2020 vision: Regulatory trends to define the New Year

In the fourth part of our ‘what to look out for in 2020’, we ask industry experts’ for their input on regulatory issues to watch out for in the New Year.

By Editors

RegTech transformation – waking up to a smarter way

Samir Pandiri, president, Broadridge International

As the business, operations and technology leaders of financial firms contemplate the mandatory changes required over the next 12 months, there is good reason to believe that they should do so with less trepidation than in prior years.

Regulatory change in 2020 will help to drive market efficiency, as well as helping to advance the live operational deployment of FinTech innovation.  A case in point is the updated Shareholder Rights Directive (SRD II), widely regarded as the biggest change to European corporate governance standards and processes for many years. With a market deadline of September 2020, intermediaries such as banks, brokers and wealth managers will need to share information more quickly, accurately and transparently, particularly in the areas of meeting notification and proxy voting, while also fulfilling their obligation to disclose shareholder details to issuers upon request.  The good news is that enhanced market-ready solutions are already well advanced, including a blockchain-based shareholder disclosure hub, in readiness for a carefully controlled transition.


Securities finance takes centre stage as SFTR and CSDR strike

Philip Morgan, COO, Pirum Systems

Regardless of market dynamics, 2020 is shaping up to be a red-letter year for securities financing, with both securities lending and repo set to experience challenges. This is driven by SFTR and CSDR which will create a major reporting burden and the need for improved settlement discipline, with costs and potential fines for firms failing to meet required standards. In an environment of reduced margins and demand, firms need to embrace change and transparency on a scale not seen in the past. In order to adapt, firms are looking for new technology and data to assist in driving efficiency, adopt new industry best practices and improve controls. Those that take advantage of these opportunities will grow and improve profitability, however, those that do not will find it increasingly difficult to compete effectively. So, 1 January 2020 will likely be a time of soul searching for many and will hopefully result in some impactful New Year resolutions.


Year of the R.A.T – regulation, advancement and trust

Stephan Leithner, member of the executive board of Deutsche Boerse and chairman of Clearstream

In Chinese astrology 2020 will be the Year of the Rat. Now, what does that mean for the financial industry? Some levels of meaning are shrouded in uncertainty as the future always is. In my book, “R” stands for regulation, a topic that will continue to be top of mind for market participants in 2020 as they walk the line between efficiency and stability. “A” stands for advancement, as new technologies start moving into production, poised to change the way we do business. And “T”, crucially, stands for trust. Against 2020’s backdrop of geopolitical, technological and ecological uncertainty, the currency of trust will only gain in value. My key to a successful 2020 for the financial industry: prioritise regulation and technology, and be the trustworthy partner you would like to have.


Two big regulatory issues will dominate the next 12 months

Brian Collings, CEO, Torstone Technology

The coming year brings implementation dates for both the settlement discipline regime (SDR) component of the Central Securities Depositories Regulation (CSDR) and the first phase of the Securities Financing Transaction Regulation (SFTR), the final pieces of the regulatory reform that has been rolling out since the financial crisis more than a decade ago. Firms will be focused on preparations, especially addressing data management challenges and ensuring their technology strategy delivers the performance and efficiency they need.  

The other regulatory trend for 2020 will be around cryptocurrencies, as the industry and its supervisors continue to work toward ensuring the regulatory infrastructure is in place to support existing and new crypto projects. The industry at large will closely watch this process, as it is likely to have significant impact on the markets no matter how it progresses.