New horizons

May 03, 2019
Brian Healy FCA, Managing Director at Atlantic Vantage Advisory, reflects on two decades of innovation and growth at the Irish Stock Exchange.

Brian Healy has been described as a “veteran” of the Irish Stock Exchange. The Cork native spent 20 years at the heart of the organisation. Having initially passed on the opportunity while working at Arthur Andersen, a persistent recruiter convinced him to meet the management. Thus began a journey that led to the transformation of one of Ireland’s critical market infrastructures.

When Brian joined the Irish Stock Exchange it had 30 staff, there was no electronic trading, no central clearing capability and it generated a small profit on its almost entirely domestic business. Although many predicted publicly the demise of the Exchange after its demerger from the London Stock Exchange, Brian had a contrary view. In his opinion, if managed correctly, the Exchange was potentially on the cusp of something big. “It was an opportunity to direct and guide the evolution of a business with a national impact, and that doesn’t happen very often,” he said. “But in 1998, I thought it would be a three-year project to launch the Irish equity market into the relatively new world of electronic trading.”

After three years, Brian knew the job was just beginning. The first step for the Exchange was “obvious” to him – a successful transition to electronic trading. However, he had to do that in a business with no technological capabilities. “With a clear vision, ensuring stakeholder buy-in and after building a bright, dedicated and young team, it then took us six months to go live in June 2000 with a world-class new electronic trading platform,” he said. “That technology platform – fast, resilient, very cost-competitive and, critically, easily accessible internationally – was the cornerstone of subsequent growth. In addition, it forged a team and developed a confidence that we leveraged to further diversify and internationalise the business. Other key strategic partnerships negotiated with Euroclear Group and with Eurex Clearing were also  centrally important. This foundation also saw us through the global financial crisis.” In fact, the Exchange’s conversion to electronic trading remains one of the smoothest and most successful transformations for any exchange globally.

Against the grain

So, how did the Irish Stock Exchange go from being an analogue organisation to having a real fintech competence? According to Brian, it comes down to a combination of understanding changing market dynamics, excellent people, smart partnering and brave decision-making. “One of the key decisions I had to make was to build or buy,” he said. “Most people assumed we would either engage a large technology firm to build a platform or buy an ‘off the shelf’ solution. Instead, we decided to simultaneously partner with Deutsche Bourse on the core trading platform, ISE Xetra, while building proprietary systems that delivered more bespoke functionality.

“There were raised eyebrows at the time as Deutsche Bourse wasn’t the global player it is today, but it was a very innovative model. Our mainframe was in Frankfurt as opposed to Dublin and you could describe that as a very early adoption of cloud technology,” he added. The ancillary systems also allowed the Exchange to develop unique and deep internal technology competences. “Within two years, we had internationalised our trading membership, trebled revenues, were winning business from London and were positioned to avail of further opportunities. This taught me a valuable lesson: great things can happen when you innovate and don’t go with the perceived wisdom – and, of course,  you rigorously manage key projects and maintain focus on strategic growth drivers.”

Building a compelling business case

Immediately after the launch of the electronic trading platform, Brian and his team set about developing a new platform for the Exchange’s funds and debt listing business, an important growth area. The Exchange faced an embedded competitor in Luxembourg. “Our strategy was to create an e-listing platform that would transform customers’ listing experience, converting from what was essentially a ‘people and paper’ business until then,” he said. “We also didn’t want to compete on price. The resultant solution was a proprietarily developed system that enabled the Exchange to handle, profitably and efficiently, greatly increased listing volumes and to become a world leader in this area.”

The Exchange’s trading platform has suffered just eight hours of downtime in the past 18 years. The stock exchange is the cockpit of the market, its indices a bell-weather, and if its systems are unavailable – even for a millisecond – the market knows, and the tolerance is minimal. The Exchange’s enviable record, coupled with the success of its international listing business, suggests that this approach has paid off in spades. Indeed, the level of interest from potential acquirors during 2017 and the Exchange’s ultimate sale to Euronext NV in 2018 at a very strong valuation is further testament to the value created.

Interestingly, such ground-breaking innovation was achieved with very modest capital outlay, an obvious attraction for shareholders. Brian notes, however, that the full backing and buy-in of the board, and of all stakeholders, was also a key enabler. “The board was very supportive. However, we ensured that there was a rigorous challenge and approval process in place. I always had to provide a compelling business case for any innovation or capital investment.”  In addition, as a fundamental market infrastructure regulated by the Central Bank, there was full regulatory oversight of all significant developments. Brian notes that “ensuring the full confidence of the Exchange’s regulators was always critical. I’m proud of the track record of delivery and of keeping a completely clean regulatory slate, including throughout the years of the global financial crisis.”

Need for reinvention

Over his 20 years in the Irish Stock Exchange, Brian’s ambition was to create a great business, delivering a leading-edge and internationally competitive infrastructure for Ireland’s securities market and for those around him “to make the Exchange a great place to do great work”. He grew his team from four to 80 staff covering the markets, operations, finance, technology and risk management functions. He left his COO/CFO role at the Exchange in July 2018 proud of a job well done: the group was robustly profitable with an EBITDA margin of 32%, had a diversified business, great staff and was well-positioned for future growth. His management style focuses on some simple principles: “Knowing your market and understanding what your customers need are obviously central. But for me, really good leadership is defined by integrity. It’s at the core of creating a high-trust environment.” He added: “I’ve always sought to hire and work with the best and brightest. A good strategy backed by the commitment and trust of the right people will consistently outperform.”

Today, the Irish Stock Exchange is in Brian’s rear-view mirror and although it was a period of great success for him and his various teams, he is looking forward to new career challenges and developing his other interests. He is now focused on a portfolio of advisory, consultancy and non-executive work. This includes chairing a cross-industry group, which is working with Euroclear Group to develop a new post-trade model for the settlement of Irish securities after Brexit, as well as two other INED roles. He has also been using his Irish Sailing Association skipper’s licence to explore other horizons. “Last summer, as a family, we really enjoyed some charter sailing in the Mediterranean and I have a small boat in Kenmare Bay, which will be used much more in the next few years.” In conclusion, Brian notes: “Businesses more than ever need to re-engineer and reinvent themselves; a corporate is just a reflection of the people that work in it and we too need to reinvent ourselves. A bit like sailing – always wonderful until familiar land disappears under the horizon, and then it’s just you and the sea! But that’s when the focus shifts to navigating to your next port of call and to enjoying the journey. I’m now fully open to new opportunities and thoroughly enjoying setting that new course.”

You can read more articles from business leaders in the second issue of Vision, a publication from Accountancy Ireland for members in business, supported by FK International.