It’s perhaps no surprise that, post-crisis, the compliance category has been one of the more competitive in the Buy-Side Technology Awards. Charles River, which last won this category in 2014, returns to the podium this year for its Investment Management System’s in-built compliance-monitoring capabilities.
This is due in large part to its work around the revised Markets in Financial Instruments Directive (Mifid II), the incoming reform of Europe’s trading rulebook which takes effect on January 3, 2018. More than any other issue this year, this has perhaps united the buy and the sell sides thanks to its far-reaching implications for nearly all aspects of the trade lifecycle, and for the buy side in particular, the way in which it has the potential to radically reform existing practices. “At this point, I’m not aware of any vendor that’s done as much work and has delivered as much as we have on Mifid II,” says Tom Driscoll, managing director, global, at Charles River Development.
Charles River’s efforts have zeroed in on the particularly troublesome aspects of Mifid II for buy-side firms, which largely center on trade and transaction reporting—which will see firms obliged to report to Approved Publication Arrangements (APAs) for the former, and Approved Reporting Mechanisms (ARMs) for the latter—as well as on the analysis of trading outcomes for best-execution purposes, and on the separation of payments for research and executions. “Most of the front-office vendors in particular have given their clients spreadsheets, saying people can fill them out and send them to the APA or the ARMs,” Driscoll says. “A number of them have done the APA reporting, which is the trade reporting, but that’s only part of it. From just a front-office perspective, we think we’re one of very few vendors that has done a comprehensive integration of Mifid II capabilities into our products.”
Looking ahead, Driscoll says that Charles River is keeping an eye on emerging technologies, including artificial intelligence and blockchain, but that the near-term trends are more market-led. “We see a lot of firms moving aggressively toward new products—multi-asset products, liability-driven investment products—which have more complexity associated with them,” he says. “We see risk and compliance fusing together in the regulatory space. When people talk about regulation, they talk about compliance, but they also need to be talking about risk monitoring, so we’re seeing value at risk come into play in some for the European regulations. That’s another area on the horizon.”
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