Overcoming Regulatory Uncertainty with an Agile Response
20th July 2016
Author: Helen Nicol, Global Product Director, Lombard Risk
Banks across the globe are facing an unprecedented pace of regulatory change, with no sign of relief, particularly in the face of Brexit. These constantly evolving changes are extremely costly to financial institutions as they try to cater for every possible interpretation of a piece of regulation and conform to various demands across jurisdictions.
For example, banks in the US are anticipating uncleared margin rules that will come into force on the 1st of September, however in the EU, the equivalent regulation (EMIR) is being delayed until an indeterminate time in 2017. A ‘breath of fresh air’ for those in the EU perhaps, but the deadline remains for the US and consequently for those who work across both sides of the Atlantic. Time limit or not, firms should forge ahead with their plans to comply, and should assume the EU regulation will come into force in the near future.
Furthermore, regulation should be viewed less as a burden and more as an opportunity to streamline operating systems and improve data capture and reporting. Indeed, in this time of market volatility, vendors need to be agile and prove that they can support their clients. The ability to demonstrate sound solutions that support current regulatory compliance demands, as well as our solid industry knowledge and anticipation of further regulatory change, enhances this relationship significantly.
At Lombard Risk we have been working alongside our clients to provide a system that supports international standards and can be integrated across all global networks, whilst also being agile enough to anticipate future regulatory demands. In providing configurable parameters that enable clients to support the most stringent of the regulatory framework through our COLLINE® system, our clients are ahead of the curve in preparing to meet regulatory requirements in multiple jurisdictions.
The structure imposed by new regulation and implemented through systems such as COLLINE® enables financial institutions to adapt and protect their accounts from volatility in the market. Such a degree of transparency and flexibility provides buoyancy which has been difficult to attain until now and it will provide greater visibility across the financial landscape.
Whilst volatility is impossible to avoid, tighter regulations provide greater security for financial institutions and their clients. The regulations and their delay should be seen as an opportunity for firms to utilise the latest technology and address the demands of the new regulations ahead of their competitors. We will continue to help our clients to stay at the forefront of regulatory change.