I arrive at my interview with Xavier Rolet to find him talking about the Rwandan genocide and the role imperial powers played in creating internal divisions within the country. While the topic is sombre, it is a pleasant surprise that the man I am about to interview is not the stereotypical ex-banker I expected, but a man with a genuine interest in the world around him. Breathing a (very) deep sigh of relief, I realise I wouldn’t have to ‘talk finance’ the entire interview.
Xavier Rolet is the Chief Executive Officer of the London Stock Exchange (LSE), a financial infrastructure firm headquartered in London, best known for facilitating the trading of stocks and shares in the financial market. But, Rolet is keen to point out, “The UK equities business is a very small economic part of our overall business. We run clearing houses and settlement houses; we run indices, a whole range of infrastructure with large amounts of balance sheets, payment systems, and many other things.”
Rolet is obviously very proud of the institution he has led for the past six years. The London Stock Exchange may be an unassuming cog in the financial machine, with comparatively little attention paid to it in the mainstream press, but it provides vital services.
Throughout our interview, it is clear that Rolet thinks on a very macro level. Talking about the business he heads up, he is keen to mention the global scale of its operations, the diversification that he has pursued, and the forecasting of events through complex chains of interdependence. Xavier Rolet is an internationally-minded man who deals in big ideas.
And it is easy to see why this is the case. Born to parents who were both in the military, Rolet spent his early childhood in a suburb of Algiers, while his father “was out in the Algerian bush”. He then moved back to Paris, to a north-eastern suburb called Seine-Saint, which he describes as being more “more akin to, say, Tower Hamlets or Stratford… it was a sink-estate for many years.”
I get the impression, talking to Rolet, that he was not fond of his time in Paris. Indeed, in the talk he gave after our interview, he described London as the best city in the world, with New York a close second. But nowhere was there any mention of France or Paris. On leaving his homeland, Rolet notes, “I managed to, frankly, avail myself of the opportunity through the education system, through scholarships, to eventually emigrate to the U.S. to pursue my education and I started my career there.” There is little sadness in Rolet’s voice as he describes leaving France. It is a country renowned for a population that is immensely proud of its national identity, and it is odd to meet a Frenchman with little to say about his own country.
Part of this detachment, perhaps, stems from Rolet’s deep commitment to internationalism and his awareness of how interdependent we all are as global citizens. His particular interest, he tells me, is in global security and defence. Having served as an instructor at the Air Force Academy as part of his national service, Rolet returned to education in 2007-2008, and graduated from the Institute of Advanced Studies in National Defence.
He recalls his time there, saying, “It was sort of continuing education if you want, centred more on global issues, economic intelligence, geopolitics, broader strategic issues related to defence.”
It is not surprising for a man brought up by parents in the military, living overseas due to France’s involvement in Algeria and serving in the Air Force, to pick up an interest in defence and security matters. But Rolet does surprise me by just how much he believes in internationalism.
“I happen to believe the world will continue to evolve towards what I believe will be a global governance mechanism. I know that when you listen to Nigel Farage and Marine Le Pen who are looking towards retrenchment and putting up the borders it may not feel like this, but I’m convinced we eventually will get to [some form of global governance].”
“It may start with finance, given the outcome of the crash of 2008. We are, I believe, slowly and reasonably steadily moving towards global financial governance, both in terms of conduct but also prudential regulation.”
I sense I’ve stumbled onto a topic particularly close to Xavier Rolet’s heart; these are the big ideas that evidently occupy his attention. He points me towards several emerging imbalances in geopolitics and economics about which we should be concerned. He tells me to look at “what is happening with Russia and the Ukraine, Japan going off in a bit of a strategic surprise in terms of reflating its economy and the rivalry with China, North Korea trying to chart a separate course, the tensions in the Middle East with Isis.
“These are not unrelated. I think its obviously coming out of the crisis of 2008 – where the financial crisis was very severe – that no single nation on its own has the power or balance sheet to fix the problems when they erupt on the global scene.”
Rolet seems to be warning me of what is to come. “We are right about the time when these things are going to be tested,” he says. “Whilst periods of stress usually lead to a retrenchment, the natural sort of atavistic reaction – you know, ‘no foreigners’, ‘the problems are coming from overseas’, ‘let’s not import them anymore’ – the reality is that the imbrication is so deep that I believe we will see a test soon.”
Rolet is frank about our situation. “We’ll either keel over and go into a disaster area, as Europe, frankly, has seen many times before, or we’ll be able to evolve into a more integrated global structure.”
Sometimes, it is hard to distinguish between the times Rolet is interested in external affairs for its own sake, and when he is interested because they affect his business. He manages to translate the crises of today fairly seamlessly into how the London Stock Exchange tries to anticipate them to protect itself. “We can be right, we can be wrong. But if you can correctly anticipate the trend – even if there are severe speed bumps on the way – if you predict the correct medium to long term trend, you can gain substantial competitive advantage,” he tells me.
Perhaps I’m being too harsh. Rolet is obviously a man with insatiable curiosity, concerned with both finance and global affairs. He certainly has important insights to share on the interdependence of participants on the global stage.
Although Rolet is unquestionably a capitalist, even here he occupies a more nuanced position than a simple characterisation of him as a free-marketeer type of capitalist would allow. There is a human side to his economics, a recognition of the need for regulation and guidance, a need for capitalism to work for people. Maybe he places too much faith in the mechanics of capitalism, but I cannot fault him for his desire to subsume and address social issues within his framework.
Rolet explains why companies, including financial institutions, should employ people with “a mixture of liberal arts, history, languages, experiences overseas”. He even suggests, “Maybe having a tough youth, where you’ve got to struggle to make it, can be useful in some respects.” In his talk, he tells us that some of the most entrepreneurial individuals can be found in the rough, deprived neighbourhoods of our cities.
Rolet himself is someone who has struggled and risen from what he describes as a “sinkestate” to become a very successful businessman. He has been fortunate to ride the surf of capitalism and truly believes, I think, in its positive impact on society. But at the heart of Rolet’s philosophy is a recognition that we are imperfect: states, organisations, and individuals can never know or control everything. Diversity and a breadth of study, he argues, can “help you adjust to an environment where you simply do not have all the elements necessary to make a decision”.
His views are somewhat refreshing. Rolet and the London Stock Exchange do not make the aggressive trading decisions that characterise much of the banking sector. His industry relies on neutrality, making efficient the exchange of goods and laying down the financial infrastructure for others. Unsurprisingly, Rolet has a lot to say on how we can avoid some of the mistakes we have made in the past.
I ask him whether the complexities of the financial system, and the type of securities being traded in the run up to 2008, had any bearing on the crash itself. Will we ever return to a situation where such instruments are traded again? “If you go back through the last 300 years,” he tells me, “you see a multitude of crises. The products can change, it can be U.S. savings and loans, it can be Latin American debt, you can have extreme amounts of complexity, but at the core it is still the same problem and we haven’t fixed that. It is our extreme addiction, through regulatory and fiscal subsidies, to debt.”
Rolet is not your ordinary capitalist. He is nuanced and engaged, excited and concerned simultaneously.
He also recognises that capitalism needs to do more for the ordinary citizen to trust finance again. His ideas are certainly big and exciting, but we’ll have to see if they ever come to fruition.