GFF Podcast

Post-Trade Innovation and the Future of Market Infrastructure

• Clearstream • Season 5 • Episode 8

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0:00 | 47:11

On this show, Eva-Maria Keller and Thomas Daniels (Clearstream) join Jason Brown (Google Cloud) for a conversation with hosts Andrew Keith Walker and Christian Rossler.

Together, they explore post-trade platform initiatives, AI tools, and blockchain-based collateral management. As the ECB begins accepting digital collateral issued in CSDs, Clearstream, together with its partners, is positioned to shape market infrastructure, securities issuance, lending, and post-trade services well into the future.

Opening And Guest Introductions

Andrew Keith Walker

And welcome back to the GFF podcast. Yes, it's March. And hopefully, where you are, the first signs of spring are starting to appear. Although here in the UK it's hard to tell because it hasn't stopped raining for about three months. However, someone who always brings the sunshine with him, of course, is uh my co-host on the show, Mr. Christian Russler. Christian, welcome back.

Christian Rossler

Oh, Andrew, that's very kind of you. We have sun today, so it's actually true for today. Thank you for uh having me. It's great to be back.

Andrew Keith Walker

It's good, and of course, back from a very successful 30th anniversary celebration for the GFF Summit. And of course, along with that, the Central Bank and Sovereign Wealth Fund Forum as well. How did it go?

Christian Rossler

Well, you were there, so I think I don't need to tell you, but um it was a success, and um, I think we got very great feedback, and uh it's spot on with uh what we're having on the show now because it's actually I could say this podcast is the sequel of the Central Bank and Sovereign Wealth Fund Forum, because as you were there when I men Raboni-Rousseau from the ECB announced that the uh ECB will in the future accept um DLT assets which are in custody at the CSD. And there we are.

Andrew Keith Walker

That's right. And of course, DLT assets uh issued uh by CSD, uh, that means that we are getting into the territory of today's show, the digital CSD, the evolution of digital services. Yes, exactly. If you're old enough to remember going to a conference where they weren't talking about blockchain, uh, you know, uh like we are here, then finally, uh the 15 years of talking about blockchain, talking about digital issuance, talking about uh digital services and atomic settlement, that those days are finally here.

Christian Rossler

Yes, and and and uh so as as the ECB put it, I mean, they embrace, you know, um the uh the path towards innovation, and uh, and so do we with the digital CSD.

Andrew Keith Walker

That's right. And joining us to talk all about these uh issues and unpick the sort of threads, the developments, and the challenges ahead. We have three experts in the field, starting with Eva Maria Keller, who is the head of data channels and digital operations. Uh clear stream. Uh Eva is joined by Thomas Daniels, who is the client connectivity and data product development lead. And we are also delighted to welcome to the studio someone from Google Cloud, um, who I was gonna say based in California, but of course, uh Jason, uh who's joining us, Jason Brown, uh, who's a consultant uh data uh analytics expert and of course securities lending expert as well, is joining us from Zurich, where hopefully it's also sunny.

Christian Rossler

It is. I was in Zurich yesterday, so indeed it is.

Why Digital Still Has Paper Edges

Andrew Keith Walker

Okay, that that's great. Okay, let's introduce our guests. Uh, if you don't know them, uh we're going to uh dive in with just a tiny bio for each because we need to get into the juicy digital story. So if you don't know Eva Maria already, and I'm guessing if you work in anything to do with uh data uh and clearstream, you do. Uh Eva is uh the executive director, head of data, channels, digital operations at uh Clearstream. Eva joined ClearStream in 2004 as a pricing analyst and then moved to the uh Deutsche Borsa, where she specialized in uh regulatory and compliance services. Uh, she had a run as the chief operations officer at Impendian Systems and then moved on to be a project manager uh in uh the Deutsche Bossa, uh looking at business strategy and innovation. Uh, moving then into, of course, Global Issuance Services, uh, Clearstream, uh, executive vice president of Issuance Services and Business Transformation, and now head of data channels and digital operations. So uh an expert in regulation and the nitty-gritty of uh turning uh paper operations into digital. Ever, welcome to the show.

Eva-Maria Keller

Thanks a lot, Andrew. We're happy to be here.

Andrew Keith Walker

Joining Ever is Thomas Daniels, who is the client connectivity and data product development lead for securities services clear stream. Prior to that, he was at UBS uh working with their data mesh initiative, uh IT uh market regulation, and also delivery lead in uh lifecycle management for tools there for five years. Prior to that, he was at Deutsche Bank, uh, where he was uh vice president of data governance and standards as well. And of course, before that, he was also at UBS as a reference data program manager. So a life spent deep in data and uh delivering digital services to clients. So, Thomas, welcome to the show.

Thomas Daniels

Pleasure, Andrew. Thanks for the invite. Very much looking forward to the discussion.

Andrew Keith Walker

And a huge GFF podcast. Welcome to Jason Brown from Google Cloud. Uh Jason has uh, like me, actually, uh, uh, did his degree at Enbury University at about the same time. Finally, someone who definitely remembers before blockchain was a thing, uh, joining us. Uh Jason started out working at Hewlett-Packard Laboratories, uh, working with deploying uh AI systems uh and machine learning back in the day. Uh he was a project manager uh at the SWATS group after that, looking at embedded software development. He has been the entrepreneur in residence at Index Ventures. He was the president and CEO of Mimosys AG, an automation firm using uh high tech. And then after that, moved to Credit Suisse, uh, where he uh quickly became the managing director of data analytics and wealth management uh there before moving to Google. Uh he's also worked in market risk technology IT. He's an expert in uh architecting solutions and uh architect and cloud uh delivery for investment banks and in security services. Jason, welcome to the show.

Jason Brown

Thank you very much for having me. Good to know that we overlapped to Edinburgh. Thanks for inviting us.

Andrew Keith Walker

Great, good. Well, it's good to uh have now we've got the team assembled. It's like Avengers, really. We've got the digital Avengers here uh assembled. Um I'm going to start off with our very own Captain America, Eva. Um, I'm gonna dive in and say, let's frame that big digital picture um for the listeners. Because when people talk about the digital revolution in capital markets and they talk about the digitalization of tools, um what does it actually mean in real terms about security services and the things that market participants can engage with right now? You know, is this about sort of digitizing existing processes or is it sort of re-architecting uh aspects of the market infrastructure and sort of changing the way that they operate?

Eva-Maria Keller

Very good question to start with, Andrew. And I think uh depending on whom you talk to, there's very uh diverse perception of what this is about. And uh, I mean, uh, if if you're on the fancy conferences, people would probably immediately uh think about the the token stuff. So digital assets, the digital currencies, all of that, the fancy innovative stuff. And I think uh it's definitely part of what you call the digital revolution, a very important part, uh probably a part that uh many of us are excited about. However, I think that as part of this digital journey, there's also some stuff left in our traditional business, in our existing uh service landscape where we claim to be digital. Yeah. I mean, yeah, if you if if you listen to to conferences, to podcasts like that one, you would get the impression that that everyone is digital anyways. And yes, for decades, trading, settlement, and everything is digital in financial services. But it's only half of the truth. I mean, there's still uh some some long tail activities that are out there. If if you look at the entire life cycle of of what we're what we're doing in the in the security services industry, and um I personally believe that uh if we look at the digital revolution, it's about the new stuff for sure, but it's also about uh cleaning up and um making sure that what we what we claim to be digital already today, that this is really becoming fully digital. That I think is really something where where there's also a lot of room to move forward with the industry and to reduce risk. Yeah, because there's still a lot of paper and and with the paper, a lot of risk that we have that could, from my point of view, be easily addressed in uh moving forward and making that even more digital, end-to-end.

The Hybrid Digital CSD Explained

Andrew Keith Walker

Okay, so I I want to sort of come to this really, because as you say, we hear a lot of buzzwords. You know, we make this joke, Christine and I, about blockchain. I mean AI as well, obviously. Uh, everyone talks about data, but it seems to mean many different things. In terms of real progress and changes, let's talk about something that we can sort of hang some ideas off. The digital CSD project that is there, uh Clear Stream and you and you're leading on, because it feels like that's something where we can really get our teeth into it and say, okay, this is a digital platform that uh is, uh, it's addressing those issues to do with paper and vaults and jurisdictions and transfer agencies and all of that, and is actually using the the blockchain tools uh and distributed ledger tools and those sorts of things to actually reduce friction, reduce collateral drag, speed up settlement and those sorts of you know benefits that we're supposed to get. So tell us more about the digital CSD.

Eva-Maria Keller

Well, actually, the digital CSD is um you you call it a platform. I mean, it's not a unique platform. It's supposed to be really a hybrid. It's a it's a hybrid ecosystem where you operate the uh traditional rails next to the new to the tokenized rails. And the idea is really to um to offer um a new solution to the market that that is interoperable, yeah, that gives everyone in the market the chance to seamlessly move from left to right, to tokenize assets that are already existing in traditional, um in the traditional rails, to to then what we call eyesize tokenized assets back to the to the traditional rails. So this is really what what um what we believe is a core capability that that helps to to bridge the gap between the old and the new. Because there should be really the opportunity for all participants, especially as we are still in a in a phase where this new uh world is is growing and is not really mature, and nobody really knows whether the tokenized environment is where where business will actually happen, where liquidity will be, where there will be demand for collateral, for example, as we are here in the GFF podcast. So nobody knows to which extent this will really happen in the new world. So this interoperability is really something that uh should be a key component of what we call the hybrid setup that um that the idea of the digital CSD uh represents.

Tech Hype Versus Trust And Adoption

Andrew Keith Walker

And Jason, I I want to come to you here. We have to try and separate out the sort of difference between genuine transformative technologies and the latest buzz trends in tech. And I'm sure given your uh history working in technology and actually as an entrepreneur deploying uh tools effectively and seeing measurable gains from them, you you've got quite good at working out the difference between those things. So do you think there's a danger right now that people are reaching for digital solutions and AI and automation for the sake of it, or is it making a meaningful difference to what they're doing if we still need to maintain a hybrid model because the volume of business that's still in paper and using traditional Rails versus the the sort of tokenized DLT side of the business, which is still quite small?

Jason Brown

It's a good it's a good question. I guess most tech, whatever it is, whatever new technology is, has some intrinsic interest to people, right? And they're usually new solutions to all sorts of different problems you run into. I think in the space where you start touching the edges of business like um blockchain, which has been around for a long time, and banks, the bank I used to work in, for example, always try to do some experimentation to see what would the impact be. Um, I think what you start to look at currencies, you start to look at things that require trust. You start to have to move a little bit away from yes, the the buzz will be in, well, this tech might solve this problem. The difficulty is what we often miss, and this is why there's a time lag between an idea, the piece of tech that comes out, and its adoption is bridging the trust gap. And the trust gap is something like if you if you take now, uh everyone's talking about stable coins, and and you start to look at it. Some people that have been working in finance and probably listen to this a lot, uh, will be looking at it going, well, what's the difference between that and let's say the gold standard? What is it really? We today anyway write numbers in databases that represent currencies that represent balances. And so I think this buzz versus tech is some people will be very skeptical and say, I already do this, I write it in a database, and others will start to look at new possibilities, and that's the tricky bit about innovative technology is you have the early adopters, right? The classic early adopter, everyone loves it, I want to get into that. Early investors, for example, in Bitcoin, right? And then you've got what people call laggards at the other end, which are the last people who go, I am never gonna pick this up, right, until you actually forced me to do it. And in the middle are businesses like ClearStream that are trying to bridge that gap between how can I utilize that as a business. Um, so some of it's going to be a lot, you know, what you hear in in the press will sound way more or give you way more promises than we will realize in a short window. But they may deliver ultimately right at the end anyway, right? So I think that usually the issue about buzz is more the the delivery of it uh immediately, and that's often never the case because we've got old legacy systems that ever talked about before, you have to kind of transform those. You've got acceptance from um the public, um, which is why things like you know LLMs are very interesting because they they appear to be humans talking to you, so that's less of an adoption problem. So I think I don't see this as a as a buzz. Do we know where it's gonna land? That's tricky, right? And and a lot of that has to do with things like security, trust, and that will be adoption time, but it also may lead to how broadly uh interchangeable digital assets will become.

Data Models As The Interop Backbone

Christian Rossler

So now let's get into the the more complex side of this project, and um which is the hybrid CSD model that you uh explained. How does a digital CSD operate in a market where tokenized and non-tokenized assets coexist maybe ever? You want to take that question?

Eva-Maria Keller

I think a very important uh piece to make that happen, to really create this uh seamless interoperability, uh, is to get the data right. Yeah. Because I mean uh the that that sounds straightforward and and um Jason mentioned it before. Um so there's uh there's a lot of different perception on on data and and what it uh what it means. Um but having um a sound data model in place, having governance in place, having everything clean um is uh a very important um uh prerequisite to be able to really manage this complexity that that you're creating when you're trying to make um to bring the worlds two worlds together and and create this interoperability. A lot of the processes that have been digitized in the past have not been really digitized, but only content that was once stored on a paper was put in a database. Now the thing is really we need to create data native processes. We need to bring that to a level where the data structure is driving how the process is operated, and and this is really something that um we are uh we are starting with. That that's uh that is something that also requires a transformation with with all the banks that that we're working with together, because this is not the way that we are currently running financial uh services. Yeah, and um this transformation to to a real data-centric um um setup is um is one of the key building blocks that we are uh working also closely together with Jason and and the teams to to build this foundation that will then enable us to unlock all the features that the real digital, the native digital um processing can can bring to our clients and the market.

Client Connectivity And Practical Tools

Andrew Keith Walker

If we're talking about data moving uh you know natively as opposed to just being you know paper that's that that's tied down, um we're really talking, aren't we, about that client connectivity and that data story. So we should bring in Tom here. Uh Tom, in terms of the building blocks that are helping to sort of drive this digital transformation, you're at the hands-on end, working with clients, getting their connectivity right, you know, building the the products end-to-end that they need. What is the the big building block that you would identify as being the number one thing that is enabling this digital transformation in the way they work?

Thomas Daniels

I don't know if I necessarily sort of point to one thing. I think it's, you know, for me, it is incremental wins and I and I like the digital building blocks, right? And I think that whilst we may not feature, you know, these might not all feature, sorry, in this sort of utopian financial ecosystem, they're certainly supporting the drive towards it. Um, for me personally, I'm thinking about our array of client-facing digital solutions that we make available. You know, these are supporting the securities financing and collateral management community. So these are tools that are providing business insights, they're providing visualizations, benchmarks, the opportunity to further optimize holdings and you know, cut down the time required in operational processes. So, you know, creating and agreeing collateral baskets in in mere minutes. And I'm I'm very sort of deliberately, Andrew, mentioning our sort of suite of solutions here in collateral next, liquidity next, and lending next, and of course Oscar. Uh and these are solutions which are actually you know actively helping and supporting clients today in terms of reducing time, reducing risk, and and providing those business critical insights. Um I think you know, these are the tools that start to help clients realize some of the efficiency saves that we expect as we transition towards a much more automated and more programmable and interconnected DLT world. And I think also, you know, thinking about sort of near-term criticality of these solutions beyond these sort of operational improvements and the risk reduction and the funding improvements, we also have an eye on T plus one, right? That's on the horizon. Um, there's a there's a big impact there when you think about the securities financing and collateral management community who are effectively moving to T0. Um, and and I you know the need for insights and data and intelligence is even more pertinent. And not surprisingly, we're we're sort of active in that space as well. And we have you know our settlement next product, which is really helping clients, and yeah, we're preparing to sort of take that out to the securities financing community because we think it can add value there as well.

Where AI Delivers Real Value

Andrew Keith Walker

Okay, so Jason, I'm gonna stick with you uh on that front because we are in the middle of this sort of unfolding tech story, and we don't know how far it's gonna go. And we've we've looked a lot at digital and data, but you know, AI is really the new one. Everyone's got an AI something, they've got an LLM integrated into everything that they're doing. There's a lot of snake oil uh getting uh uh sold on uh LinkedIn about you know how uh it can change your life, and then there's a lot of really solid solutions and applications where it is actually uh making a huge difference in terms of uh saving time and automation. So I I want to uh sort of come to capital markets in this place, you know, and AI is really moving, isn't it, from experimental to deployment across capital markets? So from the ClearStream and the Google Cloud perspective, how is AI being used today and where is it delivering the most value across the organization? Is it in client-facing applications? Is it in business operations, or is it in those sort of internal end-to-end processes, sort of making the sort of new DevOps model and uh regulatory ops models uh work more efficiently?

Jason Brown

So I would say. Right. So AI, I don't know, Io, you you mentioned I used to be in in in Hewlett Packard, right? But that was back in 90s, right? So and we were deploying AI into production, right? So the biggest change that's happened and why everything got all excited again, since this stuff is the same process, same ideas as the 40s, is is really just compute and storage, right? So the amount of data you've got and the compute. Now it's I don't know what snake hole you've been reading about, it's real, right? Um again, a little bit like the tokenization, we're in this phase of it all looks like it has a huge possibilities across the board, right? And I think within the organization, the the low-hanging fruit stuff are helping programmers. This for sure. I use it every single day, and now you know they're called vibe programmers or or vibe development, right? Um it's that's there. It's that value is there. There's no question, especially if you look at I'm now going to you know punt our stuff. I mean, Gemini 3 is genuinely a massive step forward over the previous versions. If you then integrate it now with the orchestration of agents, you get a really interesting development experience as a developer. That's out there, you can use it today. And it and it genuinely is uh adds huge value. Where do we go from here in terms of what are we looking at? Like LLNs, everyone knows it's it's really it's knowledge retrieval. Um, I personally right now question what people mean by AI, but it's definitely a very, very good knowledge retrieval and it's um can be used in many spaces. But I think going away from LLNs, we still have things like reinforced learning, right? So if you look at Collactron, and we're we're working with um with ClearStream on the collat the collateral optimization, which is reinforced learning is a process for training and continuous training of a neural network to ultimately solve a nonlinear uh problem, which is how do I allocate uh uh resources or collateral in this case. So that's being used. You need, you know, for us again. I mean, you've probably seen in the news that GCP we have our own strategy about how, you know, our infrastructure, which are our TPUs, um, which is very important for organizations that want to do this continuous learning, because it's that's where most of the effort gets put in, retraining these things to solve problems like how to optimize collateral allocation, right? So we're working across the board again. I go back to my nagging on this story, there's a sliding scale of adoption. Where are we going to find the best optimizations in these organizations? Most of it right now is around operational. You can clearly do the emails, you can do summaries of meetings, you know, uh that's there for LLMs, but there's really some real business uh benefits. You see hedge funds these days doing a lot of algorithmic trading using, you know, neural networks. So we're applying all of that across the board and looking for those opportunities, and we're finding those opportunities, right, within within Deutsche Borsa.

Precision ML vs LLMs In Operations

Eva-Maria Keller

I can only add to what Jason just said. I mean, uh there is a lot of uh a lot of potential, and and uh we are very eager to try and identify what works for us, what what brings value. And of course, most commonly used is uh everything around uh office, yeah office tasks, very simple email stuff and so on, writing a text, all of that. Um but we are also trying and hoping to get some some more value for our uh operations transformation. So really getting to a zero-touch uh operational processing, um, where the the initial versions of what we saw from AI solutions and models was definitely not ready. Yeah, definitely not something where you would trust uh the solution to be able to integrate that fully into uh into um regulated mission-critical processes. But uh with the uh with the development now around the Agentic AI, we are we are really definitely going in in a direction where it uh seems really uh an opportunity to to come up with with solutions that that also support in um in our attempts to to really come to a to a zero-touch uh operational reality.

Andrew Keith Walker

I suppose that's where the the challenges come in. If you have uh issues like you know hallucinations and uh those sorts of problems that are often reported uh in the the LLM world, that isn't something you can let loose in financial uh market infrastructure environments where, of course, you can't afford to get something catastrophically wrong. And we've all got hilarious stories about how ChatGPT or perhaps Gemini or Copilot came up with the wrong answer to uh a question which was hilarious in the office, but you wouldn't want that facing clients. So on that front, I guess, uh uh Tom, I want to come to you because when it comes to Oscar, and we had uh Bart Coppins from IntelliSelect, a big shout out to Bart on the show uh last season, uh telling us about some of the developments there and talking about AI. We we're not talking, are we, about LLMs. We're talking about machine learning layers and you know, a much more precise and accurate kind of model. Um tell us more uh about that. How does AI support the sort of scale and complexity that's demanded by uh issues like matching collateral baskets or appetites for risk or finding the right counterparty?

Collateral And Liquidity Tools That Matter

Thomas Daniels

Okay. So, I mean, I guess probably you know, just anchoring in on some of the real solutions that we have active today. So um, I'm going to mention the settlement prediction tool, uh, which obviously helps clients identify uh using machine learning those transactions which have the highest probability of failure and the reasons for that failure up to four days in advance. That again is very helpful for T plus one. But what's interesting is we're now discussing with clients how we can leverage this capability in other ways. So, you know, for the screws financing community, it's very much around, you know, can I start to predict where an ISIN may go special, which I think is a really good use case, right? So I think there is genuinely uh quite a bit of interest from clients in, you know, this ability to sort of forecast and make predictions. And it's important that we're alive to that and that we find ways of implementing meaningful solutions. We obviously have access to a lot of historical data that's key, particularly for machine learning. And obviously, there's a lot of market data as well at our disposal. And you have already mentioned Oscar, and that's obviously using uh a large language model to automatically generate collateral schedules and check eligibility. But I think also beyond that sort of efficiency play, it's also a nice illustration of that dematerialization that we've touched on. Um, and that is a huge step in the digitalization journey as well. Um, and I think you know, further down the road, um, we'll see AI helping to make uh complexity more manageable. It can obviously aggregate and normalize data across tokenized and non-tokenized assets, it can identify optimization opportunities across fragmented collateral core pools and you know support that intraday rebalancing in a way that simply isn't feasible manually. And these are the sorts of things that we that we're starting to you know look at and explore with Thrives.

Christian Rossler

Yeah, so so so if we bring the conversation then to the um securities financing and and collateral management, then I think I carefully listen to what you you just said also, Tom, and and also Jason. But for um for the collateral management and liquidity solutions, it is key that institutions not just use and adapt to technology, but they thrive in this new environment. So, Tom, maybe for you, where are the applications today that help our customers in CLLS to thrive in tomorrow's environment that you just described?

Frictions: Legal, Cash Leg, And Rules

Thomas Daniels

You know, in Collateral Next, we can provide insights around those collateral holdings. We've got a number of different metrics and visualizations. Uh, we found certainly from speaking to clients this sort of ability to benchmark you know how how their portfolio looks relative to a peer group is also highly appreciated. Uh, we've seen quite a bit of interest there. And I think probably one of the strongest propositions has been, you know, with tools like the collateral mapra, what was formerly Mapra, and it's now part of the collateral next suite, um, which is allowing that additional optimization outside of CMAX. Um, and that additional optimization is allowing us to, or in some cases, a number of clients to bring in more equities, free up HQLA. And obviously, once you do that, you can you you can utilize that HQLA for more lucrative opportunities. Um, I mean, some of the other tools that we've got sort of live in this space as well, around you know, liquidity next, and I think obviously credit line utilization and collateral pool fluctuations becomes a big consideration. Again, for T plus one, that's going to be key. So I think providing that sort of granular detail for clients, that sort of minute my minute breakdown if they so require it, is is also key. And in the in the case of the lending next solution, we're able to actually support those borrowers in terms, sorry, rather this let me say that again. And with the lending next solution, we're also supporting those lenders to get eyes on, you know, what are their revenues associated with their lending, what are the opportunities? That's something we'll be starting to look at down the road as well. So these are really sort of tangible examples. And I think also Jason mentioned already um the sort of the optimization, the wider optimization play. And, you know, you're gonna start to hear a little bit more about solutions like Optimax in time, because you know, these are going to, you know, as I said sort of already, they're gonna give us the opportunity to look at um what can be optimized outside of ClearStream as well. Um so I think these are all sort of you know real solutions that are gonna help our clients and should be actively helping our clients today.

Andrew Keith Walker

And on that front, Everett, I want to come back to you because we know that, you know, we've talked a bit about this sort of technological utopia that's somewhere over the horizon. But right now, we've got some very sort of useful practical tools that are actually getting deployed and delivering real value back. But there are still some sticky friction points, aren't there? Um, around settlement timing, around the legal certainty. I mean, there's no golden source, so there has to be sort of multiple sources sometimes of information. Um and of course, the cash leg is still mostly using traditional money. There's not a lot of settlement going on uh using stable coins, and there's no digital euro yet. We're still waiting for we've been waiting a while, uh, but you know, it'll come one day. But there there's quite a lot of you know traditional processes that you have to uh you know orchestrate and engage with here when you're operating these digital tools. So where are the friction points? Where are the things that you know need more engagement from people like the ECB or you know, uh regulators and national competent authorities to make sure that these technological advancements can really deliver their value?

The 28th Regime Proposal

Eva-Maria Keller

Yeah, I mean, regulation and um and and legal framework is is really one of uh one of the key um challenges that that we're confronted with uh trying to move forward with the digitization. And I mean, we are um operating in a in a very complex global environment with very uh diverging frameworks and and uh regulation. So that is really um um a topic that that uh keeps us very, very busy trying to navigate uh those um those rules and regulations that that we're bound to. I mean, uh we we have some some clarity for some of the markets. Uh we have, I think, a very um uh very uh flexible and and and supportive environment on in Luxembourg, uh which we're trying to leverage as much as we can. Uh we have a German regulator, which is unfortunately not as um uh uh ready for supporting those new digital uh solutions and and more uh being afraid um about the the the risks that's that may come with it. So this is really where we're trying to lobby a lot to really um um allow us to to achieve this um savings and investment union idea, yeah, to really bring uh in Europe the markets closer together. Um this is uh this is one of the our key beliefs. Um but um this is this is really um uh one of the challenges where um yeah we are uh also very much depending on on the regulators um to support us here. And uh if if we then look to the to the US, where you have an environment where there's a lot of support, uh we are we're really um very much uh scratching our heads how we can achieve in Europe a similar environment that that brings us into a competitive uh position to be able to really offer attractive uh conditions that uh make uh financial um business uh attractive. Yeah, but uh that that is something that um yeah is is really keeping us busy and uh is is not not an easy task to solve. But but we are on it, and there are very interesting uh approaches that um that we have in mind. Um one of the most uh promising one being the so-called 28th regime. Um it's um basically um coming from um the the issue of uh having so many different legal regimes in Europe, 27 in total. So 27 uh different legal frameworks in which um our um participants are operating in, 27 uh different frameworks, legal frameworks um that we need to uh adapt our solutions to. And um instead of really um uh trying to harmonize all of these 27, which would uh sounds really like an unachievable um uh idea, um, we we came up with the concept of the so-called 28th regime, which would be a completely new legal framework that that we would create together with other key players in the market, um and uh trying to keep it simple, but uh ideally uh very quickly coming up with a framework that is supportive of um digital uh financial servicing.

Crystal Ball: T+1 Reality Check

Andrew Keith Walker

It is time for us to get out our GFF podcast Crystal Ball and ask uh our guests to make their crystal ball predictions. No pressure. Um we will ask you back on the show uh uh you know next season. But let's look down the next uh year or two of development and ask ourselves you know, what are we gonna be talking about in the digital uh uh innovation space uh a year from now? And I'm gonna I've got a few different crystal ball angles we can take here. So, first of all, I'm gonna come to you, uh Eva. Um what about settlement? T plus one. Is technology going to be really driven forwards by the fact that T plus one, you know, is going to really turn up the pressure on settlement? And is that going to sort of push forward digital CSDs to automate more of those processes? Because obviously the time's getting compressed in some cases, maybe down as far as 80% uh with T plus one. And uh, you know, is this where digital cash is going to start playing a role to really try and reduce that friction, reduce sales and automate a lot more of that post-trade process?

Eva-Maria Keller

Talking about one year from now, um, not sure if I would consider this the crystal wall, but um within one year from now, I'm sure that um the pressure that T plus one is is putting on on everyone will have an impact, and uh uh everyone in the market will get ready. I mean, we see a lot of activity, we see a lot of um uh getting getting preparedness, yeah. Um and and uh this this will have an impact. Uh a lot of cleaning will happen, a lot of transparency will have to increase, but this is happening, and I'm very uh confident that this um this will um this will be at a much different stage uh one year from now. Will um the participants make use of digital solutions to address that? I don't think so. I don't think that we will see that within 12 months' time. I believe that uh getting T plus one ready means getting the traditional environment ready. The digital um uh component is something that um will in 12 months from now ideally have a different relevance, will ideally be uh uh further ahead than what we see now with some sandboxing, with some uh uh exploratory uh attempts to try this out. But I do not um personally believe that um this is what the major players will bet on to get uh T plus one ready.

From Records To Orchestration

Andrew Keith Walker

Okay, great. All right, and I'm gonna pass the crystal ball over to you, Tom. Um and uh I I want to ask you about uh CSDs uh again, uh not just CSDs, but financial infrastructure. Is it all evolving, do you think, in the future into just platform operators um who are orchestrating digital services uh and you know offering more connectivity end-to-end to market participants rather than the current sort of record keeping, maintaining records and operating regulatory frameworks role?

Near-Term Transformation And Stablecoins

Thomas Daniels

A hundred percent. Um, so for me, it's from system of record to system of orchestration, it's managing the multiple ledges, whether we're traditional, digital, tokenized, and we've kind of talked about that already. It's managing the interaction with multiple chains, it's orchestrating flows across custodians, CCPs, agents. Um, I think you know, when you think about settlement moving from sort of an end-of-day event um to conditional and atomic uh conditions are met. It's not it's not anymore about what the clock says, it's it's more about the conditions that are being satisfied, right? Um, I think there's a there's gonna be a focus on abstracting the client away and making it as seamless as possible. Um so the client comes along, they've got their digital wallet, and they want, you know, they want to just be able to interact and the CSD manages that complexity. And I think from a sort of a collateral perspective, it becomes, you know, a sort of a collateral mobility hub, right? And it's it's not just a vault anymore. This is about automated substitution and optimization. And of course, some of this we do already today, right? But you know, this movement towards you know global 24-7 at speed is where things really get interesting. But that's probably a little bit more than a year away, Christian, to be fair. Um, I think we're we're certainly seeing, you know, some movement uh in that direction. I mean, I you know, I've been to a few events uh uh in in 2025, and I think you know, we all agree that this sort of the elevation uh in terms of the coverage digital was getting as a topic was was considerable. Um and you know, when you go along to some of these fintech events and you see sort of almost as many people in suits as you do techies in t-shirts, you know that the corporate world is really sort of waking up and embracing. And I think, sorry, just to finish with a sort of a repo point as well, uh it won't be necessarily about sort of tokenization at scale for the sake of tokenization. It's about efficiencies, faster eligibility checks, um substitution, and you know, that sort of cross-silo visibility and optimization that we that we talked about earlier.

Andrew Keith Walker

I pass the ball to you, uh Jason. Um getting there requires simplifying market infrastructures, doesn't it? So, I mean, tell us, do we are we we seeing a transformation of uh markets through digitalization now, or is it all just getting rebundled into a new set of products that we'll all buy into in the way that, you know, once upon a time we had a phone that was nailed to the wall and now everyone's got a smartphone? Is it just the tide and the way that things are flowing? Give us your view as someone who's spent his career in tech at that cutting age.

Closing And Community Invite

Jason Brown

I mean, especially within a year, most of the transformation is going to be going on inside an organization as they learn, right? Because it's it's hard to do the the cross. So you may get participants, especially in in the context of something like an exchange, right? And and and clear stream, they may be able to be one of the providers of pushing the boundaries a bit of this transformation, right? Gen generic, I can settle anywhere, anytime, any currency, any asset, use it anywhere. In a year is never gonna happen, in my opinion, right? And so a year is way too short. But I think, especially in inside DBG, now also that they have a new digital officer, right? So digital transformation, right? So Daniel, um I I think you're gonna see a lot of internal transformations in the space of settlement, etc. I what we see are lots of businesses in terms of exchanges and that looking exactly the same stuff, right? The question is, will they generically break out within a year? I think not. I think that's gonna be very difficult um because of all the legal aspects to it. Um I'm very curious as to what stablecoin actually is gonna break, right? And and where are they going? At the moment, I feel um it's it's sort of on, you know, people are just following along with with Bitcoin and just saying, well, let's introduce new things and see. But um I I I don't know. I think you'll see most internal, and there'll be some probably announcements by these companies explaining why this is going to be better if you're participating. And that's why I we really enjoy working with uh with with with DPG, right? Along with our tech, which enables them to go faster, they're really wanting to change, right? They are really going to the market and going, like, how am I going to move this along within the constraints we have, right? So they do want to push the edges. And I think that's that's super exciting. I think if you come back in a year, we will see some pretty exciting stuff coming out of DBG in partnership with us, right? Um, so I'm looking forward to it.

Andrew Keith Walker

Well, that really is the end of the show. Now we have to go. Yes, we are out of time, but do stay tuned because there's lots of exciting developments on the digital CSD front coming from PlayerStream and from Google. So coming to a blockchain near you. And a huge thank you to our special guest, and that is in no particular order, starting with Jason Brown, our uh expert from Google Cloud, a man who I can say is here in the virtual studio. We can see him. He is not augmented by technology, he's not virtual, he is a real person. Nano Banana version of me. No nano banana's here. He's the real deal. Uh Jason, thank you very much. Well, thanks for having me. It was been fun. Also, huge thank you to uh the uh lead for client connectivity and data product development, uh Thomas Daniels. Thomas. Thank you very much. Thank you. And finally, a huge thank you to the head of data channels and digital operations, uh, ClearStream, an expert on all things digital CSD, Eva Maria Keller, ever. Thank you.

Eva-Maria Keller

Thanks a lot, Andrew.

Christian Rossler

Okay, and then all that remains, I guess, is for us to say a big goodbye to the man without whom there is no GFF podcast, the BFF of GFF himself, Mr. Christian Russell. Christian, thanks very much. And a huge thank you from my side to Eva, James and Thomas. Thank you for joining us.

Andrew Keith Walker

Yes, thank you indeed. Okay, Christian, we will be back with another GFF next month. And in the meantime, do make sure you join me and Christian and our guests uh from this show and from previous shows on our LinkedIn page. That is LinkedIn.com slash company slash clear stream, where you can find out all about the GFF podcast. You can network with our guests, with Jason, Thomas, and Eva, and of course, you can network with me and Christian and anyone who's been on the show before. And we will look forward very much to seeing you next month. In the meantime, everyone here at ClearStream in the virtual studio. Bye-bye.

Christian Rossler

Yes, bye-bye.

Andrew Keith Walker

And don't forget, this show is brought to you by ClearStream Banking, one of the main sponsors of the GFF summit in Luxembourg every year. It features members of the ClearStream team and special guests offering their personal opinions, not the opinions of ClearStream as an organization. There's no representation made as to the accuracy or completeness of information in this podcast, and nor should it be taken as any legal attacks or other professional advice. Bye-bye.