The financial crisis and economic slowdown is sure to prove problematic for Swift, as it faces declining volumes and pressure to drive down costs from its users. Mike Foley, CEO of vendor Peterevans, ponders this and other issues that may crop up during Sibos next month.
“As signalled in the Swift 2008 report, ‘the global slowdown has meant a year on year decline in transaction volumes across the industry’. During the next 12 months, this will put pressure on Swift’s commitment to halve prices by 2011,” says Foley.
Swift has been talking up its endeavours to reduce costs for its users for some time and, year on year, announces rebates for those using the network. This year, however, the proposition is somewhat more difficult, given the economic situation and its impact on volumes across SwiftNet. In its 2008 annual report, Swift chairman Yawar Shah noted the downturn in the market and decline in transaction volumes and indicated that the industry body is reassessing its business model in light of these developments.
The focus on cost reduction is likely to be a common theme throughout the conference week in Hong Kong, especially given that this year’s traditional end of Sibos party has been cancelled. Attendees and exhibitors have noted that the location of this year’s conference may drive down the number of delegates and Foley is no different. However, he notes that his own firm decided that Sibos was an important event at which to be present: “The state of the market will clearly have an effect on the budgets available, in our case, we decided that we should continue our ongoing commitment to Sibos, which for us is one of the key dates in the calendar but have focused hard on ensuring that the resources deployed are most effectively used.”
The vendor will, in fact, be launching a new product at the show focused on the area of central counterparty clearing, says Foley. “We have been working with some of our clients who are major players in this area, one of whom has been trialling this new functionality during the summer,” he says.
Counterparty risk and risk management in general are likely to be a theme present during the sessions and on the exhibition floor, if recent vendor and bank interviews on the subject are anything to go by. Foley concurs: “After the experience of last year’s Sibos, when external events drove the agenda, the hot topic must be the one that has dominated the past 12 months and that is the management of risk. Counterparty risk in all its forms is firmly on everyone’s agenda, in fact the first securities session this year is entitled ‘Can central counterparties save the world?'”
Obviously, the setting will also bring exhibitors into contact with delegates from the Asian region and Foley is keen to gain some traction in this market. “Asia is a very exciting market opportunity and still potentially an area for future high growth. In contrast to more mature markets such as Western Europe, which have a large number of incumbent legacy systems, Asia is well positioned to leapfrog the established competition by exploiting new technology,” he says.