BornTec Insights: Three Takeaways from FIA Boca
Generally referred to simply as “Boca”, the annual international futures industry conference hosted by the Futures Industry Association (FIA) each Spring is traditionally a time for the leading luminaries of the global derivatives community to gather and assess the state of the industry. Boca was back to full steam this year following the Covid-19 pandemic and renovations to its longtime home at The Boca Raton and the issues most addressed revealed a healthy and dynamic industry that also has its fair share of challenges. Here are three issues that were topics for conversation at Boca.
1. What’s next for digital assets?
Executives from cryptocurrency exchanges were flying high in 2022 but were in somewhat short supply this year as plunging prices, failed businesses, and, in some cases, criminal charges combined to clip their wings. Crypto is still of interest, however, and many discussions centered on how digital assets are likely to be adopted in the years ahead. While there may be less talk and activity right from the trading side of the business right now, the subject is a hot one on the legal and compliance side of things. It’s on these foundations that future digital assets will be built.
2. The “ity” twins: profitability and volatility
In markets, profitability and volatility often go hand in hand and that is proving to be true in 2023. A multi-year period of low interest rates was a challenge to the futures commission merchants (FCMs), who earn more money on deposits held when rates rise. Now, banks and FCMs are enjoying their best year in some time due to both rising rates and higher volumes. However, volatility has risen with recent events like the failure of SVB and First Republic Bank, leading to greater risk, and future events such as the U.S. debt ceiling standoff may bring more of the same.
3. Boosting Operational Resilience
One of the recurring themes of the conference this year was around operational resilience. This was covered by multiple panels and it was often a topic of general discussions over a coffee or cocktail. The pandemic-induced convulsions of March 2020 started the conversation and the recent ransomware event at a significant industry software vendor brought the problem into sharp focus. The ransomware event has forced a reckoning of sorts and further examination and analysis is likely to lead to higher standards for operational resilience. Many in the industry are looking for additional functionality to come along with resilience increases in order to defray some of the expected costs.
Lessons from Boca
The international derivatives industry provides vital products and services that help manage risk, enabling more certainty and flexibility for all businesses. While the industry has a remarkable history of innovation and growth, there are always challenges to be addressed. The major ransomware attack in February 2023 is a reminder that vigilance is a constant requirement and that new standards and procedures should be adopted to address both current and future threats. BornTec stands ready to assist in those efforts, ensuring the strength and integrity of these critical markets. To learn how BornTec can help your firm address your operational resilience challenges, contact us at resilience@borntec.com