Parting Thoughts

ISDA CEO Bob Pickel reflects on his nearly 17 years in senior positions at ISDA

Swaps and ISDA have played a central role in my professional career ever since the mid-1980s when I was with the law firm Cravath, Swaine & Moore, ISDA’s original outside counsel. As I leave this incredible organization and consider other opportunities, I wanted to share a few reflections from my various roles at ISDA.

My belief in the essential power of these risk management tools known as swaps remains unshaken. From the early days of managing interest rate and FX risk, through equity, commodity, credit, weather, longevity and more, the logic of companies using these financial tools to adjust their exposure to risks of all sorts is irrefutable. However they are traded, however standardized they are, however the risk is managed, banks, companies, investors, governments and many others are more empowered to tailor their risk profile by virtue of the availability of these products.

ISDA has stood for safe, efficient markets for its nearly 30 years of existence. The way we have delivered on that promise at the macro level has been by focusing on so many of the details at the micro level. And I am proud to have been a part of delivering on that promise. The documentation architecture that we have built and the opinions that support that architecture are, perhaps, the most obvious examples of ISDA getting the details right so that, in the aggregate, markets are safer and more efficient.

As ISDA and the market grew, we focused on all aspects of the counterparty relationship. Growing derivatives markets created operational challenges, and our operations groups addressed those challenges through increasingly standardized processes and the use of technology, including FpML. Collateral use grew, not just to mitigate counterparty credit risk, but to facilitate trading, and we worked to provide solutions. Numerous iterations of the regulatory capital rules have changed the economics of products and trading strategies, and here we have served as both advocates for our membership and facilitators of implementation. Tax and accounting issues have been an undercurrent throughout, and we have always emphasized the need to provide the appropriate representation of these products and the risks they seek to manage.

It has been just as important to get the word out about the value of swaps and all that we have done to deliver on our promise of safe, efficient markets. We do that in many ways. Advocacy delivers that message to policy-makers. Our communications team reaches out to the media to get the word out more broadly. Our research efforts provide the analytical support for our messages. And our extensive, global conference program trains and informs people who need to understand how these products can be used in their businesses.

All that, and it has been great fun as well. That has been most true when we gather for our annual general meeting. Going to a different location every year puts a huge burden on our conference team, but the AGMs are what so many of our members remember fondly. From Rome in 1998 to Munich earlier this year, the AGMs have been an opportunity for me to get to know our members and to better understand their concerns.

ISDA’s three greatest strengths historically have been its global nature, the diversity of market participants represented in our membership and the range of products that we address. In the future, whether or not the products are cleared or electronically traded, I believe these will remain its strengths. ISDA’s scope and diversity – in terms of geography, asset classes, product types and members – creates financial and logistical challenges, and coming to consensus isn’t always easy. But the end result is stronger for having been forged in a process that encourages such broad input.

Organizations are ultimately only as strong as their people. I have been fortunate to have so many colleagues who are as committed to the organization as I am. This includes the many members of the ISDA Board, including six different chairmen, who I have worked with during my time at ISDA. It includes a committed, knowledgeable staff that has grown over three-fold during my time with ISDA, housed in seven offices instead of the two when I started. And it includes the many, many members who have contributed their time and expertise to ISDA. Since I became ISDA’s CEO in 2001, our global membership has doubled.

I am delighted that Scott O’Malia has agreed to take this organization forward as CEO, starting in just a few weeks. I will be working with our Chairman, Steve O’Connor, the ISDA Board and my many colleagues on the ISDA staff to help Scott with the transition to his new role. He can take great comfort in knowing that the broader ISDA membership will be working with all of us to maintain ISDA’s position as the global derivatives organization, working as always for safe, efficient markets.

All the best from a very grateful member of the ISDA team.

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