Chris Murphy
Jul 28, 2021
-min read

Carrying a torch for fairness: Why the Olympic ideal and spirit of fair play is as vital for capital markets as elite sport

Carrying a torch for fairness: Why the Olympic ideal and spirit of fair play is as vital for capital markets as elite sport
Tokyo has welcomed 11,091 athletes to compete in 33 sports and 339 events at the 32nd modern Olympic Games, despite the ongoing Covid pandemic. From Artistic Swimming to Slalom Canoe, Dressage to Decathlon, Steeplechase to Skateboarding, sportsmen and women are fighting for medals and glory while upholding the Olympic ideal.

While nebulous – the International Olympic Committee even modified its "faster, higher, stronger" motto three days before Naomi Osaka ignited the cauldron in the Japan National Stadium – the spirit of fair play, wrapped inside a broader concept of "friendship", has remained constant since Pierre de Coubertin founded the IOC in 1894.

Regardless of phrasing, winning fairly is an indissoluble component of the Olympic Spirit. It is even part of an IOC-sanctioned education program. Sport has derived countless variations of this central theme, and, disappointingly, countless nations, teams and individuals have challenged it with boycotts and various methods of cheating, notably doping.

That the principle of fair play survives at all is testament to the universal good it embodies. Cheating makes losers of us all, including those who gain by gaming a particular system, whether sporting, legal, academic, professional or financial. The last will resonate with the likely readership for this article.

As financial services leaders, we share a responsibility with sporting federations to promote fairness. Our industry has suffered as much from scandal as any sport. And we know that, like sport, tainted results bring reputational damage that cannot be exculpated by scapegoating an individual and branding them a lone wolf.

The truth is an athlete who dopes rarely does so alone. More discomforting is the grey area in which their actions take place. A thin line separates health from performance. Often, a thinner line separates performance-enhancing drugs from medicines. Conceivably, a "clean" athlete is one who consumes every permitted substance.

So it is with financial services. Were the thousands of professionals who performed the numberless processes that led, collectively, to the Global Financial Crisis, bad actors? Or were they following internal protocols designed to comply with the letter, if not the spirit of the extremely light-touch regulation that existed pre-MiFID2?

We must ask: is regulatory compliance enough? Or can we – should we – do more? At Ediphy, not only do we believe in the principle of fair play, we have built simple, powerful systems to promote it. Our digitally native, venue-agnostic execution, for example, empowers buy-side clients with vastly increased visibility.

In our world, gold is a commodity rather than a goal, while performance is measured in micro-seconds, but the underlying parallels with elite sport – good and bad – are clear for anyone with eyes to see. Too often, sadly, the most obvious has been the pursuit of success at any cost.

In recent years, however, a more edifying synergy has emerged with the development of what might be described as "fairness technology". The introduction of VAR to the English Premier League, for example, has not been without controversy, but the recent Euro2020 tournament showed how smoothly technology and judgement could align.

Other sports supported officials with advanced replay technology years before football adopted the same. Why was a sport so commercially developed so slow to act? In capital markets, where many entities still trade like it's 1999, we might ask ourselves the same question. Scale is not always aligned with change.

My experience is that monolithic entities are slow to adapt. It's why, at Ediphy, we cherish our agility. I've seen the view from both sides of this fence, as head of European rates trading at Morgan Stanley and co-head of global fixed income at UBS, and know which I prefer.

It falls on those of us with ambition, experience and vision to drive change. Along with Ediphy's Co-Founder, Dan Wild, our CTO, I decided the best way to pursue a new vision for capital markets was outside of the existing power structure. Together, we've developed a fully-integrated solution from scratch.

Naturally, our technology is fully MiFID2 compliant, but it exceeds mere legislative requirements in its design and ethos. To return to my opening point, we have built a technology that embraces the spirit of fair play. With democratised data and fair access to liquidity, we level the digital playing field.

Our development of a consolidated tape for European bond markets, a transparency tool recommended by MiFID2’s European Commission legislators, and strongly advocated by organisations like ICMA, offers further cause for optimism. Our work aligned with Dutch regulator AFM proves that change – structural, technological, and, ultimately, cultural and ethical – can be achieved.

To return to doping, professional cycling has transformed. In 2019, Chris Froome was finally awarded victory in the 2011 Vuelta a España when Juan José Cobo, the rider who'd stood above him on a podium in Madrid eight years earlier, failed to contest irregularities subsequently discovered in his biological passport.

The biological passport is an electronic record of a rider's blood values, gathered from samples taken throughout the year in unannounced tests made within and outside of competition. Doping Control Officers simply turn up wherever the athlete is staying, courtesy of mandated "whereabouts" information supplied to the International Testing Agency.

The passport's success lies in digital record-keeping and advances in anti-doping technology, such as retroactive testing. Tests of the same samples made years later with improved technology may yet uncover substances undetectable during an event. In financial services, transparency is equally important, and, as in sport, “fairness technology” constantly improves.

Our consolidated tape means information is no longer shared only by buyer and seller. Pricing accuracy will unquestionably improve as trade data is made publicly available and accessible to all market participants. By eroding the systemic advantages typically enjoyed by certain institutions, we aim to create a fairer trading environment.

Elite sport is engaged in a continual battle for fairness, and so too are capital markets. Sacrifice and reward unite athletes and market participants. While we should enjoy the competition in Tokyo, we should also remind ourselves that the spirit of fair play is a torch we must all carry.