Euroclear shareholders approved the new board at an extraordinary general meeting, held on 3 May 2024. This included the official appointment of Valérie Urbain as CEO, initially announced in January. She replaces Lieve Mostrey.
Six independent non-executive directors, five non-executive directors representing the largest Euroclear shareholders, and three executive directors were approved at the meeting.
Commenting on her appointment, Urbain said: “It’s a real privilege to take over as CEO of Euroclear. I would like to thank the board and our shareholders for their trust. I look forward to working with the board and our great teams to shape the Euroclear of tomorrow, better serving our customers and accelerating our growth journey.”
Francesco Vanni d’Archirafi, chairman of the Euroclear Group, added: “I am delighted to welcome Valérie Urbain as our new CEO, and the board and I are confident that she will successfully lead Euroclear. Valérie has the right experience and the value creation mindset needed to take Euroclear forward. I would like to recognise Lieve Mostrey for all her achievements during her time as CEO.”
A member of the Bank of England’s Financial Policy Committee has cautioned against the use of AI trading strategies that could exacerbate market instability – highlighting the potential dangers of AI-driven trading algorithms that might inadvertently amplify external shocks, and warning that heads of trading will be held responsible if anything goes wrong.
Jonathan Hall
Speaking at the University of Exeter yesterday, Jonathan Hall warned about the emergence of ‘deep trading agents’ – AI systems that operate semi-autonomously and may not be fully understood by human traders. These agents could collude with each other in ways that evade detection or worsen market volatility. He stressed the importance of rigorous testing and regulatory compliance before deploying AI models in financial trading.
Hall believes that it is theoretically possible for “trading nodes” to shift from being human traders to neural networks – in essence, for AI to take over – and that this could have serious implications for market stability. “My concern is that deep value-trading algorithms could make the market more brittle and highly correlated. And that deep flow-analysis trading algorithms could learn behaviour which actively amplifies shocks,” he said, in a speech entitled ‘Monsters in the Deep’. “The incentives of deep trading agents could become misaligned with that of regulators and the public good.”
He also warned that trading desk heads would be held accountable for any non-compliant or harmful behaviour exhibited by AI algorithms. While acknowledging that his concerns were currently speculative, he drew parallels with past trading strategies that contributed to market crises, such as the collapse of the Long-Term Capital Management hedge fund in the late 1990s.
In light of these risks, Hall urged caution in the adoption of neural networks for trading, citing both performance and regulatory concerns. “A manager that implements a trading algorithm must have an understanding that is deeper than just a simplified first-order interpretation of its behaviour,” he stressed. “If a manager implements a highly complex trading engine, then they are making an explicit choice to do so as opposed to a simpler model. If the difference between the two is what causes a problem, then that difference is the manager’s responsibility.
“Trading algorithms must have both internal stop limits and external human oversight, including a kill switch. Just as with a human trading desk, the buck stops with the manager… If trading algorithms engage in non-compliant, harmful behaviour then the trading manager will be held responsible.”
However, Hall also clarified that his views were personal and not necessarily reflective of the Bank of England’s official stance.
In reaction to the speech, Oliver Blower, CEO of fintech VoxSmart, who previously worked on Merrill Lynch and Barclays’ trading desks, said: “ When it comes to AI, sure there are risks to adoption and trading desks must proceed with caution. But investment banks can ill afford to ignore it. Heads of fixed income desks, for example, can achieve tangible benefits. By gathering all the disparate information from across the bank, before then deploying AI on top, some of the long-standing pricing and illiquidity issues across bond markets can finally be overcome.”
Gerard Walsh, global head of client solutions, banking and markets, Northern Trust
Singapore-based investment manager New Silk Road Investment has outsourced its trading to Northern Trust.
Through Northern Trust’s integrated trading solutions, New Silk Road will be able to rescue costs and risk, improve transparency and operational efficiency and manage regulatory compliance, the firm said.
New Silk Road invests in Asian companies with the goal of long-term returns. Northern Trust has provided global custody services for the firm’s funds since 2011.
Outsourcing trading functions is becoming increasingly popular among Asia-based asset managers in anticipation of the upcoming T+1 transition in North America. Time differences mean that the shortened settlement cycle will provide a series of challenges for APAC managers’ existing systems.
Gerard Walsh, global head of client solutions, banking and markets at Northern Trust, said: “T+1 introduces significant market timing challenges to investors and managers in Singapore and New Silk Road has a strong understanding of the issues involved in this change.
“Northern Trust is very pleased to be working with New Silk Road to ensure their US dollar execution, trade matching, clearing, settlement process, and trade-related foreign exchange are managed as a single lifecycle.”
Yen Leng Ong, country executive for Southeast Asia at Northern Trust, commented: “New Silk Road came to us looking for a solution to help navigate cross-border trading challenges amidst a changing market structure in North America. Our ITS offering was the right fit to provide seamless integrated middle to back-office processing along with efficient trade execution. We look forward to continuing to build our relationship with New Silk Road to enhance their global trading needs.”
A new report from three leading market associations outlines an ambitious roadmap to improve the competitiveness of capital markets in Europe through a combination of retail investment, financial incentives, tax breaks and education.
Rainer Riess, secretary-general, FESE
The joint project, co-developed by the European Banking Federation (EBF), the European Fund and Asset Management Association (EFAMA), and the Federation of European Securities Exchanges (FESE) with insight from 37 senior market stakeholders, outlines progress made towards the Capital Markets Union (CMU) and offers a roadmap for policymakers, regulators, and industry stakeholders to move forward.
“Deliberate demand-side and supply-side steps taken over the next five years can set the conditions that will build more momentum, attract more investors, and create more investment opportunities for the decades ahead,” said the report, which was authored by Oliver Wyman.
“Europe needs deep and liquid capital markets to finance its companies and deliver attractive valuations. Cutting red tape and getting citizens to put their investments into capital markets are key to unlock the flywheel,” added FESE director general Rainer Riess.
European capital markets are currently facing a decline in competitiveness, particularly when compared to the United States. This poses a significant threat to Europe’s economic growth and its ability to finance innovation, support green and digital transformation, and address the needs of an aging population. The report highlights the importance of leveraging Europe’s capital markets infrastructure to its full potential, increasing overall capital pools, and enhancing investor outcomes. It emphasises the need to activate the demand side of capital markets by improving retail investors’ access to attractive products, enhancing financial literacy, incentivising retirement savings, and creating tax structures conducive to long-term investments.
It echoes the list of policy recommendations released by EFAMA earlier this year to improve fragmented capital markets in Europe. These included a primary focus on competitiveness – urging that all new EU regulations should be subject to a competitiveness check, with unnecessary reporting requirements reduced and anti-competitive behaviour in areas like market data urgently addressed.
Retirement savings were another focus: including affordable and quality financial advice, regular financial health-checks, improved financial literacy, reform of occupational pension systems (through the implementation of auto-enrolment mechanisms) and tax incentives (for instance, by establishing tax-exempt investment plans for individual retail investors). Sustainable finance was another pillar, with EFAMA recommending simpler, user-friendly investment disclosures, access to reliable ESG data for asset managers, and the streamlining of existing regulations.
Finally, the recommendations stressed the importance of efficient, stable and integrated European capital markets, supported by digital innovation. Improving market transparency by delivering an effective, useful and reasonably priced consolidated tape and removing remaining tax barriers to cross-border investment were key points.
“The Capital Markets Union is something policymakers have been working on for many years,” said Tanguy van de Werve, director general at EFAMA, speaking this week.
“However, we will never reach the desired end point without the necessary political will. Now is the time for decisive action and leadership if we want to see the EU remain economically competitive on the global stage. This will require ‘top-down’ regulatory initiatives at the EU level, as well as ‘bottom-up’ measures at national level, to make our goals a reality.”
“Developing vibrant and competitive European capital markets is crucial to harness the necessary financing power to usher in true economic transformation in the EU,” said Wim Mijs, European Banking Federation CEO. “This report marks a significant milestone in outlining the path towards game-changing reforms.”
James Tan, chief operating officer, Lion Global Investors
Asset management firm Lion Global Investors (LGI) has partnered with NeoXam to centralise and optimise its investment data and performance reporting across middle and back-office operations.
Through the collaborations, the firms aim to improve the accuracy and timeliness of client reporting. This will be achieved through the centralisation of LGI’s market and reference data, investment accounting and performance data, NeoXam explained.
Using NeoXam’s Investment Data Solution, a cloud-native software-as-a-service product, LGI will have access to a single source of truth for its investment data across all asset classes, NeoXam claimed. This will enable greater automation in the data management and client reporting pipelines, it added.
Tim Versteeg, managing director for APAC at NeoXam, said: “We are delighted to be working with one of the largest asset management companies in Singapore. Given the region’s rapidly evolving financial landscape, it’s imperative that financial institutions ensure they have access to accurate and reliable data for the seamless functioning of its middle and back-office operations.”
James Tan, chief operating officer at LGI, commented: “By leveraging NeoXam’s technology, we’re providing our teams with access to uniform investment and reference data, enhancing investment precision and performance reporting.
“This strategic collaboration underscores our dedication to innovation, reinforcing LGI’s commitment to delivering efficiency in its investment operations to clients in Singapore and the region.”
UBS saw total net income of US$6.1 billion in Q1 2024, up 67% YoY from US$2 billion. This was driven by the consolidation of Credit Suisse revenues (US$2.9 billion), the firm explained, and includes US$517 million in accretion impacts from purchase price allocation adjustments on financial instruments.
Total reported revenue for UBS over Q1 2024 was US$12.7 billion, up 14% QoQ from US$10.9 billion and up 31% YoY from US$8.7 billion.
Within the asset management division revenues were up by more than half (54%), with US$665 million in revenues. This figure is particularly striking when compared to other business arms, with global wealth management revenues increasing by 28% and investment bank revenues rising by 16% to US$2.8 billion.
Global markets equities revenues rose by 3% to US$1.4 billion YoY, despite a 5% drop in overall global markets revenue to US$1.9 billion. This drop was the result of reduced revenues in derivatives and solutions, UBS stated.
Sergio Ermotti, UBS group CEO, commented: “A little over a year ago, we were asked to play a critical role in stabilising the Swiss and global financial systems through the acquisition of Credit Suisse and we are delivering on our commitments. This quarter marks the return to reported net profits and further capital accretion – a testament to the strength of our business and client franchises and our ability to deliver significant progress on our integration plans while actively optimising our financial resources.”
Scott Kirkby, managing director of European financial services and technology team, Houlihan Lokey
Global investment bank Houlihan Lokey has appointed Scott Kirkby as a managing director of the European financial services and technology team, part of its broader fintech group.
In the London-based role, Kirkby will focus on strengthening the firm’s banking and lending capabilities across EMEA.
Kirkby has more than 20 years of industry experience and joins Houlihan Lokey from Bupa, where he was group corporate development director. Prior to this, he spent seven years as head of corporate development and M&A at NatWest Group.
Earlier in his career, Kirkby was part of Credit Suisse’s Financial Institutions Group and became head of its M&A division first for EMEA and later for the Americas.
On his appointment, Kirkby commented: “There is an understanding at the firm that an industry driven by innovation and change requires a unique blend of sector expertise, transaction experience, and a client-centric ethos. These values align with my own, and I look forward to working with the team to deliver exceptional results for our client base.”
Christian Kent, managing director and co-head of Houlihan Lokey’s European financial services and technology team, said: “[Kirkby] has invaluable insights into how the banking and lending sector across Europe is evolving. The rapid digital transformation in the sector has opened new opportunities for clients to embrace innovation, scale operations through M&A, and expand into new verticals. Scott’s wealth of experience, strategic insight, and expansive network will help our clients as they consider a future sale, acquisition, capital raise, or other strategic options for their business.”
Jan Stiebing (mid) and Sven Wohlfahrth (r), Deutsche Börse, with Laurie McAughtry.
Global Trading editor Lauren McAughtry speaks with Sven Wohlfarth (director of data services operations) and Jan Stiebing (head of business strategy and M&A for market data and services) at TradeTech Europe 2024 about Deutsche Börse’s Marketplace, which is scheduled to be kicked-off with historical data and analytics from Eurex, Xetra, 360T and Clearstream in Q4 2024.
Find out more about:
– How customers will benefit from this new initiative
– What market participants can expect in the coming
– The drivers behind this launch and how it relates to Deutsche Börse’s strategic cloud partnership with Google Cloud.
To make its data products more directly and globally available, Deutsche Börse is already providing its analytics based on Eurex, Xetra and Clearstream trading data via the Databricks (see here) and Snowflake (see here) marketplaces.
Societe Generale reported revenue of €6.6 billion in Q1 2024, remaining stable in relation to Q1 2023 with a drop of just 0.4%. Revenue was up by 9% from Q4 2023’s €6 billion.
Group net income was €680 million, up 36% from Q4 2023’s €430 million. While this is a significant increase YoY, the bank is still down on its Q4 2022 figures, where it saw €1.1 billion in net income.
The equities business recorded €870 million in revenue for Q1 2024, up 3.1% YoY and 13% QoQ. This was due primarily to a rise in equities indices and strong commercial momentum in derivatives, the firm commented.
Fixed income and currencies saw €733 million in revenues over the quarter, which Societe Generale stated is the result of activity in the investment solutions business. However, this figure marks a 16.7% decline YoY – due to lower volatility on rates, which impacted flow activities, and less conducive market conditions, the firm added.
Societe Generale highlighted the launch of research and cash equities business Bernstein in its results release, which has allowed clients to access international services through the equity value chain.
On the results, Slawomir Krupa, CEO, commented: “We are progressing in the execution of our strategic plan. Our operating performance improved thanks to a strong contribution from Global Banking and Investor Solutions and solid revenues from International Retail Banking.”
The London Stock Exchange Group (LSEG) recorded “solid growth” in Q1 2024, according to CEO David Schwimmer.
The capital markets division was up 11.4% YoY, which the group stated was due primarily to growth at Tradeweb, which it owns a majority stake in. Equities returned to growth, with secondary trading gains partly offset by lower market activity.
Within its capital markets division, the average daily value traded for equities was £3.9 billion – a slight drop YoY from Q1 2023’s £4 billion. Total income was £60 million, up from £56 million in Q4 2023 and £59 million YoY.
At FTSE Russell, equities revenue was £60 million, up 1.7% YoY from Q1 2023’s £59 million. In its trading update, LSEG stated that continued strong demand for flagship equity products has supported growth in underlying subscription revenues.
Revenue for fixed income, derivatives and other was recorded as £318 million, up 18.2% YoY. Compared to Q4 2023, it rose by 8% from £294 million.
The data and analytics division saw a 0.9% YoY increase in revenue, from Q1 2023’s £990 million to Q1 2024’s £999 million. The firm attributed this growth to Credit Suisse-related cancellations and the impact of an enterprise-wide LSEG Data Agreement (LDA) with a major bank, which it stated will provide multi-year growth and improved long-term value, after an initial revenue reduction.
On the results, Schwimmer commented: “We have started the year well, delivering another quarter of solid growth consistent with our plans. The rapid pace of innovation continues, with new product launches across LSEG throughout 2024.”
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