As part of the Heard at Ops series with top operations and technology leaders, Andrés Choussy, Senior Vice President and Product Management Group Executive of Trading & Processing at FIS, describes the risk and opportunity of this convergence and digital assets adoption.

Q. There’s growing interest in digital assets and crypto among broker-dealers, banks, and asset managers. What is the greatest risk and greatest opportunity in this space?

A. The biggest risk lies in the lack of regulatory structure and clarity. As it stands right now, the market has been rapidly growing and multiple models have evolved. You have different companies coming into the space and straddling the lines between technology companies and financial services companies. The worst thing that could happen – for the industry – is for there to be a bad experience that can really set back adoption very quickly. Achieving the right level of trust is needed to get the institutional market behind it because it is very different from the retail market.

I believe that applies both in terms of how bankruptcy protection rules are established and how you can demonstrate client assets are properly protected. And, overall, ensuring systems are secure and that a stablecoin remains stable.

The opportunity, conversely, lies precisely for firms that can straddle the line between digital and traditional assets and are able to bring the right level of trust and security to the market. For example, in tax information reporting, we have a partnership in place with a company called Ledgible that is helping us get access to all the digital markets and bring them together along with traditional assets in a way that is holistic and meets the needs and expectations of each institutional client.

Also, for companies that are going to be focused on self-custody, Fireblocks – with whom we have a partnership – allows us to focus only on the self-custody and to narrow the scope of what’s being done in a way that is quite effective.

Q. How has the recent market volatility affected institutional adoption?

A. Volatility has been occurring throughout the market: as much as Bitcoin is down massively, there’s also massive volatility in the equity market and across the board. But certainly, the increasing interest rate environment is forcing a shift in how investors perceive risky assets in general.

Beyond the volatility, I believe what matters more are individual events. Going back to the clarity around regulatory issues, what really matters is how specific events – like hacking events and individual idiosyncratic events – are handled. It probably matters more than the overall market volatility in terms of impact to the sector.

Q. What changes to the role of the operations professional do you anticipate in response to the interest, opportunity, and challenges?

A. I see three big trends in this space:

One – The convergence of digital assets and traditional assets. Financial services operations need to move towards digital assets, to learn digital assets, but do it in a way that minimizes the overall impact to the firm. We should focus on adopting new technology without having to completely redo everything that we’ve been doing for the past 30 years.

Two – The blurring of the front office, middle office, and back office. There is a lot of discussion about OMS frontend systems all the way down to the mailroom and how do we minimize the actual paper trail and operational processes that, if unchecked, introduce more risk? The operations teams need to be able to think more broadly than they used to before.

Three – The reallocation of how the workforce is structured. Whether we’re talking about the Great Resignation or generally how people are now working more from home and changing jobs, there’s a significant amount of attrition globally. It is a bigger problem for large firms that have outsourced most of their teams outside the primary, secondary or tertiary locations.

 Q. How does connecting with SIFMA help you?

A. Events, like SIFMA Ops, give you the opportunity to see clients, see regulators, see competitors, and get a good sense of what people have been working on for the past two years. At the same time, these events provide the opportunity to talk about how we, as an industry, can move forward on issues like the standardization of messaging protocols or the initiatives around settlement.

Andrés Choussy is Senior Vice President and Product Management Group Executive of Trading & Processing at FIS.

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