Author Bio -
Casey Spezzano heads up US customer sales and trading at NatWest Group, the largest commercial bank in the UK. She supervises the bank's currencies, rates and credit trading and sales businesses across the US, bringing strong expertise in trading, risk management and resource optimization, as well as a relentless focus on client experience. Casey was recently appointed chair of the Federal Reserve Bank of New York's Treasury Market Practices Group and previously served as vice-chair since joining the group in 2020.
It's no secret that 2023 was a challenging trading year with high volatility and significant events. In addition to new customer initiatives and regulatory programs, the financial services industry has experienced a turbulent period, with the failure of Silicon Valley Bank and the break-up of Credit Suisse and subsequent takeover by UBS sparking large market moves. That uncertainty remains present across the market this year, with patient players waiting in the wings. Trading ranges are tighter and conviction is lower across the street.
However, inflation and market data have been coming in stronger than expected, and sentiment is changing. We saw yields rise over the first months of this year, with the market shifting to just two cuts priced into 2024 and the start being pushed back to the summer. Meanwhile, money market fund assets continue to hit new highs and balance sheet run-off remains a key point of discussion, specifically when it comes to the timing of a slowdown in quantitative tightening and the ultimate endpoint.
‘Every business has different needs and constraints so remaining focused on seeking out the right partnerships and solutions is key to allow for greater optimization.’
The ever-changing regulatory environment will significantly impact how activity plays out across the market for the remainder of 2024. To name just a few, there will be mandatory clearing for treasuries and repurchase agreements (repos) that are being phased into the market in 2025 and 2026, the T+1 settlement is coming in May, preparations for Basel III Endgame are underway, and money market reforms are being implemented. The market will not only need to be operationally prepared for these varying changes but also understand how they impact current business models and determine the strategic shifts necessary to adjust efficiently.
Looking more widely, the advancements we're seeing in digital transformation and artificial intelligence (AI) are just the beginning. We need to keep in mind that AI outputs are only as good as the data it has, so in order to successfully use it for the benefit of our clients and our business, we need data that is complete and correct. Furthermore, digital transformation is and will continue to evolve and plays a critical role in organizations ability to run effectively and provide the best and value-adding client experience. We continue to see a lot of vendors, fintechs and start-ups popping up in this space, offering various services to create efficiencies and improve processes. Every business has different needs and constraints so remaining focused on seeking out the right partnerships and solutions is key to allow for greater optimization.
As the industry we work in continues to evolve and change, it's important that we work to ensure the market remains robust and liquid. Chairing the TMPG allows me to further understand, discuss and see first-hand the impacts of these developments alongside other senior industry professionals. Together, we work to consider market conditions, developments and potential changes to best practices around trading, clearing, settlement and risk management, helping to support the integrity of the most liquid market in the world.
