A new white paper from SWIFT titled Facing the unknown: Building a strategy for regulatory compliance in an uncertain landscape argues that there will be more regulations added to the securities services industry that will impact everything from the capital structure of banks to the clearing and reporting of derivatives.
Adopting where possible a collaborative approach to compliance is an important way to take back some control of the situation, the paper says.
Presenting to the regulators, alongside your peers, operational solutions that work for both regulators and for you and your fellow institutions is a better way of moving forward than either just waiting for something to be imposed or burying your head in the sand and hoping it will all go away, Fabian Vandenreydt, head of securities and treasury markets at SWIFT, says.
The SWIFT white paper suggests that firms need to monitor the situation, take a stance on how proactive they will be in shaping the regulation and make a plan for compliance based on what they do know. It argues that standard, open, flexible solutions are essential to reducing the total cost of ownership of compliance effortsand that there is an opportunity to develop collaborative solutions to minimize the industry-wide operational impact of regulatory change.
One activity set to be particularly affected by new regulation is clearing, and this implies changes for central counterparties.
Diana Chan, CEO of EuroCCP, says in the paper: Regulators want CCPs to clear more, and at the same time, are raising the bar significantly on all aspects of their operation. The cost of compliance with new regulatory requirements will be significant. Collaboration within the clearing industry to develop standards to face these new challenges is more important than ever before. Standardization of message formats, communication protocol and operational procedures among connected parties reduces long-term costs and operational risks for everyone. The sooner we accomplish this, the better. We must not miss the opportunity to do it right from the start.
(CM)