement chain to speed up processes and reduce sources of errors.

Cloud and modernization

Embracing new technologies and methods of architecting FMI tech stacks will be crucial to the future success of Asian capital markets. Our report with ValueExchange found the APAC region had the highest concentration of legacy tech, with 40% of FMI systems being 10 years or older. Altogether, 78% of their budgets go toward maintenance of and transitioning away from legacy platforms.

Modernization of infrastructure will help improve performance, resilience, resource management and scalability. Cloud is fundamental to modernization and the most important enabler of innovation, deployment of emerging technologies like machine learning and generative AI, powerful market surveillance and the unlocking of data insights and services.

One of the larger obstacles holding back FMI cloud adoption has been regulatory uncertainty. Regulators are, however, not saying no to the cloud, but they are taking a measured and deliberate approach, especially as more FMIs consider third-party cloud services for critical systems. The key will be proactive collaboration between FMIs, regulators and service providers. There’s a shared interest in embracing modernization, but it has to be done through a risk-based approach that assesses and plans for all risk factors.

Talent

As the financial services industry embarks on these modernization journeys, talent management has become an even larger business priority. New technologies and operating models require new skills, experiences and mindsets. Financial institutions are assessing their talent needs across the organization to ensure they have the people in place to drive innovation, reduce complexity and realize benefits.

This will require upskilling across the reporting hierarchy, from IT professionals to the board. At an employee level, adopting new technologies will be important for everyone. At the board level, there needs to be an understanding of operating resiliently so that they can challenge the organization, support the C-suite and work more closely with regulators.

Trading and the cloud

After ASIFMA, I had the pleasure of attending the AWS Exchanges Cloud Forum and participating in the fireside chat “Trading in the cloud: From cloud-native exchanges to building an ultra-low latency, hybrid environment using AWS Outposts” with John Kain, Head of Worldwide Financial Services Industry Market Development for AWS.

We discussed the evolution of trading workloads in cloud environments and how technology advances are powering FMI modernization, touching on the migration of Nasdaq’s MRX U.S. options market to the cloud utilizing AWS Outposts. A key benefit that we have experienced from cloud operations is the ability to optimize the time to deploy new innovations. Lowering TCO is not just about the cost of hardware and licenses; it’s also about reducing time-to-value.

Leveraging our own cloud journey experiences, we can now, as an FMI technology partner, offer our customers deployment optionality between public cloud, edge cloud, on-premises and hybrid deployment. In most cases today, the cloud is the starting point of deployment discussions and we’ve seen how the question has developed from “Could I go to the cloud?” to “How do I go to the cloud?” across the market ecosystem. 

I hope to be at both events again next year and look forward to the conversations and progress that come out of these experiences. Learn more about Nasdaq’s cloud journey here and our trading technology here.