Insights from TSAM 2014

Yesterday I had the pleasure to attend TSAM2014 as a panel member. Of course I took the opportunity to look in on other sessions and network with friends, old and new.

Considering the "TS" in TSAM stands for trading systems, it seemed that the majority of technology represented there addressed client reporting and information management. This may be a comment on the state of trading systems or a reflection of the buyside's current interest.

My predominant interest was in the OTC Derivative stream, the regulation and developments affecting it. I did come away with three insights/comments that I thought worth sharing.

A number of sessions operated under Chatham House Rules so I won't attribute any comments other than my own.

#1 The "Regulators" who put out a good showing seemed to bleat on about how the buyside does not come to them and contribute. This was a repeated comment and was supplemented by a request that any representations come with the associated quant active analysis.

This seemed to highlight a delusion that the buyside is homogenous. The audience pointed out that the buyside is in fact many different interest groups and that the final asset owner caught by the regulations may not be a FS company and may well be in a third country.

There were requests for the buyside to speak with one voice, but this feels as likely as continental Africa having a single economic plan.

There also seems to be no thought for the resourcing required; resources that are seriously constrained.

Now I am not saying this is easy, but as the regulations are complex and multi-territorial so the regulators need to up their game and understanding. It seems they still think about their remit being neatly defined geographically and organisationally. Anyone charged with implementing the torrent of rules knows that is certainly not the case.

#2 I challenged the regulators that if they wanted better behaviours from the buyside then they needed to make better delivery to the community, proving clarity in good time, not making late changes and helping prioritise the torrent of regulatory change being heaped in firms. They are part of our critical path.

The response was a robust report of under-resourcing. Apparently the European Commission only has four (4) people working on this. It was claimed that each was working 80 hour weeks, but then look at what the industry has to do too!

The creation of ESMA was to try and address the shortfall, but it too is under resourced.

When I pointed out that if I excused late or poor quality delivery on only having four people assigned to this critical regulatory activity, the regulators would hang me and the firm I was working for, out to dry. I must point out that my teams have met every regulatory date and requirement so far, but only by extreme prioritisation that had seen the whole development and testing team dedicated to the regulatory cause for extensive periods.

#3 The room was advised of a shadowy group who are now "coming out of the closet" - not my words but a quote from the event - called the ODRG, or OTC Derivatives Regulatory Group. This seems to have been an informal, undocumented group of regulators who have met frequently to discuss the cross border issues created by various regulations. This is critical given the duplications, inconsistencies and conflicts the market is faces implementing the rules.

It appears that this group has just issued its first report to the FSB. The conference was advised to read between the lines as the report could appear a little anodyne if read literally. I will certainly look out for the is report on the FSB site in due course.

The work this group is undertaking is hugely important to any firm with an international or gloabl business. I just wonder why it had to be clandestine until now?

A Useful Tool - The Change Formula?

Yesterday I was talking with a friend and mentioned "The Change Formula". They had not heard of it and were interested to know more. They asked me if I had written about it in this blog and I was sure I had, but when went to look I could not find it, so here we go (again?).


The Change Formula is broadly attributed to Robert Gleicher, though I have seen other claims to have been the creator. Whatever the answer it is a very useful tool for anyone looking to mobilise and lead change.

The formula is written as

C = D x V x F > R

One can read this as

(C)hange happens

when

The level of (D)issatisfaction (with the current state of affairs) amongst those involved

times

A clear (V)ision of how the future should look

times

An understanding of the (F)irst steps to be taken

is greater than

The (R)esistance the change will face

The "times" functions in the formula are important as in the absence (value = zero) of any of D, V or F then Change will fail in the face of any Resistance.

The value of the formula is both in preparing and communicating change endeavours and in diagnosing troubled undertakings.

For new endeavours it is useful for a leader to understand the existing levels of dissatisfaction and work to ensure they are widely understood . This may require either exposure of issues or the amplication of implications, but is often the starting point for successful change.

Put simply unless people are or understand why others are sufficiently dissatisfied they are unlikley to actively engage with the proposed change.

Following this and assuming there is sufficient dissatisfaction (ie why they are changing), people repond best when they understand where they are going (ie why and how it will be better), especially if it will be uncomfortable for them along the way. Vision in this context is an articulation of what they will see and experience at the end of a successful change.

The importance of first steps is to help people set out on the journey, individually and collectively. by anology, if I told a Londoner he was going to France, I may tell him the first steps are to buy a train ticket to Paris and pack a bag for a week. These are things that start the process.

First steps can also give early feedback and help build belief and commitment.

In terms of resistance the key is to consider why people my resist and how strongly. The nature of the resistance is most likely financial or emotional. By considering these causes of resistance a change leader can a) assess how strong their DxVxF has to be and b) how they might reduce the R.

The other use of the formula is when a change is in trouble or at least not progressing as expected or desired.

If as the leader you cannot get a change moving it is worth looking at the D or levels of dissatisfaction amongst your stakeholders. Possibly your people are too comfortable where they are and how they work now? They may not understand why it is important (to you and them) to change.

If a change keeps starting, but faltering it is possible that people are lacking sufficient vision of where they are going. They get excited about a first step but then do not know what to do next.

If a project is spinning its wheels ie doing a lot of work with little in the way of results, then maybe the team don't have a clear understanding of the first steps? They maybe caught in analysis, not able to see how to deliver the vision.

I could go on, but I hope I have shared the essence of the change formula and that you, the reader, can see ways it may help.

I can't believe that I have not blogged on this before!!!!

Why wouldn't I be professional?

A large part of the workforce in the City of London are contractors/consultants many of which stay with firms longer than permanent employees. Not surprisingly, an oft asked question is, "What is the difference between a contractor/consultant and a permanent employee?"

My answer is usually that a permanent employee doesn't know that their job will come to an end ...... yet!

Well yesterday I was advised that my current role is coming to an end. Without going into details it is a budget issue that has led to this, rather than anything else. Currently I am half way through the latest six-month renewal having been here almost two years. I think my client was nervous about breaking the news to me and left it until 4:30 pm, only inviting me to the meeting 10 minutes before.

When I sat there, accepted the news and then assured him I would work to manage the transition of work, he thanked me for my professional approach.

The fact that he felt moved to thank me for being professional surprised me more than the news of the contract break; for perspective I should say that I had no inkling of the break. But why would I react badly to the fact that a client exercised their rights within a contract - in truth I could have done the same.

There would be no value in throwing my toys out of the pram. As independents we rely on our reputation. The world of business is very small and news of unprofessional behaviour or below par performance will travel, often ahead of you. That is why I and many others strive to ensure that performance is recognised and appreciated, value my integrity and protect my reputation.

Now starts the exciting part of being independent and that is the uncertainty of the next challenge and opportunity. Right now I have no idea of what that is. While I think I know why I will be attractive to a client, experience has shown me that their interests and perceptions may be very different. The trick is to have an open mind and be prepared to re-evaluate your skills and experience against new possibilities.

Experience has also shown that one cannot predict where the opportunity will come from - this current work came through an agent that found my details and called me. It was in a field that I had been researching, but would not have claimed expertise and went from first call to onsite working within 12 days, the offer came after three with the paperwork and inevitable reference checks taking the rest.

Where will the next opportunity come from?

As one who thrives on change and enjoys variety, this is part of the non-financial rewards this employment choice offers. I hope I find something interesting!