FT: banks, industry associations press exchanges for detail on managing risk of home trading

Capital markets have swung wildly in recent weeks, but exchanges, clearing and settlement houses have broadly held up. Practices designed to smooth volatile markets, such as circuit breakers — which suspend trading after quick and deep drops in price — have kicked in as expected.

“Market supervision has become far more automated and dynamic since the last crisis. Everything is working as it was designed to do, including in the context of ‘working from home’ protocols,” said Euronext, which operates six equity exchanges around Europe.

That has helped exchanges to rebuff the suggestion that they should shut during the coronavirus crisis. Still, the prospect of months-long disruptions to normal working practices has encouraged banks, brokers and other market participants to demand more information about exchanges’ business continuity plans. Three trade associations — Sifma, the FIA and Asifma — have been working on a questionnaire to send to about 20 of the most systemically important companies, according to people involved in the drafting.

Virginie O’Shea, an independent adviser to the industry, said the operations teams at banks and asset managers were struggling to cope: “There are numerous teams working late into the night to process the trading peaks across the globe on systems that just weren’t built for large teams working remotely. The market infrastructure guys have it tough, but not as tough as post-trade staff at financial institutions at the moment.”

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