Clearing and settlement has always been seen as the plain-as-paper sister to the sexy and vivacious front-office trading systems and technology. Now it may be time for plain Jane to shine. Investment banks and other exchange members alike are focusing more than ever on their risk management. This is inspiring bourses to tout their clearing and settlement systems’ reliability.

According to Rick Redding, managing director of products and services for CME Group, who spoke at today’s Citi Financial Services Conference in New York City, the Chicago bourse will “continue to stress high standards of the clearing house to make sure we never have a situation where customers are exposed.”

It has become evident that financial institutions are looking to shift some IT dollars to risk management systems in 2009. I think we will also see global exchanges beef up their clearing and settlement units or forge partnerships with clearing houses. But can the exchanges’ marketing teams make the industry swoon for back office effective risk aversion philosophy as it does for millisecond match rates and complex algorithms?

We’ll have to see.

--Oksana Poltavets, Dealing with Technology