Better Balance Needed to Combat 'Regulatory Fatigue'
Regulators need to be more concerned about properly spacing regulations as opposed to simply pushing their mandate.
The regulations won’t stop coming.
That was the message from US Securities and Exchange Commission (SEC) director of division of trading and markets Stephen Luparello at this year’s Securities Industry and Financial Markets Association (Sifma) Ops conference last week in Miami.
Last week I shared my thoughts on the hottest topics at Sifma Ops, but the one major trend throughout the entire conference was regulation.
This isn’t necessarily a surprise considering it was a conference for operations professionals, but it is worth noting that compliance is still one of the most pressing issues financial firms face.
Luparello’s panel discussion with Sifma’s Ira Hammerman, which you can read more about here, stood out to me above the rest.
Hammerman cut right to the point early, asking Luparello if his agency ever worried about regulatory fatigue. Luparello didn’t dodge the question, saying that while it’s something the Commission considers, it doesn’t influence decisions.
"We have an enormous mandate and so much of that mandate is overhang from things we were required to do by statute, whether it was Jumpstart Our Business Startups (JOBS), which is finishing up now, or Dodd–Frank, which is six years later and still not finished," Luparello said. "Under ordinary circumstances, I think our pace with rulemaking would be such that we would be putting these things out in even sequence with enough space where people aren't particularly feeling overwhelmed."
I understand the director’s point. They have a list of regulations that need to get passed and into the space. It’s not like they want to force-feed firms an endless stream of regulations. However, to me that seems like someone who can’t see the forest for the trees.
Proper Timeline
Luparello voiced his disappointment that the SEC is still implementing Dodd–Frank rules six years after the Act's passage during his conversation with Hammerman. I can certainly appreciate how tough it might seem to have a backup of regulations to get through, but simply pushing them off your plate and out into the industry doesn’t seem like the best approach.
Maybe the reason for the constant delays in firms adopting regulations is the massive number of compliance requirements, which continue to grow. If there were proper buffers between regulations, firms might be able to adopt them quicker and more seamlessly.
Instead, regulations are pushed forward and, in turn, firms push back against regulators, causing more delays.
That said, end users need to take a bit of responsibility as well. I imagine that even if only one new regulation was passed every decade there would still be complaints and resistance from firms.
But that’s certainly not the case now. Regulators are interested in pushing out their mandates, whether the industry is ready or not.
This week on the Waters Wavelength podcast ─ Episode 16: Sifma Ops, Nasdaq, Fixed Income
If you haven't already, subscribe to the podcast on iTunes here. Also, check out our SoundCloud account here.
Food for Thought
- In case you missed it, I profiled Nasdaq CEO Bob Greifeld. Check it out here.
- The Sell-Side Technology Award write-ups have also gone up. Click here to check them all out.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@waterstechnology.com
More on Regulation
Verafin launches genAI copilot for fincrime investigators
Features include document summarization and improved research tools.
Waters Wrap: Open source and storm clouds on the horizon
Regulators and politicians in America and Europe are increasingly concerned about AI—and, by extension, open-source development. Anthony says there are real reasons for concern.
DSB says industry is ready to meet UPI mandate ahead of deadline
The Unique Product Identifier will be required for certain OTC derivatives in the EU at the end of April, following US adoption in January.
‘Very careful thought’: T+1 will introduce costs, complexities for ETF traders
When the US moves to T+1 at the end of May 2024, firms trading ETFs will need to automate their workflows as much as possible to avoid "settlement misalignment" and additional costs.
Court case probes open-source licenses as movement stands at crossroads
The Software Freedom Conservancy’s lawsuit against TV-maker Vizio begins trial in California, raising questions about open-source licenses and the risks posed by adhering to them.
Waters Wavelength Podcast: Countdown to T+1
DTCC’s Val Wotton joins the podcast this week to discuss the impending move to T+1 in the US.
Consolidated tape hopefuls gear up for uncertain tender process
The bond tapes in the UK and EU are on track to be authorized in 2025. Prospective bidders for the role of provider must choose where to focus their efforts in anticipation of more regulatory clarity on the tender process.
Fighting FAIRR: Inside the bill aiming to keep AI and algos honest
The Financial Artificial Intelligence Risk Reduction Act seeks to fix a market abuse loophole by declaring that AI algorithms do not have brains.
Most read
- Chris Edmonds takes the reins at ICE Fixed Income and Data Services
- Deutsche Börse democratizes data with Marketplace offering
- Waters Wavelength Podcast: Broadridge’s Joseph Lo on GPTs