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2012 Top International Operations Executives

The More Things Change, The More They Stand Out
 |  DIANA CHAN: Shaking Things Up, In European Clearing |  CHRIS REMONDI: Increasing Information, Reducing Risk |  NEERAJ SAHAI: Marrying Large-Scale Technology With Boutique Service |  KEVIN MILNE: Making an Exchange Succeed By Working With Rivals |  THOMAS ZEEB: Gold Standard in Securities Processing |  CHRISTOPHER JAYNES: Cutting Out the Custodian Bank |  PATRICK COLLE: Going Global, But Not Everywhere |  TONY FREEMAN: Targeting Two-Day Settlement

DIANA CHAN: Shaking Things Up, In European Clearing

December 14, 2011
By Tom Steinert-Threlkeld

She was unproven, on her first job out of graduate school.

Among her tasks: Sell the use of a computer program that would allow institutional customers to spot foreign exchange risks and hedge against movements in interest rates.

So, to make sure she understood what she was marketing, Diana Chan decided she better figure out what it was she was selling. This, after all, was in the era when computing was something of a dark science, overseen by lords who could establish the formulas that would cause computers to spit out the reports that users and their customers might need.

“I looked at that thing and I said, if I'm going to sell this thing, I'd better know how exactly it works,’’ Chan recollected in a recent conversation with Securities Technology Monitor. “So I punched in an example, then it spit out the report, and I sat there and manually tried to calculate how it got to the results of the recommendation, with my input.”

Diana Chan, CEO, EuroCCP

Chan couldn’t get her calculations to match those that came out of the program used by Morgan Guaranty Trust Company, now part of JPMorgan Chase. So, she asked that the formula in the program be checked, for accuracy in processing inputs and results.

There was, of course, a mistake. Yet the program had been sold to customers as accurate.

The program got pulled from the market and Chan earned a reputation as being thorough.

Chan is now the chief executive of EuroCCP, which has acted as an agent of change in the European clearing services marketplace.

Its goals: To radically reduce the cost of carrying out securities transactions in Europe, to something more akin to the cost in the United States, and to promote the ‘interoperability’ of competing clearinghouses. This so a trading firm can designate whichever clearinghouse it wants to use for any transaction on any exchange or venue it wants to use on the European continent.

The clearinghouse, spawned by the Depository Trust & Clearing Corporation, has been on a mission to lower costs and increase efficiency. When it responded to the request for a proposal from Turquoise, a new electronic trading facility setting itself up to take advantage of new cross-market operating rules emerging in Europe, the lowest charge for clearing one side of a trade on that continent was 29 cents. The lowest bid for clearing one side of a trade that came in response to the Turquoise search for alternatives was 20 cents.

The EuroCCP bid? Six cents.

Chan has never been one to avoid unconventional approaches to advancing efficiency of securities markets. In fact, she has embraced them.