Road Trip: FIA's Walt Lukken Previews IDX 2025

With some of the biggest names in the financial services industry gathering in London next week for the International Derivatives Expo (IDX), Futures Industry Association President and CEO Walt Lukken stops by the show to preview some of the highlights from the agenda. Lukken also shares his views on how the industry has performed during these times of increased market volatility and details some of the important work the FIA has undertaken in recent months related to issues like tokenization and regulation. 

More resources

FIA White Paper on Tokenization

Derivatives Market Institute for Standards (DMIST)

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Transcript

(Note: This transcript was created using artificial intelligence. It has not been edited verbatim.)

Sean McMahon  0:00  

Hello everyone and welcome to the Modern Money SmartPod. I'm your host, Sean McMahon, and next week, some of the biggest names in the financial services industry are gathering in London for the International Derivatives Expo. It's been a while since I've been to IDX. In fact, I think it was way back before the pandemic. So I'm excited because this podcast is growing on yet another road trip to bring you all the news and insights from that event. Each year, IDX is hosted by the Futures Industry Association, and joining me right now to give us a preview of the speakers and topics that are on the agenda is Walt Lukken, the President and CEO of the FIA. Walt, how are you doing today? 

Walt Lukken  0:56  

Sean, it's great to see you as always. Thanks for having me.

Sean McMahon  1:00  

Yeah, I'd love to connect with you. We usually chat, you know, right around Boca in March, and kind of touch base and see what's going on in the industry. But with this big event coming up in London, what are you looking forward to the most when the industry comes together next week? 

Walt Lukken  1:11  

Well, IDX represents the preeminent gathering of the listed and clear derivatives markets in Europe. So it's great to get the C suite of that industry together once a year to talk about the different challenges and issues that are affecting them, and to see all these familiar faces, friends and family that are joining there from our industry. So it's great to be in London, and especially during this time where we've seen a lot of significant market volatility coming from the new administration talking about tariffs and and just what's happening with inflation around the globe. So this will be the first time that we've gathered since the Trump administration has come into office, and it's it'll be exciting to hear how the Europeans are viewing that and how our markets are reacting to to deal with that volatility. 

Sean McMahon  1:59  

Yeah, and I mentioned this the first IDX since the second Trump administration came into office. And I remember when we were in Bucha in March, there was a lot of talk about tariffs, but Liberation Day hadn't quite happened yet, so it was all kind of about what might happen, what might the plan be? And now we're kind of, you know, seeing what's what it is, and sometimes what it isn't, what it is, what it isn't. Again, how do you think the markets reacted so far?

Walt Lukken  2:22  

You know, good. Our markets are not there to drive the prices of commodities or securities, equities, financials in any direction, but they're there to hedge risk. And so, you know, volatility is part of the way our markets work. And so our markets have worked incredibly well, and in fact, we have seen record volumes in April from the Trump tariff announcements. We've actually seen less delayed trades than what we experienced during COVID, and that's mainly due to our industry, investing in back office, investing in settlement systems, us developing standards in that area through our demist initiative. So we're excited about that, that we've actually given capacity, safety and soundness back to the industry as the markets have grown. So it's a good news story for the derivatives markets. 

Sean McMahon  3:15  

And now looking ahead to London and IDX, every time the FIA puts on an event, there's obviously distinguished speakers, and this year's IDX is going to be exactly like that. So there any speakers or panelists that you're looking forward to the most? 

Walt Lukken  3:27  

Yeah, we have some wonderful keynote speakers and amazing panels, but a couple of the standouts, we have Lionel Barber, who's the former editor of the FT, one of his former journalists, Jeremy Grant will be interviewing him, and again, what is the state of the world and how do he sees the politics the new Trump administration, the Labor Party in the UK, how that is playing out globally? It's going to be fascinating. We also have former Federal Reserve Governor, Randy kroszner, who's at the University of Chicago now, but also advises the Bank of England on economic policy. So he'll be speaking on how he's seeing the macroeconomic view of the globe, and how a central banker might be viewing what's going on. And lastly, we have Hall of Famer Don Wilson, who will be in London. He runs Dr w1, of the largest principal trading firms in the globe, and he'll be talking about how traders are viewing the market from the customer and how they're dealing with this volatility. So those three speakers are stand out over the two days of the conference, and we're looking forward to hearing what they have to say. 

Sean McMahon  4:39  

You know, we already talked a little bit about tariffs, but are there any other topics, do you think you're going to be creating quite a buzz at IDX?

Walt Lukken  4:46  

Well, certainly AI and tokenization are front and center, you know, as technology just pervades our industry. You know, how can we benefit from those investments? And FIA is pretty. Promoting this idea of how we can tokenize our back office system, and many exchanges are thinking about this now. But once a trade happens, how can we move collateral faster? How can we de risk the system using this new technology and blockchain? So people are experimenting with this. We're going to publish a paper on tokenization that will be out by by the conference about how we can benefit from that. So that, to me, is very exciting, I think obviously AI, and how our industry can benefit from Ai, but also where the pitfalls are with AI and where the protections need to be. So that certainly is a topic we'll be talking about. And then lastly is just regulatory simplification. You know, we're 15 years since the financial crisis. We've had layers and layers of regulations put on the industry. I think the time now is to rationalize that, and I think the EU has recognized this through its Draghi report. The UK Labor Party has also indicated it wants to simplify these rules with Rachel Reeves talking about this issue, and of course, the United States is also going to be thinking about this with the SEC and CFTC. So FIA wants to work with its members to figure out, how can we rationalize the system, make it just as safe as always, not adding risk to the system, but make it simpler, using technology, using investment and finding those duplicative areas and trying to eliminate them. So that's going to be another key theme to IDX.

Sean McMahon  6:29  

All righty. Now you mentioned that FIA is just about to release a paper about tokenization, and I know that the FIA is hard at work on a lot of issues. So are there any kind of achievements, perhaps, since the last IDX last year that you want to highlight?

Walt Lukken  6:43  

I think, achievement wise, I mentioned, which is, you know, the fact that we have put in three new standards through our DMIST initiative, and those standards are starting to bear fruit, as I mentioned, you know, we had, have had a 50% reduction in delayed trades, even though volumes have grown in that area. For me, that is incredibly important, that our industry is improving, how it settles trades during times of growth and volatility. So to me, that is an enormous one for our industry. You know, we seem to be growing. There's more competition. There is, is more competitors on the digital currency side of things, and I think traditional finance and the digital currency industry is starting to converge. So to me, that is a recognition that our markets are working well, that they're where they're starting to adopt our framework and how things work. And I see, you know, a year from now, that this will be more mainstream and in a way that's safe for the public to invest in. So to me, there's been a lot of progress over the last year on that front as well, and more to come in the year to go. 

Sean McMahon  7:51  

Well, yeah, it certainly sounds like the FIA has been busy, and as you mentioned, it's bearing fruit all that hard work. Any other aspects of IDX that you're looking forward to?

Walt Lukken  8:01  

Well, IDX always ends with our charitable gala for the features for kids. So that is a industry adopted charity that raises money for underserved children. So over the years, we've raised, you know, millions of pounds for all these charities that we give to as an industry. So next week will be special, and that we have FIA zone, Chair of our Board, Alicia Crichton, will be a volunteer wearing in the kilt challenge, along with Chris Edmonds, the executive at ICE, but both of them will be wearing kilts to the IDX Gala. They raise money for these charities, and they've already raised over 100,000 pounds from donations of people who want to see them wear a kilt. So we're excited to have both Alicia and Chris be a part of that and raise a lot of money for these kids charities.

Sean McMahon  8:52  

Yeah, and obviously, listeners of this podcast, last week, I just released an episode where I interviewed Emma Davey, former Chief Commercial Officer who worked with you at the FIA. She's also the Chair of the Board of Trustees at futures for kids, and we had a great conversation where she shared all the background about that organization. So I encourage listeners to check that out and maybe support futures for kids in some way possible. Well, listen, Walt, I always appreciate connecting with you around these events and hearing what you're looking forward to the most and all the hard work the FIA is doing. So thank you very much for your time. 

Walt Lukken  9:23

All right, Sean, we'll see you next week. 

Sean McMahon  9:26

Well, that's our show for today, but just a quick reminder, be sure to watch this podcast feed next week, because we've already scheduled multiple episodes with some of the leading industry experts gathering at IDX in London. And if you happen to be heading to IDX. I look forward to seeing you there.