Regulation & Standards special report

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Regulation is Good For You

In the introduction to last year's annual Regulation & Standards report, I noted that the Foreign Account Tax Compliance Act (Fatca), Solvency II and Basel III were starting to reap more attention. In this year's virtual roundtable, talk around the implementation of these regulations dominates. Also, the European Market Infrastructure Regulation (EMIR) is prominent on the industry's radar.

Compliance requirements are of course a potential boon for service providers, but as Etienne Deniau of Société Générale observes in our roundtable, these providers must anticipate how firms are going to adapt to the new regulations. The providers, naturally, don't want to commit to offering a service that doesn't catch on. As Citihub's Suzanne Gorman puts it, "The cost of compliance with the regulation can be significant, and there is no ROI [return on investment] for the firms implementing these changes."

Stephen Engdahl of GoldenSource makes the point that firms have to strategically invest in data management capabilities for better quality and decision-making support, which are certainly pre-requisites for regulatory compliance. So ROI may not be there in the traditional sense, but could be derived from the value of those by-products (like technology advances from the US space program).

The London Stock Exchange sees value in the guidance that EMIR's architects, the European Securities and Markets Authority, gives in the form of published dialogues with industry participants. So regulation, if seen this way, can be a guide to deriving value from data governance and management. Analyzing new regulation carefully could yield valuable cues, as all our roundtable participants expound upon in this report.

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