Now in its second year, The Network Forum (TNF) Australasia Meeting returned to Sydney, where experts tackled a number of topical issues, including operational resilience and Asia’s handling of T+1.
Fraser Wikner, CEO at MYRIAD Group Technologies Ltd (MGTL), looks at some of the big issues to emerge from TNF Australasia.
Operational resilience is a strategic priority for Australia’s regulators
After a succession of Black Swan events – and perhaps in anticipation of a few more – a number of markets have developed regulatory frameworks around operational resilience, and Australia is no exception, highlighted Adam Vine, our CIO and Head of Client Operations, speaking at TNF.
In 2019, the Australian Prudential Regulation Authority (APRA) rolled out CPS 234, requiring Financial Institutions to put in place clearly defined policies and procedures around ICT resilience.
We also heard that more regulation in Australia is on its way.
APRA’s CPS 230, which will start to take effect from July 2025, is designed to strengthen the Operational Risk Management, Business Continuity Planning (BCP), and Third-Party Risk Management (TPRM) practices at Financial Institutions. CPS 230 builds on existing regulation, namely CPS 231 and CPS 232, which are focused on outsourcing and BCP respectively.
During his TNF panel, Adam noted that CPS 230 had quite a lot in common with the EU’s recently enacted Digital Operational Resilience Act (DORA), particularly with how data is handled, stored, transferred, and secured.
It is clear to me that regulations such as CPS 230 underline the importance of working with best in class Vendors.
Meeting the TPRM requirements of Clients
As a Provider whose software is used by some of the world’s biggest Financial Institutions, I believe we are uniquely positioned to meet Clients’ increasingly stringent TPRM criteria.
This was echoed by Adam, who added that MGTL is often on the receiving end of detailed due diligences from Clients’ TPRM units. During these assessments, we routinely stress our unwavering commitment to IT security, Data Protection, Operational Resilience and Business Continuity.
Our Clients are often comforted by the fact that we are ISO 27001 and Cyber Essentials certified. They also like how we treat their data. In contrast to other Providers, Adam told TNF that we have limited to no access to our Clients’ data, nor do we have any intention of ever commercialising that data, i.e. by selling aggregated data analytics to Third Parties.
Not only do we comply with industry best practices on operational resilience, but we are actively shaping them. A number of my colleagues, for instance, were heavily involved in the drafting of the International Securities Services Association’s ORQ, an operational resilience questionnaire based on the Basel Committee on Banking Supervision’s Operational Resilience Principles.
T+1 in Asia goes better than expected
I have attended a number of TNFs over the last few years, and discussions about T+1’s implementation in North America have featured at nearly all of them.
TNF Australasia was no different.
Despite initial fears, we did not see a spike in trade fails in Asia, nor was there an FX funding crunch either. Industry studies appear to corroborate this was the case everywhere. During an engaging discussion on shorter settlements, Barnaby Nelson, CEO at The Value Exchange, shared the findings from his latest research. One interesting takeaway for me was that 30% of Firms told The Value Exchange that T+1 went better than expected, while a further 65% noticed no difference in their operations.
In Australia and New Zealand, this was partly because their respective equity markets open only a few hours after New York’s closes, allowing for post-trade processing to be performed without much disruption. The only exception is of course on Fridays, which requires some Asia-based Operations teams to work Saturday morning shifts.
However, a lot of people I spoke to at TNF believe the European transition to T+1, which is due to happen in October 2027, will be more disruptive for Asia than North America’s, due to the less favourable time zone conditions, e.g. the 430PM market close in London is 330AM in Sydney.
While increasing the Operations headcount might be a short-term fix, I believe the only way Asian (and global) Financial Institutions will be able to navigate T+1 is by embracing automation and investing into their technology infrastructure.
