Firms Prep Increased Regulation in Europe and the US

The Post-Crisis Mode

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I attended a lunch with a UK Member of Parliament (MP) this month, and when commenting on where the regulatory environment seems to be going, it was all about the fact that the UK appears to be in a mindset to work with Europe – a very active Europe.

Jonathan Evans, MP and newly elected chairman of the All Party Parliamentary Group on Insurance and Financial Services in the UK, said: "In post-financial crisis work, we're going to see significantly more European activity."

This did not come as a surprise. It seems to be impossible to go to any data management event without talking about potential future impact of regulation nowadays. In the London market, meetings about MiFID II are rapidly becoming more frequent, and firms are still awaiting more details on Basel III.

At our continental European financial information summits in Copenhagen and Paris, regulation and standards also underpinned the majority of the discussions (see pages 1 and 8). In Paris, panelists discussing integrated data management ended up talking about the growing regulatory focus on data quality, and the potential for regulators to mandate the use of more standards as opposed to putting in new infrastructures.

In the US, the change in infrastructure already seems to be on the agenda, resulting in banks currently running internal meetings to assess the potential impact. The focus continues to be on what the set-up of the proposed government-run reference data and analysis centre, the Office of Financial Research, could mean for each organization.

This was further looked into at the Sifma Technology Expo Show in New York, where my colleague Carla Mangado heard speakers debating the impracticalities of attempting to manage systemic risk by collecting all this data and aggregating it in one massive repository (see feature page 20). It is not the preferred option by all market participants.

In fact, these types of major infrastructure changes, which seem to be happening everywhere at the moment, really get people talking. In the UK, the first significant change may be the planned split of the regulator the Financial Services Authority. For data managers in the UK, the main complaint I've heard about the current regulatory system has been the large piles of documents produced by the FSA, with some saying that just over the Christmas period there were hundreds of pages to read for anyone working in the client data space.

Evans, the MP, said the current system may have been committed to consultation, but in reality it has been committed to burying people in paper. "I hope what we don't do is go back to the structure with the FSA with the consultation paper," he said.

I think our entire industry, representing the professionals who have to read and interpret all these documents, would agree with that—particularly if the regulators continue in this post-crisis activist mode.

 

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