Meet Mark Matthews, Zodia Markets' Chief Risk Officer

Join us as we get to know Mark Matthews CRO at Zodia Markets | Crypto. Without Compromise.

Hello Mark! Can you tell us a bit about yourself?

I’m of Celtic ancestry, a neat blend of Welsh, Irish and Scottish (mostly) – and grew up in the heartlands of mid-Wales. I had a free-range upbringing (swimming in the River Severn, making treehouses, picking (and selling!) blackberries and raspberries). I have a passion for rugby, cycling and a general spirit of adventure. Since leaving Wales I have lived in 5 countries across Europe and Asia. By the time I returned to the UK in 2021 I had been living out of the country for 20 years! Talk about reverse culture shock.??

You became Zodia Markets' CRO earlier this year, what made you join the team?

On the surface my story is fairly standard – 20 years in Financial Markets before moving into a role within Risk.? Your typical poacher turned gamekeeper. However, if I thread through a habit of actually reading governance and regulatory documentation, a penchant for constant optimisation, and an ability to intrinsically understand the immediate application of new concepts and technologies – then you will begin to understand the move from stable banking job to joining a Digital Asset start-up.???

On top of this, there is significant opportunity to disrupt the traditional banking architectures which are mostly all 40+ years old and are hugely manually intensive. Why should corporates settle for T+2 FX settlement where often it is far more convenient for settlement to be near instant, transparent and with certainty.?

Joining ZM in a Risk role was an opportunity to craft something from scratch, to influence the appropriate industry evolution, as well as setting the appropriate risk culture within an ambitious bank backed project.?

Risk management has become a crucial focus for businesses looking to access the digital asset markets, how important is risk management in addressing some of the evolving market’s fragilities?

When I first started in the role, we took the approach of implementing bank-like standards to the assessment of counterparty appetite. This biggest surprise was that many of the initial names we spoke to had little in terms of an ERMF or any ability to demonstrate a reasonable level of risk management. Even fewer had audited accounts.?Those that did have risk teams installed, we discovered that some “talked the talk” but failed to “walk the walk”.?

To answer the question of importance, Risk Management is critical to the success of this evolving market.?Fortunately, we do see more experienced risk professionals with strong traditional finance backgrounds joining digital asset firms - and that fills me with confidence; that as an industry we are on the right track.?

Your previous experience at Barclays, ANZ, Standard Chartered Bank, and ABN AMRO makes you a veteran within Financial Markets, what makes a trading business risk proof in your opinion?

Much like the efficient frontier in investment analysis, risk and reward are interconnected. To eliminate risk entirely is to extinguish the possibility of achieving any rewards, but there should be a sweet spot. You can’t make any business “risk proof,” but you can create the culture that supports a more robust risk outcome. I’ve seen firms which are so risk averse that they forget about doing business, and we’ve all heard about firms that completely lost their moral compass. There’s no simple recipe I’m afraid. You need an experienced team which has an ingrained sense for what’s right and wrong, a first line that owns the risk, and critically a second line with members that are smart, pragmatic, approachable and willing to listen.

What piece of advice would you give to digital asset businesses looking to have a more robust risk approach?

That’s a really good question – and when I look back over what I have observed over the last 2 years, all of the major failures within the Crypto ecosystem have been caused by a desire to ignore the significant and often painful lessons learned over the last nearly 100 years of the traditional financial services (aka TradFi). The digital asset space has appeared adamant that it wants to “speed run” all of the mistakes of those 100 years in TradFi in a few short years.? There is a famous saying, by George Santayana (and often misattributed to Churchill) that “those who cannot remember the past are condemned to repeat it”. Therefore, my best advice would be to employ a risk team with sufficient seniority and maturity that they can put in place a robust risk framework with appropriate controls and governance to support the level of risk appetite for their respective boards.? It need not be heavy handed, even a basic framework will improve most firms risk/reward profiles from where they currently are.?

Connect with Mark Matthews on LinkedIn and follow Zodia Markets to stay updated with the latest news in the digital asset space.