What are the drivers behind DTCC’s adoption of new technology?
As an industry-owned utility, The Depository Trust & Clearing Corporation (DTCC) is an integral part of the financial system and so has an obligation to continuously improve risk management and cost efficiencies for its member firms and the industry as a whole.
Furthermore, the entry of technologically nimble financial technology companies, unburdened by legacy systems, has meant that the more traditional financial services providers have had to innovate in order to remain competitive.
Finally, a new generation with an entirely different mindset is joining the financial services workforce. Many are joining with degrees in science, technology, engineering and mathematics subjects, and hence have an understanding of the latest technologies and their application to post-trade processes.
We need to be able to respond to these new realities, and leveraging technology can help us to achieve this.
How is the financial industry utilising the cloud?
Ever since the computer was introduced to the financial industry in the 1950s, firms, including most market infrastructures, built, maintained and housed mainframe and distributed server technology in their own data centres.
Today, the cost and value of cloud computing technology is challenging those long-standing justifications for provisioning or sustaining individually-owned and managed data centres. Our recent whitepaper highlights that public cloud operations have become so robust and sophisticated that even the biggest data centres cannot possibly match the capabilities of the largest cloud vendors with respect to performance, security, cost and scale.
What is DTCC’s cloud computing strategy?
DTCC has been modernising its technology capabilities, which has included expanding its solutions delivery by using externally hosted platforms, such as the use of public cloud vendors. We are actively exploring the use of the cloud for core financial transaction processing and intend to strategically expand and leverage cloud technology across our services and applications, where it can add value for DTCC and for our clients.
Can you share some examples of DTCC applications or services that have moved to the cloud?
At the end of 2012, we built our real-time price dissemination application for our Global Trade Repository in the cloud. Since then, we’ve moved select internal systems to the cloud to take advantage of the reduced costs and the increased efficiencies it offers. We are also looking at new DTCC services and our existing portfolio to identify the best opportunities to move those to the cloud.
What has been the reaction of regulators regarding plans by financial firms to move services to the cloud?
Regulators globally have long had existing control requirements for third-party service providers, and they have extended those requirements to cloud vendors who must meet compliance obligations. Regulators have also suggested best practices for the adoption of new technologies by market infrastructures, including due diligence, risk assessment compliance and continuous monitoring. A key requirement of any DTCC initiative is adherence to regulatory frameworks and establishing the requisite controls to ensure we operate in a compliant way. We are working closely with our cloud vendors to establish alignment with relevant regulations and policies to ensure that everyone understands the implications of shared services utilities running critical transaction processing applications on the cloud.