Much has changed since last year’s WFC in June 2022. From the regulatory point of view, policy makers such as the European Commission, ESMA, European Central Bank, and the US CFTC came to shed light on new regulations and initiatives to protect the investors and ensure fair and efficient markets amidst the new challenges arising from the digitalization, ESG and geopolitical instability.

During the two and a half days of discussions, they brainstormed and exchanged views and ideas on the role CSDs will play in ESG and sustainability strategies, the extent to which CSDs have to embrace technological innovation such as Blockchain and DLT, and the impact of the shorter settlement cycle, to mention but a few. The WFC provided an excellent platform to assess the current situation of the industry and shed light on its future trends, where and how should it be heading.

As in previous editions, some of the main SIX heads participated in different panels: Javier Hernani, Head Securities Services, participated in a senior panel about the long term vision for the global CSD industry; Jesús Benito, Head Domestic Custody & TR Operations, did it in another senior panel dealing with further consolidation and growth of EU FMIs; Francisco Béjar, Head CSD Services, discussed next steps for the CSD engagement on sustainability; Jesús Sánchez, Head Settlement Services, debated how to improve settlement efficiency after the implementation of diverse European regulations; and Alexandre Kech, Head Digital Securities, SDX, moderated a panel about CSD digital transformation and DLT MI pilots.

Since we do not have a planet B, ESG and sustainability topics are high on the agenda, and CSDs have a crucial role to play. CSDs are very well positioned to have all ESG-related data. However, standardization and taxonomy are needed in order for CSDs to analyze the ESG data and report it. CSDs need to provide concrete products and tools and ESG data should be apart from the trading data.

Throughout the history, technological innovations have changed many aspects of human life, if not everything. Digital innovation is not an exception. Accelerated by the pandemic, digitalization has changed many business models and processes, customers’ behavior, needs and expectations, the way people and organizations communicate, engage and organize themselves. It could be a paradigm shift. When it comes to specific new technologies, such as blockchain or DLT, the ultimate benefits and potentials are yet to be explored. Some financial infrastructures, such as SIX SDX, offer their clients the option to be in both traditional and blockchain environments. Many participants agreed that these two worlds will coexist for the foreseeable future.

Since the US market announced its move to T+1, there has been much discussion around the world about shortening settlement cycle. However, it is a well-known fact that CSDs are able to provide T+1 and even T+0 settlement as of today. It was never a technological issue, but the markets’ structure and their needs. Maybe it will change with the digital technology and we will enter a new era of shorter but efficient securities settlements.

Everything in this life is subject to change, including opportunities, risks, and challenges. A number of events have tested the resilience of CSDs in the past few years: pandemic, political threats, wars, sanctions, cyber-attacks — just to name a few. Nevertheless, as a financial market infrastructure, CSDs have proved to be resilient and robust. In order to continue to do so, in addition to the challenges arising from digitalization, ESG and geopolitical changes, a number of issues need to be addressed, including standardization, interoperability and connectivity. But most of all, collaboration is key. We live in a highly integrated world facing global issues which require global solutions. Therefore, the importance of collaboration and cooperation was stressed and highlighted on numerous occasions by the panelists and participants.

The next WFC will take place in Almaty, Kazakhstan in 2025. In two years’ time, CSDs will meet again to address the challenges and opportunities of the time, celebrate its achievement and share the lessons learnt. Thank you Prague, see you soon Almaty!