Eugene Grygo, chief content officer for FTF News and Financial Technologies Forum (FTF), will be speaking at NICE Actimize's "Meet the Press" industry panel at its upcoming ENGAGE Client Forum on November 8. We met with Eugene "virtually" ahead of the event to get his thoughts and forecasts for 2018 in regulatory, financial crime and technology trends, along with a profile of what types of stories he likes to follow in his editorial coverage.
Q. NICE ACTIMIZE: What is your forecast in terms of key trends for 2018 in your respective coverage areas?
Ongoing regulation will see a lot of focus in the year ahead. This is not sexy perhaps, but I think a big set of key
trends will continue to emanate from Washington, D.C.. There will be a lot of pain and reverberations from the Republican tax changes, the new Fed chief, the direction of regulation, and market impacts from foreign policy.
Depending upon the fine print of any new legislation, there is a great deal of anticipation about
tax relief. In particular, Wall Street firms would like to see tax relief that jumpstarts the economy coupled with big investments in the U.S. infrastructure. How the Trump Team and Congress carry off this balancing act will impact Wall Street firms, and is making them nervous.
Wall Street firms are concerned about the choice of the
new head of the Federal Reserve and whether regulatory reform for U.S. markets will slow down. I think that some regulatory flows will slow down, but the big news may be that the regulators will start to push the superiority of the U.S. markets over other markets. This may create new friction among global regulators and could halt harmonization.
If foreign policy engagements take a dark turn, and war breaks out in North and South Korea, for instance, then global financial markets are likely to pull back and set off a recession. This would mean that many advances in (and purchases of) cutting-edge financial technology would be put on hold or frozen.
Q. NICE ACTIMIZE: Speaking of technology, where do you think the focus will emerge in the year ahead?
A. GRYGO: I think that more trends will come from a combination of cloud, artificial intelligence (AI), robotics, analytics and overall stronger IT systems applied to big piles of data. For instance, combinations of these technologies could jolt anti-money laundering (AML), KYC, financial crime-fighting and cyber-security systems.
Q. NICE ACTIMIZE: What do you think next year's disruptors are going to be? And what do you think financial services organizations will be looking to focus on next year?
A: GRYGO: I think the major unexpected developments for 2018 will stem from the next stages of development from the disruptors in 2017. The key areas to watch include:
Blockchain Gets Real
I foresee many more practical applications of
distributed ledger technology (DLT) for securities operations. I think it will be coupled with competing blockchain efforts. We may even see the start of blockchain/DLT battles that will resemble the operating system and web browser wars from past decades.
owever, I think the bravado will settle down and blockchain groups could adopt a business model similar to the streaming online TV services that are hitting their stride now for consumers. A firm may need to subscribe to multiple DLTs for various services much like consumers do for their TV binging fixes. This will have implications in the securities industry for the major service providers; they will have to sort out a new business model or will start their extinction.
More Leapfrogging Over Manual Systems
Robots & AI: I think there will be a greater acceptance of
robotics and AI technologies that will translate into more automation of securities operations that were once totally or partially manual.
Margining and Collateral: As more offerings for collateral and margining management hit the market, they will help securities firms, especially buy-side firms, leap over manual systems that have been in place for too long. For instance, there has been a surge in tri-party collateral management offerings that could pave the way to complete automation.
Cloud Computing: With so many systems moving to the cloud, the embrace of automation becomes easier for many firms and allows them to move away from manual systems.
Q. NICE ACTIMIZE: What are your publication's hottest topics right now? What will continue to be the focus areas?
A. GRYGO: Global regulatory issues still dominate our coverage:
- Collateral and margining management, the Volcker Rule, stress tests and capital retention requirements will continue to put strains on banks and other financial services firms. The tighter internal controls are happening just as external searches for liquidity are getting more difficult.
MiFID II and the research unbundling issue will come into focus as U.S. firms and regulators sort out how to comply with this requirement.
- The Consolidated Audit Trail (CAT), an uber-database of market activity may or may not launch in 2018 depending upon SEC Chairman Jay Clayton and Rep. Jeb Hensarling (R., Texas), chairman of the House Financial Services Committee, who is lobbying Clayton for a delay.
- Speaking of Mr. Hensarling, his
CHOICE legislative push may get a wider spotlight and may spur efforts to replace key parts of Dodd-Frank. Unlike the Obamacare replace and repeal, the CHOICE Act has been percolating for a few years.
Q. NICE ACTIMIZE: What types of stories do you each like to cover the most, and why? What gets you excited to start typing?
A. GRYGO: The stories I like best are the ones that I can quantify the most. Like a good scientist, I prefer to gather as much evidence and new information as I can for news and feature stories. I can then dive into the data to provide as full a view of the situation as possible. Facts and analysis can provide an arc for a story, and, if enough homework has been done, there may enough mystery left to allow readers to draw their own conclusions. Too many news stories now are heavy on speculation and weak on factual support.
Thank you, Eugene. We look forward to learning more from you at the 2017 ENGAGE Client Forum.