Not-for-profit trading consortium Plato Partnership recently appointed Simon Steward, director and European head of equity trading at Capital Group, as its new buy-side chair. Steward talks to BEST EXECUTION about the power of listening, the stream of opportunities — and challenges — in the industry, the seemingly inexorable march to T+0 via the incoming T+1 settlement cycle, and the spectre of market outages.
You have been on the board at Plato for three years – what expertise or wisdom do you hope to leverage from that experience in your new role?
The last three years being part of Plato Partnership have really enabled me to understand the workings of the organisation, how we approach and identify issues, and look to take a constructive and thorough approach to solving them. I have seen first-hand the collaborative output of the members, and my role now is to further galvanise the buy-side members to ensure that we continue to drive and shape our initiatives. The objective is to improve our industry, benefit market participants, and create greater value for end investors.
This is a very exciting time for Plato as we navigate an ever-changing market backdrop, punctuated with continued challenges and opportunities of greater complexity, evolving technological initiatives, regulatory developments and a new generation of industry joiners.
What lessons have you drawn from your own experience on the buy-side that will help you in your role?
First and foremost, the key for Plato is providing a platform, accessible to all members, for raising a concept or idea that requires a solution. Around the table, there is significant industry experience and true diversity of thought, which results in valuable and open discussions. I have always been focused on deliverables, and that will continue to be a focus for me at Plato as we remain committed to demonstrating value and positive output to help improve the broader European markets.
The final key element for me is taking Plato’s already very strong ability to listen, to a deeper level. We need to be able to identify and help react to the biggest market issues positively and collaboratively with all market participants effectively across the industry. We share the universal end goal of ensuring that, as an industry, we are trying to produce valuable and realistic solutions for the whole marketplace.
As the buy-side chair, what opportunities and challenges are you anticipating across the wider industry over the coming months and years?
Our industry is never short of opportunities. I am positive about what lies ahead for the industry in the future regarding people, technological advancements, regulatory evolution, and market innovations. Although all these things can be challenging and each organisation navigates them in different ways, it seems to me that as we have overcome many similar challenges over the years – we learn each time and adapt accordingly to their impact on our industry.
If we take technology specifically, there is a lot of opinion around AI usage. All market participants are very much on their own journeys assessing the role it will play within their organisations. This is exactly the kind of area where Plato can play an exciting role in the future in terms of education and promoting positive change, either via direct industry participant experiences or academic-supported studies that can benefit the broader industry.
What initiatives do you have in the pipeline that will help streamline and reduce complexity across the industry, and drive forward progress?
We are just about to start planning for our 2024 initiatives, so I don’t want to give too much away yet, but I can tell you that the market and Plato will likely continue to focus on market data cost controls as we continue to see some significant movement in venue activity across Europe. The move towards T+1 in not only the US, Canada, and Mexico, but potentially more global standardised settlement cycles in the longer term, begs the question “Is this just a stopgap to T+0?”, as much as that may seem concerning to the market now. The final area of ongoing potential progress is policymaker engagement and education. Having the ability to continue to offer concise and consistent industry views to policymakers to help validate or better assess decision-making is essential for the industry. Plato, alongside other industry bodies, has a key role to play.
With the move to reduced settlement cycles, what role do you see Plato taking as the industry makes this seminal shift?
The reduced settlement cycles, particularly in the US, Canada & Mexico in May 2024, are a primary focus for most firms currently. Many are preparing for operational readiness, potential implications from CSDR, funding costs, extended settlement demands & liquidity concerns to name but a few. However, this is just the start as we are likely to see both the UK and EU follow suit at future dates.
We look forward to playing the role of consolidator given member expertise and interpretation skill, and to working collaboratively with other industry bodies, as there could be a large proportion of overlap in our work. For example, if we can coordinate our assessment of shortened settlement cycles across jurisdictions and investor groups, we can save the industry time which is critical as we work to a fast-approaching deadline.
What other issues are on the Plato agenda for 2024?
The issue around market outages continues to be an area where market participants are looking for some consistency in both approaches to the communication aspect of an outage and also the remediation regarding order status and cancellation, market re-opening and, in the most complex of cases, establishing an industry standard around market closing price.
Plato has carried out some excellent work in this area already and I hope that this will result in it becoming a new industry standard. There is an acceptance that the technology-driven world in which the exchanges operate is getting faster and the operational resilience is growing under these challenges. However, there is still an acknowledgement that these rare outages will still unfortunately occur and can create significant downstream implications for market participants.
Given your membership consists of large industry players (who are the status quo), how do you expect Plato to change the status quo?
This is something I think about a lot. One thing that I feel is important for Plato, and any other industry body, is establishing a diverse group of market participants that represent what the marketplace is really like. My hope for Plato is that over time it will become the organisation that has this type of representation.
It is having these diverse opinions and expertise that will continue to provide organisations like Plato with an even greater opportunity to influence broader change on key industry developments and issues. For myself, the more continuity via our participants that we can have in our discussions at Plato the better as we need to represent an ever-changing marketplace from a composition perspective.
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