Stepping up to the plate

LCH.Clearnet is the leading central counterparty in Europe serving major international exchanges and platforms. It clears over 1.25 billion contracts a year with offices in London, Paris, Amsterdam and Lisbon. Turn back the clock a few years, and you’ll see a company whose IT was in disorder. With a failed strategic IT initiative and IT dislocated from the heart of – what is in effect – an IT-dependant financial services business, things looked bleak.

In June 2006, Martin Taylor joined LCH.Clearnet as interim CIO, reporting to the Group CEO and a member of the Group Executive committee. Not one to shy away from a challenge, Taylor has worked across airlines, food, telcos, chemicals and the music industry. His experience is diverse as they come. He has taken on some of the toughest information technology challenges in companies as large as Cable & Wireless and EMI.

At LCH.Clearnet to date, Taylor has implemented a three year IT plan directly supporting business growth, hired a top IT team and refreshed 30 percent of the IT workforce. His initiatives have driven IT performance and prepared the business for IT-enabled change and potential growth. He’s been called “a legend among CIOs, who specialises in turning around chaos. He can handle the most difficult or even dysfunctional situation. A key strength must surely be the ability to see the wood for the trees, make sensible decisions and drive them through.”

Together, LCH.Clearnet and Taylor are a formidable force. CXO was lucky enough to catch Taylor – one of 2007’s Top 50 CIOs as voted for by peers on silicon.com – for a quick chat.

CXO. Many CIOs tend to stay within the same industry but you’ve moved around a lot. Is it tough moving around this much?
MT. Not really – what I do is to drive technology-enabled change in business, so I would describe myself as sector agnostic. In all the businesses I’ve worked in, it has been about taking a business through a complex period of technology-enabled change generally backed by rapidly evolving market conditions. The difference here is that I’m doing it in financial services. But the challenge is fundamentally the same.

CXO. Being CIO of a clearinghouse as large as LCH.Clearnet must be quite a challenge. What are the most difficult parts of your job?
MT. The most difficult thing is matching the consistent levels of operational excellence that we’ve got to reach day in, day out, with the change required to take us to where we want to be. Doing both of those things at the same time and against the backdrop of a rapidly evolving marketplace is the real challenge, because we simply cannot afford to drop the operational ball in this business. That was not as big an issue in other industries.

To give you an example: if an FMCG business stops making chocolate for two days it’s not a big deal. If a telco has billing problems for a few days it’s uncomfortable for customers but on the whole the impact is not that great. If LCH.Clearnet fails to clear trades, we’re starting to impact the whole capital market’s trading infrastructure. That’s really the key difference. Operational excellence issue here is at the fore: having to do that and make change as well is the real challenge.

CXO. Handling so many hundreds of exchanges every day, risk management must be a major factor for you. How do you mitigate for technical risk management in IT?
MT. You’re absolutely right – we’re a highly regulated business in a highly regulated industry. To give you an example, we are required to be constantly available because we’re a market infrastructure player. That means I’ve got to have two synchronized data centres, with identical data in each of those two data centres at any given time. I have to provide separate power sources to those data centres. I’ve also got to provide separate network runs from different network providers that don’t run through the same conduits in London. To top that off, we have to constantly check that we can actually do what we say we can, which is to switch and run from either of those two data centres at any time.

This is a battle-tested plan. The 7/7 London bombings went off underneath this building, and we had to invoke that technical recovery. We have to take this seriously. It’s both a regulatory issue and an issue of pride: we’re proud to be professional at this. We also have a business continuity centre where – if necessary – we can move our staff to so they can continue to work if we need to evacuate this building. Technical risk management is a key imperative for us, and it’s a regulated requirement of what we have to do.

CXO. To what extent does technology drive LCH.Clearnet?
MT. It’s important to understand that we are less focused on the ‘latest’ technology, such as resilience or speed of response – not in the way that the traders are. We operate at the back of that. For us, technological imperatives pose a different set of issues which drive how we operate. We try to balance two things; firstly, we need to be reliable. Whether we’re delivering operational systems or projects to the business, they’ve got to be completely dependable. We’ve also got to be safe and secure, and in a position where there are no technical issues, so we can handle the trading volumes that go through the exchanges. We have to be able to deliver that day in and day out. We’ve seen huge growth in the volume going through the exchanges, and we have to keep pace with that growth, which we do.

On the other hand – and at the same time – we’ve got to recognise that our customers are asking us to be more agile and be more responsive to their needs and speed to market in projects that we deliver to support their products. This is absolutely critical. Our key job is balancing those two things and using technology to help us do it.

CXO. Is green computing a concern at LCH.Clearnet?
MT. Yes it is. We’re currently developing some policies in this space, which we’re hoping to introduce soon. We’re very keen that what we do results in minimum environmental impact.

CXO. What is your greatest achievement since you’ve been at the company?
MT. I came in as an interim about 18 months ago, so I’ve been full time at the business since about January. I’ll comment on this calendar year, which I consider to have been highly successful where we’ve refreshed a lot of technology systems and also refreshed people. We’ve worked hard at turning around the performance of the IT side of the business. To give you some examples, now we’re handling over 70 projects at the moment for customers, whereas we were running about 12 last January. The number of people in IT that I’ve introduced to the business has doubled since the same time to handle the workload that we’ve got.

We’re delivering between 10 to 13 projects a month to our customers. At the same time, the number of incidents that we’re getting on the operational side is showing a downward trend. The problems that we identify have been resolved quicker. So I’m immensely proud about how the IT team has stepped up to the challenge that the business has thrown out to us: refreshing the infrastructure, keeping that operational excellence at the very highest levels, bringing in new people to handle it and becoming a place where people want to work. We are seeing people who want to work for LCH.Clearnet because they recognise that we’re investing and we’re a key player in the market. We’ve got goals and a vision that people want to be part of. So for me, driving that through, selling it and getting acceptance of it inside and outside the business has been the achievement I’m most proud of this year.

CXO. So what do you hope to achieve at the company over the next few years?
MT. Firstly is to complete our refresh program. We said it would take anywhere between one and three years, and we’re on track to deliver it. My second goal is to consistently deliver to our customers on the promises that we make to them. I don’t think it’s any secret that 18 months back we were not very good at that. Now we don’t see that as an issue and my job is to keep it that way. My third goal is to further develop the staff capabilities I’ve got and to attract the best IT people from the markets so that we can really get this place operating at a much higher level. It’s my aim to achieve those three things, and I think I’m on track to do that.

About the company
LCH.Clearnet is the leading central counterparty in Europe serving major international exchanges and platforms, equity, exchange traded derivatives, energy, interbank interest rate swaps markets and the majority of the Euro-denominated and sterling bond and repo markets. LCH.Clearnet clears 1.25 billion contracts a year with offices in London, Paris, Amsterdam and Lisbon.