Compliance

10:51 AM
Dr. John Bates
Dr. John Bates
Commentary
50%
50%

It's A Rich Man's World

Regulators are chasing the market with real-time market monitoring technology because they lack the budgets of banks and hedge funds.

John Bates
As regulators prepare to update market-monitoring technology and improve market surveillance, one question keeps arising. Why are they so late to the game? Part of the answer is money.

Regulators have fallen behind in scrutinizing the markets that they are responsible for because regulators are not Wall Street banks. Banks and hedge funds can afford to (and do) put the best armies of top PhDs to work for them. Banks and hedge funds can afford to (and do) buy and use the latest and greatest technology. Regulators are at the mercy of annual budgets set by painful negotiations with Congress. Thus regulators have been at a disadvantage and are now running to catch up after the markets went sour.

Mitigating risk was not a top priority for regulators when times were good. After all, why mess with a booming financial services industry? When it went bad it went very, very bad and that was when they looked inward and realized that they were totally unprepared. The UK's Financial Services Authority likened the struggle to "chasing a Ferrari whilst riding a bicycle."

In the U.S., the Securities and Exchange Commission (SEC) is planning to improve surveillance and establish a consolidated audit trail system, while the Commodities Futures Trading Commission (CFTC) is re-establishing a technology advisory committee to provide a best practices blueprint for market oversight and surveillance. This will be particularly relevant if the CFTC gets responsibility for over the counter (OTC) derivatives after financial reform is passed.

These are great steps in the right direction, but the truth is that the regulators are still chasing the market. Until recently, most regulators were unaware that it was possible to do market surveillance in real-time.

Dr. John Bates is a Member of the Group Executive Board and Chief Technology Officer at Software AG, responsible for Intelligent Business Operations and Big Data strategies. Until July 2013, John was Executive Vice President and Corporate Chief Technology Officer at Progress ... View Full Bio
Previous
1 of 3
Next
Comment  | 
Print  | 
More Insights
More Commentary
5 Tips On How To Prepare For A Data Breach
If you are a financial institution your cyber security defenses will be breached -- again and again. Here are five tips to respond quickly and minimize damage.
Wall Street CIOs Have a Vendor Management Problem
If Wall Street CIOs want to stay ahead of competition and ensure high-speed trading software doesn't start the next flash crash, they need better insight into vendor delivered software.
Technology Innovation Returns to Financial Services
Capital Markets Outlook 2015: Following a few years dominated by regulatory compliance and cost saving technology initiatives, financial organizations are finally investing in innovative technology and tools.
Voice Biometrics Improve Transaction Monitoring Fraud Detection
Why voice biometrics should be a part of your fraud prevention strategy in the call center.
Fintech Fast Forward 2015
What will shape the future of Fintech in 2015 and beyond?
Register for Wall Street & Technology Newsletters
White Papers
Current Issue
Wall Street & Technology - Elite 8, October 2014
The in-depth profiles of this year's Elite 8 honorees focus on leadership, talent recruitment, big data, analytics, mobile, and more.
Video
Stressed Out by Compliance, Reputational Damage & Fines?
Stressed Out by Compliance, Reputational Damage & Fines?
Financial services executives are living in a "regulatory pressure cooker." Here's how executives are preparing for the new compliance requirements.