Shanny Basar talks to Dr. Stephanie Eckermann, Head of Strategy & Controls, Pre- & Post-Trading at Deutsche Börse Group, about transforming Clearstream, preparing for digital assets and the importance of sponsors in her career.
Dr. Stephanie Eckermann joined Deutsche Börse Group in May 2020 after more than 18 years at consultancy McKinsey & Company. She took on the Frankfurt-based role as Head of Strategy & Controls, Pre- & Post-Trading and is also a member of the executive board at Clearstream Holding AG, Deutsche Börse Group’s central securities depository.
When Eckermann was approached by the leadership team at Deutsche Börse Group and Clearstream, the post-trade services business, she was convinced they had a common understanding of the future.
Clearstream has €16 trillion in assets under custody and provides post-trade infrastructure for the Eurobond market and services for securities from 59 domestic markets worldwide through its international central securities depository in Luxembourg. Subsidiary Clearstream Banking AG is the German central securities depository, providing post-trade infrastructure for the country’s market while offering access to a growing number of international markets.
“I consulted on corporate and investment banking and institutional asset management and over the past 10 to 15 years there has been a trend to outsourcing ecosystems,” she said. “I was just thrilled to belong to a company which takes on that business model and is also in the middle of digitisation.”
Her role is twofold – overseeing strategy and transformation for Clearstream with her management team, but also owning finance and some of the control functions for the business.
“There was great alignment between the upcoming changes in the industry and opportunities for Deutsche Börse and Clearstream,” she added. “Deutsche Börse is quite exceptional in the way that it has a horizontal model with Clearstream being integrated – this is a very strong starting point in light of the industry disruption to come.”
Deutsche Börse Group’s structure covers the lifecycle of trade from pre-trade data and analytics, to trading and clearing, to post-trade and this is reflected in Eckermann’s other roles within the group. She is a member of the shareholder committee at Qontigo, the group’s financial intelligence business. Qontigo was created in 2019 to combine Deutsche Börse’s indices with acquisition of Axioma, which provides tools for portfolio construction and risk analytics.
The group also acquired an 81% stake in Institutional Shareholder Services (ISS), the governance, ESG data and analytics provider in 2021 and Kneip, the European fund data specialist based in Luxembourg, this year. Eckermann is a member of the board of directors of both these businesses and Eckermann believes all her roles fit nicely together and allow her to connect the dots.
As a consultant Eckermann changed context on an ongoing basis which required staying flexible and being able to modify perspective, in addition to having the requisite analytic and problem-solving skills.
“Having seen a lot of organisations makes you understand that Clearstream has a great culture of being very open, international and focussed on innovation,” she said. “We are revisiting how to support industry clients with the Clearstream value proposition as we are not the “classical” CSD anymore but have a much broader service offering.”
For example, the group is working on environmental, social and governance (ESG) data. This involves collecting data on ESG ratings and providing analytics on funds and ETFs but Eckemann explained the business is much broader. For example, banks and market participants in the European Union will need data to perform climate stress tests on their liquidity and credit risk.
“In the long term, public capital markets play a crucial role in providing efficiency and transparency, supporting and financing the ESG transformation of the real economy,” she says.
Eckermann described Clearstream Securities Services as having a very broad range of services based on holding assets under custody and settlement, such as banking and collateral management, which also requires a lot of data.
Retail and wealth management are digitising and Eckermann explained that this disruption means asset and wealth managers are getting much closer to the end-customer. As a result Clearstream aims to support them in their B2B business models with its Fund Services portfolio while clearly staying a B2B provider.
Clearstream Fund Services has evolved into a separate business and has been reported as a separate financial segment of Deutsche Börse Group for some time. The Fund Services business is being separated into an independent legal entity which management believes will give the business the required strategic focus and regulatory framework to best serve the needs of the growing asset management client base.
“We also see strategy and regulatory framework diverging in the funds industry, so there needs to be a different investment in digitisation and data,” added Eckermann. “That is why we decided to further delineate these two businesses and that is the transformation we are currently in.”
She notes Clearstream Fund Services has contributed significantly to Compass 2023, Deutsche Börse’s growth strategy, and also provides a different profile of being a very stable business and growing at between 3% to 5%. Clearstream contributes roughly 25% of the Group top line and Eckermann sees that continuing..
“The transformation programme is a huge challenge but so far it has worked and there is also great commitment of Deutsche Börse Group to support that change,” she said.
Eckermann explained there is a need for a holistic regulatory framework around digital assets and compliant and trusted infrastructure that can be accessed by everyone.
“That is where we see a role for Clearstream,” she added. “We won’t do that in an isolated space, but with important partners in the industry to really cater their needs.”
The group is investing in digitisation of legacy technology and, at the same time, is building new infrastructure. Eckermann believes the best example is D7, the new digital post-trade platform which will form the basis for digital securities. The cloud-backed and distributed ledger technology-ready platform will enable market participants to digitise their financial products with continuing access to both existing central and distributed infrastructures and markets.
The launch of D7 was announced in October last year as paving the way for same-day-issuance and paperless, automated straight-through processing for the whole value chain of issuance, custody, settlement, payment and asset servicing for digital securities.
The platform is being developed in collaboration with technology partners Digital Asset and Microsoft, as well as R3 and VMware and will be rolled out in phases until 2024. Clearstream is also working with financial institutions including BNP Paribas, Citi, Deutsche Bank and Goldman Sachs.
Christoph Böhm, CIO/COO and member of the Executive Board of Deutsche Börse, said in a statement at the time: “We are creating the next generation of future-proof financial infrastructure for the digital era, delivering cutting-edge technology and services, and paving the way for the transformation towards digital markets for our industry.”
In June last year Germany’s Electronic Securities Act removed the need for paper certificates, established a legal basis for a central registry for electronic securities and added a new license category for maintaining a crypto securities register.
Subsequently, Clearstream launched a central register for electronic securities in Germany in December 2021 which supported the first dematerialised issuances conducted by Deka Bank as well as MünchenerHyp in co-operation with DZ BANK. The central register connects directly to T2S, the European post-trade infrastructure, and simplifies data flows for listing, trading and settlement.
“We are lucky to sit in Europe as Germany has passed a regulation on dematerialised securities more than a year ago,” says Eckermann. “Digitised securities have a regulatory framework that we work with in Frankfurt and Luxembourg and that we think other European countries will follow.”
Eckermann earned her PhD at Goethe-University, her Diplom-Kauffrau at European Business School and her MBA from the University of Pittsburgh.
She says, “I finished my Masters in 2001 before the financial crisis and the Euro crisis, when finance was the hottest thing to do. I stayed in consulting because it was super interesting as after 2010, wholesale banking became a world where liquidity suddenly had a price.”
Learning about treasury and capital management, and the combination with the people, made Eckermann stay in finance.
Her advice to women who want to work in finance is that it always helps, in terms of personal happiness and excitement, to work for a company where the people and culture fit. Networking and not shying away from looking for sponsors, and leveraging those sponsors, is also very important.
“The sponsors can be female or male, but it is important that it is not just one and it is diverse,” she adds. “It is a pattern you need to put together.”
Eckermann puts her success down to having great sponsors but also due to always having the curiosity to learn and see more.
“I think it helps if you stay authentic, very open and personal,” she says. “A lot of people follow how I manage my career and family, which is not always easy, but it is a model they can see and that is a huge value.”
The group believes the ESG side is more important than ever for employees to identify with the company and it has an ambitious target of reaching net zero by 2025. “As an infrastructure provider we also bring together more than 2,000 international financial institutions and I think that’s also a very important piece of the story on the talent side,” says Eckermann.
She sees a lot of diverse talent joining the financial industry but thinks that the issue, as in many other industries, is the glass ceiling and lack of female leaders, which needs to change. Eckermann highlighted that ISS, led by President and CEO Gary Retelny, has a female ratio which is higher than 40%.
“The ISS CEO has set the tone from the top and has 40% women in his direct leadership team and you can really feel the difference,” she adsd. “At Clearstream, we have a 21% female ratio in leadership, and some senior female leaders but we still have a way to go.”