- Regulators have given a certain degree of autonomy to the banks to motivate them to become increasingly forward-thinking and proactive in their approaches to regulatory implementation and compliance.
- GreySpark Partners anticipates that this more flexible approach to regulation will push banks to reassess and reconfigure their data management and technology programmes to position compliance as an embedded customer service in the attempt to stay ahead of both the competition and the regulators.
LONDON – 21 June 2017 – GreySpark Partners has published a new report examining the imminent changes a proactive and principles-based approach to regulation will have on the investment banking industry. The report, titled Best Practices in Sellside Regulation Implementation, argues that the post-financial crisis regulatory regime provides banks the autonomy and flexibility to decide how they want to approach and position compliance within their organisations in ways that will ultimately help create self-regulating institutions.
The report identifies two core tenets of the ‘new normal’ of regulatory compliance in the EU and the US, both of which are set to permanently alter the ways in which banks operate, and which GreySpark believes underpin the new, proactive, forward-looking approach to regulation implementation that must be taken. Those tenants are:
- an explicit mandate that internal and external sellside market, trade and client-derived data be made available to regulators and the public global financial markets community; and
- an implicit mandate that technology solutions for creating market structure and managing requisite financial services interactions be utilised to incentive new levels of transparency.
By forcing banks to reassess and recalibrate their data processes and technology systems, the two remits will help banks evolve into self-regulating entities that are not only aware and prepared for compliance, but which are also proactive in their approach to doing so. This shift in the industry approach to regulation has intensified efforts to pursue the electronification and digitalisation of many different types of sellside business and financial markets trading models, which is supported by requirements in multiple regulations, the most prominent of which is the EU’s Markets in Financial Instruments Directive (MiFID II). The report presents analysis around how those banks that are willing to accept the benefits of achieving a level of so-called first mover advantage in regulatory compliance stand to benefit greatly.
GreySpark believes that embedding fully-realised compliance services within a bank’s technology, processes and culture will provide the flexibility needed for them to eventually become self-regulating. Moving beyond minimum compliance and positioning compliance as a crucial, indispensable customer service will help change the attitudes of both banks and clients.
Giles Broxis, GreySpark Risk & Regulations, Europe practice managing consultant said: “By making compliance an embedded and fully-realised service, banks will be able to invest their attention, time and money in the development of other crucial client-facing services. Ensuring that compliance is fully ‘baked in’ to every customer service and experience and not treated as an unavoidable add-on will act as an incentive for retained and potential clients.”