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Revolution in Australian money markets: a tribute to Ellis Bugg

My relationship with Ellis goes back to 1986 when I moved to Sydney. He was a senior manager in financial markets in the Commonwealth Bank. A few years earlier, Bill Evans had recruited him from Perth. Managing the Bank’s liquidity was Ellis’s specialty. The gyration of interest rates moving between 12% and 22% was par for the course in the 1980s and early 1990s.

Ellis used the full resources of the broader market, positioning players to be either "with him or against him". He weathered 10 or more mini financial crises before the big one hit in 2008. His skill was juggling many moving parts. He knew an exceptional number of decision makers within the Federal Treasury, Reserve Bank, official dealers, competitor banks, brokers and clients. If you wanted context, wanted to know what others were thinking and how they would behave, you just needed to ask Ellis. He was a tactician at heart, understanding the plays six moves ahead.

In the 1980's deregulation of banking was rapid. New foreign banks were setting up, Federal and State central borrowing authorities, superannuation asset managers and swift fast moving technologies were emerging.

Ellis occupied a unique seat in this evolution. Literally, the front seat. Sharing insights, building on the knowledge base, challenging traditional thinking, playing the politics and keeping on top of the real issues were all important daily pursuits for Ellis. His conversation circles were about giving and receiving information. He instructed me to talk and listen in the required proportions when amongst important contacts.

Ellis had his supporters and detractors. In political battles, he won a fair few and lost a fair few as well. When he lost, he cathartically chose to talk through the issues, question and understand the opposing viewpoint, chat about the personalities and essentially move on the best way possible.

I have one story that encapsulates his professional qualities in particular.

The birth of Austraclear, a world renowned securities settlement system

Once upon a time, there were retired bank managers walking the streets of the nation’s financial capitals, settling high value transactions in bonds, semis government securities and bank bills. Their satchels had signed ownership transfer forms, negotiable securities and bank cheques for hundreds of millions of dollars.

Risks abounded in this process. It needed to be comprehensively reengineered using modern electronic technologies. Ellis wanted the physical objects to dematerialise or disappear like a “Star Trek Transporter”.

The four major banks and other key stakeholders came together in a cooperative venture to build this better mousetrap. The goals were achievable, there was evidence of similar undertakings around the world, but the devil is always in the detail. The banks appointed an independent CEO to build a team and deliver the technology platform. Ellis was involved early in the project, in addition to his main day-to-day role. The goal was critical as it would allow CBA and the whole market to scale daily activity hundreds of times.

The design and development of Austraclear had very rocky beginnings. The project used all its available funding on two occasions. With the cookie jar empty, the CEO began to hijack the agenda and hold a gun to the heads of the Board, comprised of persons like Ellis from each of the stakeholder banks.

Austraclear was failing on many fronts and the common objectives were being lost in tense negotiations. A massive crisis was unfolding. Ellis single handedly devised a plan, which was nothing short of a political coup. He shared his plan only with Bob Challis at ANZ, Ray Terkelsen at NAB and his Westpac counterpart. A new CEO, Keith Usher, was chosen and another round of funding was injected to overthrow the current CEO.

Ellis was holding the defibrillator paddles to a dying corporate corpse. He was cool in a crisis. Others looked to him for leadership and a way forward. The immediate objectives were to re-contract the staff, secure the software code and own the design plans and the end-to-end process specifications. If you are thinking Mission Impossible, you are on the right track.

Late one Friday night, Austraclear’s key operations manager was approached at his home by Keith Usher, someone he had never met, representing the big four banks. The plan to take control was shared quickly and comprehensively. This key person’s salary was trebled and he was given an immediate mandate to speak to all the other staff and offer them jobs on the payroll of the big four banks. They were made to understand Austraclear was failing and would not survive in its current state.

By Monday morning all staff were galvanised into action. The new management was in control and Ellis was steering the ship. It was now or never! All issues that were impeding progress were identified. Renewed commitments with a tight timeline were agreed. Banks had to integrate their systems to the new platform. They were required to upload all their securities, abandon the use of secure vaults and put high dollar values into operating accounts. Commenced as a concept vision in 1981 and delivered into production in 1990 is a hell of a gestation period. Austraclear was about to be born.

Ellis's good friend of 35 years, Tess Kyprios, settled the first Austraclear trade on behalf of the CBA. Today Austraclear is one of the world’s most prestigious securities settlement systems. A great debt of gratitude should be awarded to Ellis. In my mind he should be inducted into a Banking Hall of Fame. Ellis eventually became Deputy Chairman of Austraclear.

Ellis taught me that a crisis is merely an instant in time when you have to make decisions. Think through the options, talk to stakeholders, organize and motivate all involved and move forward.

Ellis was a unique and special person. In business Ellis was a highly respected, passionate and knowledgeable leader who was confident and decisive. He was curious and questioning with a strong work ethic and a great sense of team and community. Ellis’ opinion, insights and advanced thinking were constantly sought out by many associates in the financial markets arena, a business that he loved.

RIP dear friend Ellis Bugg, we will miss you every day.

Ellis Bugg, 28 July 1949 to 25 August 2016


Peter Sheahan is now Director, Interest Rate Markets at Curve Securities Australia. This is an extract from the eulogy Peter gave at a Memorial Service for Ellis in Sydney on 15 September 2016.



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