Derek West, Senior Director, Derivatives Oversight at Quebec’s Autorité des marchés financiers (AMF) talks to DerivSource about the challenges and opportunities of working in the public sector during a time of extreme market change. He shares his thoughts on what makes a successful public servant: patience, discretion and the ability to navigate bureaucracy.
Q. Did you always want to work in finance?
A. No, I fell into finance and moved to the US in 1995 to join my partner worked for a US company. I applied for a role at the National Futures Association (NFA) but at the time I didn’t know what a futures contract was so. I have to admit I knew next to nothing about the industry then. At the NFA, I worked in the systems department for five years, then moved internally to become the manager of futures planning & development and later was promoted to Director. I spent almost 10 years at the NFA.
Q. Did you find that you started to enjoy finance when you moved into strategy and planning?
A. One of my programming jobs was redeveloping a mainframe system that dealt with financial statements from brokers and dealers. I was obliged to understand all aspects of their business from a financial point of view, enter logic into a computer system and provide analysis for the compliance staff and this was a great intellectual challenge. The concepts of futures and options are complicated for some but for me, it just clicked.
Q. Is there an event or a particular experience that was instrumental in your career progression?
A. It was more the people that I worked with rather than a particular event. I had some really great mentors in my IT role at the NFA and when I was in management, the president of the NFA at the time, Bob Wilmouth, was a great mentor, as was my boss, Karen Wuertz. The people I worked with throughout my time at NFA gave me a lot of guidance, which opened up my eyes to the possibilities of a career in this field. I was fortunate to work closely with senior folks at the CFTC and many self-regulatory organisations from around the world. And I found securing the trust of people I respected and having the opportunity to work closely with them helped me to understand how important it is to give back and coach others along in their jobs, which I do actively.
Q. How did you make the move from the NFA to the AMF?
A. My first role with the AMF was to develop legislation for Quebec’s derivatives markets. The Derivatives Act was enacted in 2009. During my time at the NFA I had established contacts with the AMF so when they were looking for someone to develop new legislation, I had all the skills and they needed: the knowledge of futures markets and their key players and of US legislation. The Chicago connection and the fact that I speak French also helped.
Q. Describe your current role and responsibilities, other initiatives and committee work which you are involved with?
A. As the Senior Director of Derivatives, I have a team of 10 people and together we are responsible operationally for derivatives policy and legislation development including OTC derivatives. Currently only OTC derivatives offered to retail customers are under my operational direction as we have yet to implement the G20 rules for institutional OTCD, but this will expand as the world becomes more regulated. We are heavily involved in drafting rules for the G20 commitments, which extends beyond work for the AMF. I also chair the Derivatives Committee for the umbrella organisation of the Canadian Securities Administrators (CSA).
Q. You have been involved in a lot of the consultation papers with International Organization for Securities Commission (IOSCO). Are there certain projects that you have found particularly interesting?
A. The current project on regulatory access to trade data repositories, which I am co-chairing with the Bank of France. This project is an interesting one as trade repositories are very new and unknown entities. The fact that regulators will also be one of the consumers of TR data makes for a very interesting challenge both for industry regulators and market participants. It was quite an honour to be asked to co-chair; you get an amazing discussion when dealing with people from different countries. Although this is the first time I have co-chaired a CPSS-IOSCO working group, I have participated in the IOSCO’s commodity committee and various task forces since the 2008 crisis.
Q. You have had several roles within policy and legislation. What elements of your role do you find most rewarding?
A. The policy work is an intellectual challenge; it is an interesting balance between needs of the marketplace and those of the public interest all of which must fit within a legal framework. Currently, there is a political will to back up the regulations and to move forward in every jurisdiction, which is both reassuring and satisfying. As a public servant you don’t always have an immediate feeling of great accomplishment because the pace can be slow, however, developing policy and rules domestically and internationally whilst exerting influence as to the most appropriate rules for your market place gives a great sense of satisfaction.
Q. If there is a young reader who might be working at a bank or exchange and may be interested in working for a regulator or in the public sector what should they expect?
A. Individuals are not attracted to public service for the money but one advantage is the work/life balance especially for someone who wants a family. You must be able to navigate the bureaucracy, be discrete and patient due to the slow, inexorable movement of the machine. When developing rules after an event or a crisis, one risks an overreaction. Getting regulations which are appropriate and not overly burdensome requires skill and intellect. Regulations exist for a reason – to protect the public interest and there is a great sense of job satisfaction and I can’t stress that enough.
The frustrations exist in any bureaucracy, whether they are large or small organisations, public or private sector. You need patience, organizational discipline to work within that structure and be culturally sensitive to the environment you are working in.
Q. What skills are important when drafting and producing consultation papers?
A. My friends or team members will tell you that I am not a patient person, however the past 10 or 15 years I have had to learn to be patient and accept that sometimes sober second thought is useful, and there are great benefits to working in a committee structure. It will always take longer than working with a smaller team but I sincerely believe that working in a group and getting diverse opinions the better the end result.
Q. What has been your biggest challenge or lesson learned?
A. One of the challenges is trying to get a consensus and an appropriate level of compromise. Whether it is a new report, rule or piece of legislation, you want to get an end result of the highest quality, and the more compromise, the more watered down it becomes. Understanding the concerns of all the participants — where they have room for negotiation, where we can find mutually acceptable solutions and where we have to agree to disagree — is something that I am continuing to learn.
Q. Are there any cultural differences you have experienced when working in Canada and the US?
A. The are only a few differences working in Chicago and Montreal. The most significant difference is language and working entirely in French. There are cultural differences in that people bring diverse backgrounds to the table.
The vast majority of people I have worked with are highly dedicated, which I think is due to the industry we are in. It is an exciting and intense industry and it attracts people who have a drive, I see that both with public service in Montreal and the private and public sector in Chicago.
Q. What is your next big focus or challenge?
A. Operationally the biggest challenge for us is dealing with the trade repository data and the underpinning of the G20 commitments. Making determinations on what needs to be cleared, and determining whether someone should be registered when they are not, for example, will be facilitated by analysis of trade data. In fact these and many other tasks we have set for ourselves would be all but impossible without TR data. The economic analysis and a better understanding of what up to now were very opaque markets is a huge challenge and one which I am looking forward to.
Q. What would you do professionally if you hadn’t followed the path that you are now on in regulation?
A. I would really like to work in Starbucks. I like the snappy green apron. I can’t imagine a better job than being assistant manager in Starbucks in Honolulu, though when I saw that very posting on their web site, I didn’t apply as I thought managers most likely don’t get to wear the apron!
Q. Any last words of wisdom you would like to share with our readers?
A. I always say to people turn up five minutes before a meeting, make sure you have read all the material and work hard. Career success is common sense; be polite and arrive on time. And a good sense of humour never hurts.
