The IT Strategy of Wait-and-See

We've been waiting to hear from the US Securities and Exchange Commission (SEC) about when it would vote on final rules for Form PF, or Private Fund, a product of the Dodd–Frank Act meant to help regulators monitor systemic risk. Well, we have a date: Wednesday.

According to a Bloomberg report, SEC chair Mary Schapiro told those in attendance at a Managed Funds Association meeting yesterday that Oct. 26 would be the date. So feel free to start holding your breath now.

But we've been talking a good deal about Form PF here at BST and there will definitely be more to discuss next week. (Please listen to BST's podcast with MIK Fund Solutions' Marshall Saffer on the subject.) What this news report did remind me of, though, are two stories I read in Waters' sibling publication Risk.

In the October issue of Risk, Peter Madigan reports that the SEC has already suffered one major legal defeat regarding its implementation of Dodd–Frank, that the SEC and Commodity Futures Trading Commission (CFTC) could face a wave of similar litigation going forward. In the same issue, Risk's Mark Pengelly writes about the barriers to Basel 2.5 in the US due to elements of the Dodd–Frank Act being at odds with the new Basel rules.

I'll leave the legislative reporting to the Risk team, but the legislations’ effects on technology are my domain.

Next Wednesday marks my two-year anniversary at Incisive Media. In that time, I have written 20 profiles of industry CIOs, CTOs and CEOs. I asked all of them how the regulatory environment changes their firms’ IT blueprints.

The words "challenge," "flexibility," "efficiency," and "study" came up in most—if not all—of those interviews. Fair enough. But I almost always felt like something was being held back. Indeed, in private conversations I've had with others in the business, many more forceful words were used.

The more I read about how few of Dodd–Frank's provisions have actually been implemented and the more I hear about how this rule or that proposal is being delayed, the more I understand why there is something of a nonchalant attitude toward these rules. The industry has been very good at fending off these reforms all while making it seem like it is fighting an uphill battle.

So when this trickles down to IT, the old strategy of "wait-and-see" becomes far more understandable. We'll find out on Wednesday if those slow to address Form PF’s mandates put their eggs in the right basket. If I had to make a prediction, I'd say that these rules will go forward as planned—but I won’t put money on it.

And speaking of regulation, before I send you off into the weekend, let me please direct your attention to Europe and the release of the Mifid II proposals by the European Commission. First we have BT's Chris Pickles giving his take on the rule changes. Our own James Rundle writes about the varied opinions regarding the proposals and how, exactly, the EU plans to define exactly what "algorithmic" trading is.