THE PROFESSIONAL YOU

Briefly, tell us about your role in the organization and the mandates you handle.

I currently serve as the Chief Risk Officer for the North American Clearinghouses at Intercontinental Exchange, Inc. In this role I am responsible for the overall risk oversight of our clearinghouses.

Background on clearinghouses: Clearinghouses serve as the “central counterparty” to the financial transactions they clear. They provide three critical services: 1) it becomes the seller to every buyer and the buyer to every seller – this provides for multilateral netting across the entire market; 2) it provides an independent price of value each day for each product it offers and collects collateral to support such positions; 3) it pays and collects the profits and losses for all users. This independent arbitration of value provides for capital efficiencies that not available in the bilateral market.

Simply put, clearing has to do with the nuts and bolts of the contractual performance of financial products post execution. Once a trade has been matched on the Exchange, the clearing house becomes the central counterparty to the trade, thereby guaranteeing financial performance of the contract. This robust counterparty risk intermediation is critical to overall financial stability and supporting the availability of efficient and liquid markets. The role of the clearinghouse is to reduce systemic risk by “centralizing” and managing risk that already exists in the disparate and opaque bilateral marketplace. As opposed to bilateral positions, cleared positions are “centralized” in a clearing house and the positions brought by the clearing members are risk managed by the clearing house in a highly transparent, disciplined, sophisticated, and regulated manner. Most importantly, clearing houses collateralize their cleared positions and mark the cleared positions to market at least daily

My key objectives mirror the objectives of the clearinghouses. First and foremost, my job is to ensure that the 390+ members that clear transactions on our platforms are creditworthy institutions, meet membership criteria and are able to meet financial and operational obligations and our clearinghouse rules at all times. These members include all Big Banks like Goldman Sachs, JP Morgan, Barclays, Morgan Staley, Bank of America, Credit Suisse – just to name a few. The ICE clearinghouses manage in excess of 200 billion US Dollars in collateral.

My job is to ensure that the collateral or funds posted by our members are adequate to cover day to day market risk as well as risks that would surface in extreme but plausible scenarios. Also, my job is to ensure that the funds that are post by our members are safeguarded, securitized, diversified and held at highly creditworthy financial institutions. My job is to ensure that if a member or more go down, which could be large banks, similar to a Lehman Brothers situation; we have adequate resources and well tested policies and procedures in place to handle such an event. We conduct drills every year that simulate such events to ensure we remain resilient and prepared.