Three Takeaways from FIA Expo 2023
FIA Expo is a high point of the year for the futures and derivatives industry. It doesn’t have the glitz and glamor of FIA Boca, held in March each year, or the international appeal of IDX, presented in London in June, or the Asia Derivatives Conference, hosted in Singapore in November, but it is the largest gathering of the bunch and it delivers a real “meat and potatoes” look at the industry. FIA has staged the event as late as November in years past but they moved it up to the first week of October, for 2023 and, in the process, gave all of the attendees a taste of fine Midwestern Fall weather, a condition that is sure to devolve into wind, rain and cold all too soon.
BornTec was in attendance at the trade show and events at FIA Expo and has a few observations and takeaways to share:
- FIA has been busy. The week before Expo was a busy one for FIA, as they released two important research papers, one with recommendations on how exchanges should proceed with regard to exchange volatility control mechanisms and the other a report with findings relating to the ION Markets ransomware event in January of this year.Volatility control mechanisms (VCMs) are tools employed by exchanges in times of market stress and may include pre-trade price bands, daily price limits, and other tools used to interrupt trading in times of market stress. In brief, FIA encourages as much transparency as possible for VCMs and, as such, once again displays their leadership as a source of improving market practices.
It’s a little less clear-cut with the ransomware report. The issue is more pervasive and complex. The FIA report seemed to lack succinct recommendations outside of performing further study due diligence. Having said that, it is clear much more work needs to be done in this area and we look forward to the FIA exhibiting clear leadership to ensure that effective results are forthcoming. Banks, FCMs, and other industry participants report that internal work has begun to build processes, meaning that this issue won’t be going away anytime soon, if ever.
- Out with crypto. Crypto was already on its way out last year at Expo, as FIA staff scrambled to black out FTX’s sponsorship mentions on presentations and signage, and it was virtually non-existent on the trade show floor this year. In the Innovators Pavilion, the “shark-tank” competition that highlights emerging technologies, only one firm was crypto related and that firm, Crossover, is essentially a hyperfast platform that most closely replicates prime brokerage. Crypto still has a place in the industry, particularly when it comes to tokenization in areas like repo, but the shine is largely off of the crypto apple. In fact, the beginning of FTX’s Sam Bankman Fried’s fraud trial coincided with the first day of Expo.
- Up with AI. AI, on the other hand, is all the rage. For example, five of the ten firms in the Innovation Pavilion are powered by AI and the two winners chosen by the panel of experts, runner-up CodeComplete and overall winner ClearDox, are AI-based: CodeComplete as an AI-engine for writing proprietary code and ClearDox for the extraction, management and utilization of information in written documentation in the energy, agriculture, and metals markets. ChapGPT captured the public’s attention when it burst onto the scene last November but, like the Alien’s first emergence in the iconic space-horror film of the same name, AI has actually been gestating for some time. There’s a lot more to come.
Overall, FIA Expo revealed an industry that is strong and dynamic. The past few years have been a challenge and incidents like the ION Markets ransomware event point to a complicated and challenging landscape but, overall, the derivatives industry is in good shape.
What are your thoughts? Please get in touch with any comments or questions.
BornTec is a Chicago-based technology solutions firm that provides tools to support surveillance, risk, compliance, and regulatory reporting functions in financial markets. Contact us for a demo of our data resilience solutions.