FIS Exec Discusses Decentralization And 'A Single View Of Your Risk' Across Positions And Markets

Zinger Key Points
  • For the past several years, FIS has been investing into a next-generation solution it calls FIS CD Trade Clearing.
  • 'In the cleared derivatives space, we have historically been the dominant provider,' FIS SVP Andrés Choussy said.

Benzinga, a media and data provider bridging the gap between retail and institutional investors, is bringing back its annual Global Fintech Awards event to New York City on Dec. 8, 2022.

Ahead of this recognition of disruptive innovators in finance and technology, Benzinga will periodically publish articles on those brands that it thinks are making a measurable impact.

Today’s conversation is with Andrés Choussy, the SVP of Securities Derivatives and Tax at Fidelity National Information Services Inc. FIS.

The following text was edited for clarity and concision.

BZ: Hey Andres, nice to speak with you. Tell us about yourself.

Choussy: I’ve been with FIS for over one year. I come from a banking background where I spent the majority of my career working at JPMorgan Chase & Co. JPM building and consolidating their prime brokerage and clearing businesses.

When I left JPMorgan Chase in 2017, I was running the derivatives clearing business for all of the Americas. I was responsible for all the prime brokerage OTC and listed futures clearing businesses. I left the bank because I wanted to start moving into technology. I first went to NEX, where I was the President and CEO of one of their businesses focused on post-trade. We sold that company to CME Group Inc. CME.

After the sale, I joined a payments and settlements startup called Baton Systems. After a year, I realized that I was better suited for a big company and that I wanted to work on bigger projects. That’s when I joined FIS.

What’s your focus at FIS?

I’m responsible for the processing, financing and tax businesses. Basically, all of the solutions we have on the cleared derivatives, securities processing and financing, collateral management, fixed income processing, and tax information reporting.

Prior to FIS, what changed your perspective on finance, technology and the merger of the two?

From a risk management point of view, we went through many different cycles at JPMorgan. That gave me perspective on cycle mentality and where the future lies. I’m much more of a builder and I wanted to continue building new things and solving problems. That is why I left JPMorgan and, ultimately, moved to FIS where we’re integrating businesses into one solution, and getting rid of solos.

Talk about the FIS product suite.

Most of the solutions under me fall into the category of being essentially middle- or back-office.

It’s essentially what is needed after a trade is completed, and push it through all of the risk management, booking, accounting, and operations steps, all the way up to settlement or collateral management. Those different steps happen after the trade has actually been executed. The tools we’ve developed expedite and automate those processes, helping connect the different players when needed.

What’s a use case?

If you need to settle, send out an instruction, or interact with another bank, we provide a lot of the connectivity and mechanisms through which those communications are being carried out.

What's your strongest business line.

The derivative solution has been around for at least 25 years. We built most of this technology but also acquired it over that period of time. The reality is that some of that technology needs to now move on to the next generation. For the past several years, FIS has been investing into a next-generation solution that we call FIS CD Trade Clearing.

What are common problems that FIS products solve?

The cleared derivatives market is incredibly big and complex, compared to equities. You’re talking about futures contracts that trade anything from weather and rates, to foreign currencies and commodities which experience a significant amount of volatility.

If you’re a clearing broker and you want to give an asset manager the ability to trade all of the different listed futures contracts in the world, you can either connect directly with different markets, or you can come to a player like us that already has connectivity to all those marketplaces.

You then interact with the exchanges but also receive data back from them that is consolidated. You have a single view of your risk across all of the positions you are taking across all of these different exchanges, even crypto.

What is the most interesting thing you’re working on?

Distributed ledger capabilities. One of the interesting things that are out there right now is the advent of these companies such as FTX FTT/USD. They’re trying to propose decentralized models in which buyers and sellers of assets can interact directly without a central counterparty.

Though these digital players have figured out how execution is carried out, they may have not fully thought out how the clearing, settlement, collateral management, risk management, and how accounting is actually carried out by the individual firms.

That’s our bread and butter. So, we’re working with a lot of these firms and trying to provide the rails for that middle- and back-office which, in many ways, is not an area of focus for some of these new entrants.

How can FIS speed up clearing and settlement?

Acceleration of settlement and collateral movements is by far one of the key priorities we have. But, there’s a tradeoff. This is to the extent that if you make some of those movements very fast, you need to be able to put in place the proper risk solutions so that the other side of your trade is not left unprotected at the same time. A lot of what we do is about putting in place those contained ecosystems that allow for more risk to be distributed across different players.

Can you provide examples of what you’re discussing when it comes to distributed ledgers?

The clearinghouse essentially neutralizes the risk across all of the market participants in some of the new models that are being proposed. The clearinghouse’s role is reduced all the way to the point in which it is nonexistent, and the contracts are essentially cleared through smart contracts that have embedded rules and carry out the same type of behavior that the clearing houses today are responsible for. So, the smart contracts may be coded to say: 'If the market moves more than 5% against you, automatically liquidate.'

What should readers take away from this conversation?

In the cleared derivatives space, we have historically been the dominant provider. We’ve invested significant amounts of money in modernizing our technology, and we’re looking at how to better leverage other assets, within FIS, to bring a more holistic solution and make it even easier for clients to actually process their derivatives. We’re doing all this in the context of some major transformations in the industry. Our job is to make it easier for clients to move into this new world.

Posted In: Andrés ChoussyCME Group IncFISFTXJPMorgan Chase & CoFintechInterview

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