Michael Shashoua: The Shape of Things to Come

The International Securities Association for Institutional Trade Communication (ISITC) recently celebrated its 20th anniversary, and on this occasion, has begun thinking about what the next 20 years might hold for financial services industry operations, in data as well as in trade messaging.

The organization continues to push the adoption of the ISO 20022 messaging standard, which, after several years, still has further to go for widespread or universal acceptance. “Although we’re not as far along with implementation as I would like, when our members are ready to migrate, we’ll be there to help,” says Steve Goswell, a past chair of ISITC and a principal consultant for Incept5.

Also, with its recent establishment of a regulatory working group, ISITC signaled its intent to be involved in the legal entity identifier (LEI) and global regulatory efforts that affect messaging and communication standards for its members.

Collaboration and Cooperation
In the meantime, ISITC is pursuing collaboration and cooperation with other industry associations including ISITC Europe, its sister organization; FIX and the Asset Managers Forum (AMF), according to Goswell. ISITC’s current chair, Jan Snitzer, announced plans for a regulatory working group that will bring the organization a greater role in the conversation about the LEI and the European Market Infrastructure Regulation (EMIR). ISITC also plans to address international expansion, middle-office data issues, derivatives concerns and advances in data technology, according to Snitzer.

Globalizing
The prevailing wisdom, as ISITC’s members see it, is that anything that is done in data and messaging standards must be global. “The evolution of technology and the availability of information for people around the world to share has created a wellspring of activity and opportunity that will continue globalization dramatically, despite the economic volatility, economic crisis, protectionism and regulatory pressures that we all face,” says Susan Skerritt, executive vice president, business strategy, development and investment financial markets and Treasury services at BNY Mellon.

ISITC’s member firms will need to have more interaction internally as well, according to Skerritt. “The people involved in cash management and trade tend to be in different parts of the organization within an importing company—procurement for trades and the treasury department for cash management,” she says. “That’s changing, but they still are in separate parts of the organization. That aspect will continue to be a hurdle. Given the shift toward open account [away from letters of credit], there are fewer people who are experts just in the trade arena.”

Integrating staff should be complemented by integrating systems, she adds. “With the evolution of supply chain management, in part to address the move to open account, there’s more integration, and there are more banking institutions that are combining and providing technological tools that link cash management and trade,” she says. “It’s inevitable. It may not be tomorrow but we will see more convergence between those two areas.”

Overarching Key
The overarching key for ISITC members should be, Skerritt says, that while the industry has to work “to address the regulation and respond to the regulation, it should continue to think about ways to innovate and do things in a way that meets our clients’ needs.”

As a central gathering place for many of the industry’s largest firms, with an organization already in place through several working groups covering regulation, derivatives, and standards and market practice technologies, ISITC is seizing the initiative to shape industry operations for  the long term.