Anne Giviskos, Chief Risk and Compliance Officer at Euronext talks about how compliance has been transformed in the post 2008 world and the lessons that can be applied to coping with Covid-19.
Will the MiFID review have any impact on market infrastructure?
There are key topics in review. The first is on the market data side regarding reasonable commercial basis and related disclosures. The second relates to the discussion on consolidated tape in Europe. The other issues we are keeping our eyes on are the share trading obligation as well as the pre-trade transparency waivers. At the moment there are certain grey areas because of Brexit and the issues of equivalency between the European Union and UK. Establishing a level playing field on the tick size regime was an important evolution post MiFID II, so that systematic internalisers and exchanges apply the same rules.
What regulation in general over the past ten years has had the most impact?
We have always had internal processes, oversight and monitoring in place to ensure that we are compliant with regulations. However, MIFID II had the most far-reaching impact and required a large change programme including adapting our trading system, including market data and building in controls. The additional reporting, and the volume of data required to meet the various regulatory technical standards was a significant undertaking, not just for Euronext but for the industry as a whole.
And what about other regulations?
The General Data Protection Regulation and EU Benchmark Regulations (BMR) have also had an impact from an industry perspective. (The latter aims to improve governance and controls over the benchmark process, including the quality of input data and methodologies used by benchmark administrators). The BMR requires additional reporting. Euronext’s blue-chip indices are considered significant within the definition of the regulation, and we have a strong franchise of other indices (over 500), particularly in the ESG space. Euronext has deep experience in governance, creation and related maintenance of benchmarks. We have a benchmark oversight committee in place that I chair.
Given the regulatory landscape, the compliance function has changed enormously over the years – how has it changed in a market infrastructure context?
The focus for us has been on end-to-end processes and it has also meant having the right people in place. We have supplemented our teams with people who have specific knowledge of the regulation and have dedicated interlocuters who liaise with the regulators. We work closely with the regulators during implementation in order to have real-time feedback and clarity on their expectations. Euronext also has unique access to a college of regulators, which helps to streamline communications concerning the implementation of different regulations and also provides a central forum where we can have discussions and input.
There are several new developments at Euronext in terms of new markets such as Ireland and Norway as well technology and services such as Optiq? How does that impact risk and compliance functions?
Last year, Euronext announced its new three-year strategic plan to continue to diversify the business through organic and inorganic growth. We have demonstrated our ability to expand in 2018 and 2019 related to acquisitions of Dublin and Oslo Bors respectively.
A key component of these migrations is moving to our proprietary trading platform Optiq, which launched updated platforms for market data, cash equities and derivatives, and completed in November 2019. The result is that Euronext cash and derivatives markets are now operating on one platform, which from a compliance perspective means that we have a consistent level of control and centralised processes within one model. Optiq has demonstrated its robust nature throughout the unprecedented high volume/volatility environment we are experiencing as a result of the Covid-19 crisis, again supporting our compliance with related regulations, keeping the markets open and managing risk in peak periods, including effective circuit breakers.
We also acquired 66% of Nord Pool (the second largest power market in Europe) and are also looking to expand Euronext FX into other products and geographies, including Singapore.
There are so many solutions on the marketplace to facilitate compliance, what are the challenges in integrating them?
There are a significant number of regtech solutions regarding risk, compliance and control on the market. One of the questions we ask is how can we leverage the tools in the market to optimise our efficiency and add value. For compliance, market abuse and post-trade analysis are critical. We are exploring things such as artificial intelligence and how we can use technology to support and build more efficient and effective outcomes. In addition, we leverage InsiderLog to monitor compliance from an issuer perspective. It has helped to streamline the process. It is important to remember that technology is an enabler and will not solve all the problems, but if it is leveraged in the right way then it can facilitate analysis, improve data quality and provide us with a better end-to-end processing. Our team is critical in this approach. You can’t fully automate experience.
In terms of choosing the right solutions, we are pragmatic and look for a fit into our organisation. We are growing so we also want technology that will grow with us. Security is critical and we have to ensure that the right cyber and information security framework is in place before we make a selection. We have deep internal experience and consult experts as needed who help us choose the right tools.
There is a lot of emphasis on the value that machines can add. What about people?
Administration can be a burdensome task and technology frees people to add the value. For example, with post-trade analysis, we can focus on the meaningful cases. It enables the team to better support in preventing market abuse, and to have more time to be proactive with stakeholders and plan for the future.
Looking ahead what do you think are the biggest challenges as well as opportunities?
Covid-19, while a challenging moment, should be leveraged as an opportunity. We have led the organisation from a risk and business continuity perspective to date, and we have learned about ourselves, our organisation and the environment around us. We will all be different after this, change is happening. We will seize the moment to adapt and become stronger.
From a compliance perspective we will continue to integrate the acquisitions we have made. One of the good things is that the implementation of multiple significant regulations has given us different perspectives on how we can think and improve our compliance programme.
Biography: Anne Giviskos is the Chief Risk and Compliance Officer at Euronext NV with teams in Europe and the US. She is a member of the Oslo Bors VPS Board and Interbolsa Board, both Euronext subsidiaries, the Chair of the Euronext Benchmark Oversight Committee and member of the Risk Committee of LCH SA. Giviskos has over 20 years of experience in financial services and technology including nearly 15 years at NYSE/NYSE Euronext/ Euronext. She began her career at PricewaterhouseCoopers in the assurance function. She graduated from the University of Michigan with a Bachelor of General Studies, with a focus on psychology and business.