The path to enlightenment

Donald Brydon CBE, chairman of the London Stock Exchange Group, reflects on the lessons learnt from his 48-year career in financial services. This is a shortened version of our interview with Donald in the Q2 2017 edition of The Review
by Rosalie Starling

“We should be careful to get out of an experience only the wisdom that is in it” – a philosophy shared by Mark Twain many years ago, which comes to mind when thinking of Donald Brydon. 
Travelling through minefieldsGraduating from the University of Edinburgh with a bachelor’s degree in mathematical science in 1969, Donald jumped into the world of financial services as an analyst at what was then the British Airways Pension Fund. Soon after, in 1971, he experienced his first “big event”, and one of Britain’s largest ever corporate failures: the bankruptcy of Rolls-Royce. 

Donald began his 20-year career with Barclays Group in 1977, expanding the investment arm BZW Investment Management – a period punctuated by two momentous events. In 1986, the Big Bang prompted a push towards professionalism and meritocracy, values Donald supports, as well as a huge expansion in products and services. “It was a manifestation of globalisation, and of completely changed access to capital.” 

The crash of 1987 saw stock markets shed value at alarming rates. “BZW was the biggest market maker at the time,” says Donald. “It was our responsibility to make sure the market continued to function, that we played the right role, and we managed the risk in the right way. That was a really important moment.”

In 1996, Donald left BZW for AXA Group, where he served another lengthy 15-year stint, including executive and non-executive positions at AXA Investment Managers and AXA Framlington. It was here, in 2007, that another storm hit: the global financial crisis. “The crisis enforced the significance of really understanding how things work,” he says.
A changing worldKnowledge – not least due to incidents such as these – has been pushed to the forefront of the modern financial agenda. “This is where organisations like the CISI come in,” says Donald. “It’s doing the things that need to be done surrounding education and values, as well as trust and setting behavioural standards.” 

Attitudes, too, have changed immeasurably, he says. “There’s something very interesting going on now about loyalty. I’ve seen surveys that say 87% of millennials believe they are loyal to their company, but 72% of management do not think that they are.” The age of allegiance spanning decades is apparently fading, with a more ‘loyal in the moment’ mindset taking its place. “That’s changed, and it’s a big change.”

Integrity, shared responsibility, service mentality, value for money, choice and innovation are Donald’s “immutable” qualities for those wanting to succeed in the industry. While these core values have stood the test of time, attitudes towards the customer are markedly different. “Looking back, exchanges were about telling the customer how they would receive their service,” says Donald. “If you put customers first today – into a technology world – they decide on the channels and the routes, and how products and services get delivered.” 

And trust forms a huge part of this modern business-customer rapport. “The trust that customers, employees and the wider public places in business now is fundamentally essential.”
Tomorrow’s companyThis is the ethos behind the LSEG’s Open Access philosophy, which encourages independent thought to embrace the trends and demands of the modern world, and the modern consumer. Technology, of course, plays a huge part in this. “There’s an innovation streak that runs through the entire building,” says Donald. “If you combine that with an intense desire to partner with our customers, then building new markets, platforms and products becomes a natural part of the DNA.”
“Capitalism can be the most egalitarian economic stewardship model ever created” Now heading up the firm’s board, Donald is ready to ride the wave of change once again. While his current term only dates back to July 2015, Donald’s ties with the company go back some 25 years, when he served as the first chairman of the FTSE Indices. “It’s transformed enormously, beyond all recognition,” he says of the firm, which has developed from a trading business into a major global entity. And yet another change is possibly in the works, in the form of the company’s highly publicised planned merger with German market infrastructure group Deutsche Börse AG, announced in March 2016, which is awaiting the decision of the European Commission’s review. 

If the merger is consummated, it will result in the creation of a world-leading market infrastructure company. “We’ve got a strategy that ensures Europe, as a geographic entity, becomes relevant in the world of exchanges and capital markets,” says Donald. “Whatever the EU will turn out to be, and whatever the result of our merger discussions, we will have feet both inside and out.”
A united futureCohesion and collaboration are essential for the future of the industry, in both a business and societal context, says Donald. “I want to look at how we can strengthen the ties that bind financial markets and society together, and how we can support innovative high-growth small- and medium-sized enterprises (SMEs) [which represent 99.9% of UK companies], enabling innovation, growth and job creation in the UK, Europe and indeed globally.” 

Capitalism, too, is important. “I believe capitalism can be the most democratic, popular and egalitarian economic stewardship model ever created, but it needs to adapt its sharp edges.” Through investment-backed innovation, capitalism can generate a new wave of wealth, and this can be achieved through improved access to risk finance for growth companies. “Risk capital should be distributed directly at the bottom of the entrepreneurial ladder, rather than just debt from the top via a handful of lenders.”

Retail participation in financial markets can also assist in “connecting” the population with capitalism. “The public deserves the opportunity to benefit from growth and value creation of the UK’s own future Facebooks and Googles,” says Donald. To promote engagement on a wider scale, LSEG is partnering with the CISI to produce educational, public materials on the basic principles of personal finance and investing.

Whatever the future brings, the financial sector has a responsibility to society as a whole, he says. “Never has there been a greater need for those leading and administering the financial markets on an international basis to have at the heart and core of their existence two values: integrity and accountability.”

The full version of this article was originally published in the Q2 2017 print edition of The Review. The print edition is available to all members who opt in to receive it, except student members. All eligible members who would like to receive future editions in the post should log in to MyCISI, click on My Account/Communications and set their preference to 'Yes'.
Published: 19 May 2017
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