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Outlook 2004: Compliance Tops the Charts

Never before has Wall Street faced so many new regulations with major technology implications.

Never before has Wall Street faced so many new regulations with major technology implications. And the coming year will only see a heightened focus on regulatory issues. Complying with the U.S.A. Patriot Act and figuring out how Basel II would impact the securities industry were top of mind last year. However, this year a slew of other compliance issues have found their way onto the CIO's agenda.

With an unending wave of scandals being revealed in financial services, no one can argue that the focus on compliance will increase. As a matter of fact, a recent InformationWeek Research survey found that 65 percent of senior executives on Wall Street plan to spend more on compliance this year.

Not only are Basel II and Patriot Act compliance still important, but the industry also has to make sure it's ready for June's Sarbanes-Oxley mandate. As well, it must be prepared to handle the newly interpreted document-management rules that now apply to both instant messaging and e-mail. And, it must prepare itself for the most recent issue - the new rules that may govern market timing and late trading in the mutual-fund industry.

So, CIOs, if there's one person to make a good friend this year, it's the chief compliance officer, as compliance will remain in the spotlight throughout 2004.

In this issue WS&T on focuses the fourteen issues that our editors believe will be 2004's top priorities. Of those fourteen issues, five center around complying with regulations, thus this year's Vision issue has a special section dedicated to compliance.

Some of the topics chosen may not seem new, but what's new is the stage of focus. Many of these issues could take years to solve. For example, the issue of managing the firm's data in order to better serve the customer, cross sell, and increase efficiencies was on our list last year. It will be top of mind this year, and will probably be on the agenda in 2005 as well.

Last year, Wall Street took the first steps to clean reference data. This year, the focus will shift to the second stage of integrating data across the enterprise using the new concept of Enterprise Information Integration (EII).

In addition, other more traditional financial-services topics will remain important, such as trading and automating processing. Competition is growing more heated around electronic platforms available for both fixed income and foreign exchange. Both areas have changed dramatically with the increased dependence on trading portals, but both must still take great strides to automate trade processing in 2004.

Additional topics new to our list include voice-over IP technology and market-structure issues. Many institutions are dabbling in VoIP and within a few years, use of this technology will become mainstream.

Furthermore, as industry experts continue to question specialists' place in market, and with the rules of the listed game potentially changing, many predict a much more automated NYSE in the years to come.

Other areas that continue to challenge the industry include figuring out how to best deal with viruses that are continuously being introduced in new forms.

As well, deciding how to safely roll out instant messaging without compromising the firm's security or regulatory standards also will be important.

These and many other issues will be top of mind in 2004. Read on to find out how some financial institutions plan to solve these issues in the coming year. We can only hope that all the time spent on the new rules and challenges won't get in the way of making 2004 a year of innovation.


Mutual Fund Compliance

SEC 17a-4

Business-Continuity Planning

USA Patriot Act


Market Structure

FX Portals

Fixed-Income Trading


Data Management/Integration

Collaborative Wealth Management

Grid Computing

Instant Messaging

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