Compliance

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Ivy Schmerken
Ivy Schmerken
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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.
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Financial executives feel the stress
More than half of financial services executives expect to feelmoderate stress in two years.
More than half of financial services executives expect to feel
moderate stress in two years.

Five years after the financial crisis, banks and other firms are still grappling with a growing list of regulatory reforms. Five international reforms currently weigh on the financial sector: Basel III, Dodd-Frank, the Foreign Account Tax Compliance Act (FATCA), the Alternative Investment Managers Directive (AIMD), and Globally Systemically Important Insurers.

A SunGard Financial Systems report (registration required) examines how financial services firms are living with uncertainty over which regulations will come out next. The report is based on a global survey of 400 senior financial executives; 86% said they are stressed by regulatory change. Further qualifying these results, 46% of respondents feel highly stressed, while 40% are moderately stressed.

And there is little hope for improvement; 28% expect to be highly stressed in two years, while 51% expect to be moderately stressed. What's more, firms must deal with an endlessly "multiplying panoply of regulatory authorities," since domestic regulators vie with international agencies for jurisdiction over both national markets and cross-border transactions, the report said.

Five more international reforms are still to come: Basel III, Markets in Financial Instruments Directive (MiFID II), the Solvency II Directive, G20 Financial Transactions Tax (Tobin Tax), and global derivatives regulations.

 

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

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KBurger
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KBurger,
User Rank: Author
6/3/2014 | 4:39:08 PM
Boo hoo
Why do I feel less than sympathetic? The industry brought this on themselves.
IvySchmerken
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IvySchmerken,
User Rank: Author
6/4/2014 | 4:10:43 PM
Re: Boo hoo
It's true that banks brought on the regulations themselves. But many are complaining that the regulations are excessive. Someone told me the regulations are vague and it's hard to write rules for systems. There are also numerous regulatory authorities overseeing their activities. In the SunGard survey, some executives said their attention is diverted from their core business and missing opporunities to invest in new markets and products. Compliance has become a huge undertaking.
KBurger
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KBurger,
User Rank: Author
6/4/2014 | 4:18:19 PM
Re: Boo hoo
Ivy, there is no doubt that regulation has become more complex -- some of that is because of politics and turf battles, but some of that is by necessity (things that were unregulated need to be, etc.). Still, it seems kind of disingenous for so many people to be so "caught off guard" by these requirements. I'm not a risk manager or compliance officer and I could have told you the day after Lehman failed that there was going to be more bank regulation. These companies have had plenty of time to plan and budget for this reality.
Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
6/10/2014 | 1:34:47 PM
Re: Boo hoo
i have to agree here. Although I am not a fan of excess or useless regulations, the public is not longer willing to allow financial firms to self regulate. For years, Wall Street argued that the market would take care of itself and regulations were useless and costly.

As it turned out, self regulation didn't really work out. Now we have gone (probably) to the other extreme. Unfortunately, this is a pill (complex and costly regs) that firms are going to have to swallow for a while.
anon0270366629
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anon0270366629,
User Rank: Apprentice
6/3/2014 | 6:14:12 PM
Reduce the Stress of Compliance in Financial Industry
There are solutions to quickly automate and ensure that your policies and procedures for regulations are managed using best practices in the industry so you can increase efficiency and cover your bases with ease. ConvergePoint is one of these options that keep all of your policies, discussions around policy creation, references, and acknowledgments all in one secure SharePoint central repository for easy creation, approval, distribution, acknowledgment and auditing of your policies and procedures. Anyone interested in automating their efforts to improve their compliance should learn more about this software at http://www.convergepoint.com/policy-management-software.
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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.