Nandini Sukumar, CEO of World Federation of Exchanges talks to Lynn Strongin Dodds about vision, strategy and consensus building.
In the five years since Nandini Sukumar took over the reins of the World Federation of Exchanges (WFE) – the global industry group for exchanges and central counterparties (CCPs) – not only has it been given a revitalised sense of purpose but also a greater voice on their leading issues of the day.
“On a fundamental level, we were looking at what WFE’s purpose should be and what the challenges and opportunities were; we wanted to see how we could be more proactive in terms of co-ordinating policy, developing markets, creating harmonised standards & best practices and building on industry education efforts through research and capacity building,” says Sukumar. “One of my main objectives when I became CEO in 2015 was also to raise the WFE’s profile on behalf of our members and ensure we were as impactful as we needed to be. Our members want us to be the public face of regulated markets.”
She adds, “We wanted to bring the members together in a meaningful way, to get the different members to meet in the middle. We are a diverse membership, both large and small markets, with multiple asset classes and geographies across the exchanges and CCP landscape. They sometimes have different views and we needed to unite as an industry and find that common ground on issues.”
WFE comprises 300 market infrastructure providers – both exchanges and CCPs. Geographically, the breakdown of members is 45% in Europe, Middle East, and Africa, 35% in Asia-Pacific, and 20% in the Americas. WFE exchanges are home to nearly 53,000 listed companies, which combined have a market capitalisation of over $93 trn.
WFE’s 57 member CCPs collectively ensure that risk takers post some $1 trn (equivalent) of resources to back their positions, in the form of initial margin and default fund requirements.
Sukumar’s strategy and vision has meant that WFE is rarely out of the news. Its various working groups regularly publish detailed analysis on a wide variety of topics ranging from public policy to technology, emerging markets, market structure and sustainability. The trade group is also kept busy responding to the plethora of regulatory consultations. The more recent include the European Commission’s current review of MiFID II as well as the Financial Stability Board’s treatment of CCP equity in resolution.
WFE is also not afraid to weigh in on more contentious subjects such as short selling, which has been a hot topic during the pandemic and the ensuing lockdown period. It was banned across various European countries due to the increased market volatility and WFE published a paper assessing the academic literature on the pros and cons. The conclusion was that short selling bans not only reduce liquidity but also increase price inefficiency and hamper price discovery, which seemingly exacerbates market volatility rather than control it.
Not surprisingly, the last six months with Covid-19 raging and lockdowns implemented has been a busy yet very productive time for WFE. One of the first steps WFE took was to create a new single Covid-19 page to support and help member navigate through a volatile and uncertain time. It not only kept them abreast of the latest and news developments within but also outside the WFE.
“We wanted to provide a sense of community because everyone was working remotely,” Sukumar says. “On the research front, a lot of the work that we do is conceptual, and we publish big thematic pieces in additional to empirical analysis while with our policy work, we agree and publish those co-ordinated industry positions. But this has been an unprecedented time and we wanted to ensure that we had coordinated information to help our stakeholders understand how Covid-19 was playing out across exchanges and CCPs, and what our industry was and is doing.”
She notes that cyber-resilience rose to the top of the agenda during the crisis, but attention was also focused on the short selling bans being imposed and the debate over whether market infrastructures should be shut down. “There was talk at the time of closing them down, but we feel it’s fundamental that they remain open during the crisis because market infrastructures allow businesses to fund, investors to price assets and manage risk appropriately,” she adds.
Sukumar was well versed to become CEO of WFE, having spent 14 years learning the inner workings of market infrastructure at Bloomberg where she established its coverage of exchanges and of the UK financial services regulator. She joined WFE in 2014 as chief administrator before quickly taking over the helm as acting chief after Hüseyin Erkan, the former head of Turkey’s biggest bourse, retired.
“I set up the beat at Bloomberg and was very pleased to be asked if I wanted to join WFE,” she says. “I knew the organisation well and had a clear sense of the role it should play and where it should be going.”
Sukumar relished the chance to take WFE to the next stage of development particularly in a world where markets at the time were becoming even more fragmented due to the rise of dark pools. “Often challenges are talked about in a negative sense, but I look at them as opportunities — something to be solved and not as a hurdle,” she says.
However, she stresses the importance of creating a team with diverse experience and talent. “In order to be a good manager, you have to have a vision but be realistic about what can be achieved. It is important to be a strong communicator and understand human nature and recognise the different skillsets that people bring to the workplace. You need to be able to motivate people, who are driven and inspired by different things, and bring out their best capabilities.”
Sukumar is also sharpening the focus on diversity and inclusion and was pleased that for the six-consecutive year, around 78 of its member exchanges rang opening or closing bells to celebrate International Women’s Day 2020. The event this year was to raise awareness about the business case for women’s economic empowerment, and the opportunities for the private sector to advance gender equality and sustainable development.
“I think we are making progress, but the world is not perfect, and we need to do much more,” she says. “At WFE, around 50% of my colleagues are women at any given time but I do not think, at the WFE, we need to have a specific diversity filter. The most important thing is to hire the best person for the job. Women want to be known for being the best person for the job. What we need to do is get more women to apply, get them to believe they can rise and help them rise. I am lucky in that I had very encouraging parents and very encouraging mentors at the WFE.”
In general, in terms of her own career development, Sukumar believes it is essential to “find a job that is interesting and to do it to the best of your ability. It is important to like what you do, and I am fortunate that I have an incredibly fascinating job where I can think, study, talk, debate and research market structure and how the industry works across the world. Also, I just really enjoy my members – I miss seeing them during this time of pandemic.”