Compliance is complex and expensive—but not as expensive as non-compliance. Fragmentation, continued regulatory changes, and globalization of regulation are among the top concerns for most securities firms today.
Click to watch and learn about compliance in the finance industry
Over the years, firms implemented separate systems to satisfy specific compliance requirements as they emerged, such as trade and order review, trade blotter capabilities, personal trading review, email and social media surveillance, and additional regulatory reporting. Today, firms are looking to integrate and consolidate compliance functionality to increase cost effectiveness and efficiency of common compliance functionality, such as case management, ad hoc reporting, and alerting and dashboard capabilities.
Continued Dodd-Frank, FINRA and SEC regulatory changes are driving new compliance requirements and create unexpected business needs for firms. Therefore, compliance systems need to be very flexible to give firms the benefits of a baseline solution providing common functionality, with the capability to address new regulatory changes as they emerge.
On a global scale, the frequency and fines related to market abuse are increasing due to Dodd-Frank and MiFID II. However, many firms lack effective processes to pinpoint abuse behavior in trading activity such as price manipulation and insider trading. Because of the nature of trading behaviors and large volumes, detecting and comparing trading activities with market realities can be challenging. Applying price and market analysis rules to trade surveillance can streamline this process. In Europe and in Asia, the ability to perform market replay based on trading, and then drill down into trade details, is especially crucial.
While compliance traditionally has not been a direct competitive advantage, many firms are beginning to see it this way. As regulation becomes global, compliance platforms will need to become more intuitive, multilingual and device agnostic. Technology is helping to meet the regulatory challenges ahead while turning compliance workflow into an asset.
If you asked 10 different securities finance experts to define the word transparency, you would likely receive 10 different answers. While the current drive for transparency has stemmed from regulators, the perception of what transparency really means varies from group to group, region to region, participant to participant.
For instance, agent lenders may want to know rates at an intraday frequency so they can best serve their underlying clients; corporate entities want to track how they are perceived by the market at large; regulators want to monitor risk and its effects on the structure of the financial markets. For the securities finance industry, transparency is in the eye of the beholder.
In this new podcast, I review a few tricky questions about the evolution of transparency in securities financing. Spend a few minutes listening to the interview and let me know your thoughts in the comment section. Do you have a different way of looking at transparency that we did not cover? Do you agree that transparency is in the eye of the beholder?
In the video below, my colleague Ted Allen and I answer several questions about enterprise collateral management. We’ve seen this issue become incredibly important in the wake of new regulations and its impact on costs and liquidity. Of course, enterprise collateral management and collateral optimization mean different things to different organizations, but as I say in the video, “The bottom line is it’s all about cost: holding down costs to be able to increase revenues, because clearly in today’s environment, that’s key to success.”
I recently participated in a video interview with Finextra that covered trends and challenges with regard to credit valuation adjustment. In this four-minute video, I touch upon three steps to effectively managing CVA, including deciding on an operating model, consolidating data and systems, and getting information out to decision makers.
What credit valuation adjustment questions would you like to ask? Are you capitalizing on change when it comes to CVA? Read more»
Mohamed Amer from Beltone Financial, a leading investment bank in the Middle East and North Africa, gives insight into electronic trading in Egypt and the Middle East, and explains how SunGard helps Beltone Financial deliver superior trading services to both regional and international investors and traders.
Jordan Kai, Member of the Board at Steubing AG, talks about the challenges faced by continental Europe brokers and how SunGard’s trading and connectivity solutions help Steubing deliver better trading services to its clients.
Since becoming the president of SunGard’s capital markets business in January, it’s become even more apparent to me that to be an effective leader, you must be able to see the big picture. This may seem like an obvious statement, yet many often focus on small problems or tasks, missing the larger issues.
Take this 1999 experiment, which tested selective attention. In the experiment, participants were asked to watch six people throw basketballs to each other, three of whom are wearing white shirts and three of whom are wearing black shirts. The participants were then asked to count the number of times a ball was passed between the basketball players in white.
Try the experiment for yourself.
You counted all the passes, right? But did you notice the gorilla? In the experiment, because the participants were asked to focus on one small thing, about half didn’t notice a person in a gorilla costume enter the scene, thump his chest, and leave.
Now switch gears and imagine the gorilla is a critical issue in your business. Imagine the gorilla is a solution to a systemic problem. Imagine the gorilla is the key to connecting the dots in your firm’s response to global regulatory reform. What would happen if you missed seeing it?
How can a leader be sure to see the gorilla?
Search for the story: An effective leader cannot be satisfied with only solving quick, small problems. A leader must recognize that beneath one small problem, there may be a larger story with bigger challenges to solve. As the leader of a large new financial systems business that combines a wealth of solutions, talents and resources from three former businesses, I am focused on seeing the big picture among my staff and our customers.
Ask more open-ended questions: If you called your doctor and told her you were having trouble breathing, what would she do? She wouldn’t phone in a prescription on the spot; she would ask questions to get to the root of the issue, identify a diagnosis and then recommend treatment. It’s the same with our industry. A risk management or securities lending challenge doesn’t exist in a vacuum or within a silo – it is the job of a leader to ask the right questions and listen to “diagnose” the deeper or more systemic issues that need solving.
Use a visual: A picture can tell a thousand words – or at least get people talking. Using a visual representation of a business challenge can be a powerful way to draw out the full story to arrive at the full solution. How many times have you sat in a meeting and found that a chart, a few scribbles on a whiteboard, a video, or even an infographic provided the context for the right conversations?
Paint the picture: Once a leader hears how customers, partners or employees tell their “story” about the challenges they face or solutions they need, it is his job to take those elements and paint the picture to help find the answers. It is his job to see the whole story and not get caught up in any one small detail. It is his job to see the gorilla.
How do you ensure that you don’t overlook critical issues in your business? Where do you believe you may be looking too closely at a problem?
June 14 (Bloomberg) — Raj Mahajan, president of SunGard’s global trading business, talks about the difference between trading in Asian financial markets compared to the U.S. SunGard provides infrastructure for financial institution trading systems. Mahajan speaks with Carol Massar and Matt Miller on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)